Today, despite being a typically quiet Sunday, the global cryptocurrency community is buzzing with discussions about Hayes and his recent controversial remarks. His claims, perceived as fear-inducing, have drawn strong reactions from five notable figures within the industry. Notably, Ki Young Ju provided a firm rebuttal to Hayes’s statements.
Allegations of Cryptocurrency Collapse
To incite panic among cryptocurrency investors in today’s market, two major fear, uncertainty, and doubt (FUD) narratives are often pushed. First, the persistent debates surrounding Tether, which have persisted even after the FTX collapse. While Tether faced scrutiny, it remained unscathed due to its robust reserves, capable of handling a bank run. The second narrative suggests Strategy BTC is selling, or preparing to sell, its holdings.
Today, Hayes questioned the security of Tether’s reserves, suggesting a potential collapse in cryptocurrencies. In response, Ki Young Ju, CEO of CryptoQuant, cryptically replied, “Translation: I currently hold no position and wish for crypto prices to fall so I can buy at lower levels.”
Alexandre Dreyfus, CEO of CHZ, offered a sarcastic response, interpreting the scenario as a precursor to a bull market. He observed that much of the FUD surrounding Tether stems from competitors or traditional finance participants rather than satisfied customers.
Could Tether Collapse?
Hayes does not assert that Tether’s reserves are entirely unsafe. He claims that the company could immediately satisfy a $130 billion redemption request, a scenario unprecedented in the cryptocurrency realm. JosephA140, who prepares research reports for Citi, states that Hayes overlooks certain aspects.
JosephA140 explains Tether has an undisclosed separate equity balance sheet whenever it issues US dollars. The disclosed numbers reflect their “matching” philosophy, merely demonstrating how their reserves are backed. The equity balance sheet includes equity investments, mining activities, corporate reserves, with potentially more BTC while the remainder is distributed as dividends to shareholders.
Since 2023, Tether holds approximately $120 billion in interest-bearing treasury securities with a yield of about 4%, generating roughly $10 billion liquid PnL, making it one of the world’s most efficient cash-producing enterprises at minimal cost (150 employees). This could elevate the company’s equity value to the $50-100 billion range.
Ted Pillows offers a different perspective, noting that despite hearing the same narratives for a decade, USDT remains at a consistent $1. He contends that operating with partial reserves does not equate to insecurity.
In the coming hours or by December 1st, Tether might address this topic alongside its new BDO report. Thus, the underlying worry appears unfounded, but knowing this beforehand can aid if fear spreads in the coming hours.