Tether And When Denial Becomes A Dialect

I’ve been in this game long enough to know that when a company refuses to furnish a full, independent audit, it’s never because things are pristine and they just forgot to schedule one.

I spent more than a decade as a professional short seller, which basically means I’ve made a career out of peeking behind curtains people would rather keep shut. And in all that time, I’ve found only ever one reason an outfit digs in its heels and won’t submit to an audit when everyone requests one. And it’s not a good reason.

So it didn’t exactly stop the presses in my house when Bloomberg reported that S&P Global downgraded Tether’s USDT to its weakest possible stability rating this week.

S&P’s analysts essentially said Tether has jacked up their exposure to high-risk assets while still offering only partial disclosure. Bitcoin alone now makes up about 5.6% of USDT’s reserves, which is more than the stablecoin’s roughly 3.9% overcollateralization margin. In plain English, if Bitcoin drops—which it was already in the middle of doing—Tether’s reserves may not cover all the USDT they’ve pumped into the world.

Combine that with the fact that other risky assets in the reserves could fall too, and you’ve got the makings of a stablecoin that might not be so stable. Meanwhile circulation keeps climbing, up a billion dollars in November to about $184 billion.

Tether, for its part, waved the S&P report away as...(READ THIS FULL COLUMN 100% FREE HERE).

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