Tether (USDT), the largest stablecoin cryptocurrency, has received a lot of bad publicity recently. Allegations have again emerged that the reserves of the stablecoin, which are supposed to be backed one to one by USD, are instead backed by dubious assets that do not equate to the U.S dollars.
Most recently, a Bloomberg article threw light on the situation. The Bloomberg report written by Zeke Faux accused Tether of not having enough reserves to back its stablecoin issuance. It called out Tether’s Chief Financial Officer, Giancarlo Devasini, accusing him of using the company’s reserves to make investments. Even more alarming, it alleged that Tether was investing in Chinese firms and issuing crypto-backed loans, “worth billions of dollars.”
“Tether still hasn’t disclosed where it’s keeping its money. If Devasini is taking enough risk to earn even a 1% return on Tether’s entire reserves, that would give him and his partners a $690 million annual profit. But if those loans fail, even a small percentage of them, one Tether would become worth less than $1,” Faux wrote.
