😎 IS TETHER IN TROUBLE?

Arthur Hayes (former BitMEX CEO) argues that Tether is too risky because it holds around $22.8 billion in Bitcoin and gold.

Hayes’ reasoning is as follows:
•Tether’s total assets: $181.2 billion
•Liabilities: $174.4 billion (the total circulating USDT)
•Excess reserves: $6.78 billion

On paper, this looks safe because Tether holds more assets than the amount of USDT it needs to back. Tether earns massive profits from high interest rates by holding U.S. Treasury bills. But as rate-cut expectations rise, Tether’s profits from Treasuries will decrease, so the company has been seeking alternative yields by investing part of its capital into gold, Bitcoin, and other assets.

However, Hayes argues that if Bitcoin and gold drop 30%, Tether would lose roughly $6.8 billion — nearly equal to its $6.78 billion reserve surplus. According to him, this could wipe out the buffer and leave USDT under-collateralized by around $200 million.

This sparked strong debate in the community. Some call it FUD, others are genuinely worried. As usual, the truth lies somewhere in the middle.

The key point is that the reserve report verified by BDO only reflects a single legal entity — Tether International, S.A. de C.V. (El Salvador), the company directly backing USDT.

It does not include other Tether subsidiaries or the massive profits generated by the broader Tether group. According to Tether’s CEO and previous reports, Tether earns over $10 billion per year from Treasuries and holds more than $30 billion in assets at the group level — none of which appear in the USDT reserve report. Therefore, even if Bitcoin and gold drop sharply, Tether could theoretically replenish the reserve buffer using corporate profits or group-level equity. This explains why Tether has survived every major market crash from 2018 to the 2022 Luna collapse and the 2023 banking crisis. USDT sometimes depegs during panic but always recovers quickly — and most importantly, Tether has never refused a USDT-to-USD redemption.

In summary, the $6.78 billion reserve surplus may fluctuate with the price of Bitcoin and gold, but Tether has far more capital behind the scenes, so the risk of insolvency due to normal market volatility is likely exaggerated. On the other hand, saying there is zero concern would also be inaccurate.

The reality is that we still don’t have full transparency into the $30 billion in group-level equity. They could be holding more treasuries or investing in other businesses. We simply don’t have the full picture because Tether currently issues attestations, not full audits — although this may change soon as the Genius Act will require mandatory audits.$usdt