Tether promises zero secured loans in 2023 in response to FUD

A new round of criticism of Tether has been released by the mainstream media, which once again criticizes the stablecoin provider as having potentially unreliable reserves. Tether has promised to reduce its secured loans to zero by 2023 in response to the “recent cycle of Tether FUD.”

Tether’s generalized response on Tuesday dismissed criticisms of its secured loans as “disinformation” created by the mainstream media (MSM). It is, however, committed to restoring faith in crypto following the collapse of FTX by selling them off entirely in 2023.

The company reviewed other ways in which the MSM has been “wrong” about Tether, including suspicions that 70% of its reserves were held with Evergrande, and that the commercial paper held in these reserves was unreliable. Tether confirmed that all of its commercial paper holdings had been sold off in October.

What’s the FUD About?

The Wall Street Journal chastised Tether earlier this month for its “secured loans,” in which Tether lends out its own stablecoin tokens rather than selling them upfront for hard currency. According to the company’s website, as of September 30th, these loans accounted for $6.1 billion, or 9% of its reserves.

Tether claims that these loans are overcollateralized by “extremely liquid” assets, but it provides few details about the nature of that collateral and who its borrowers are. The WSJ used this angle to argue that these loans put the company’s ability to satisfy stablecoin redemptions at risk. 

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