The main stablecoin has been criticized before but after the situation with TerraUSD, a tsunami of doubts and critical statements hit Tether, and rumours began to spread widely on the Internet.

Critics have been watching Tether for a long time, because it is the prominent stablecoin at the moment. But, after the collapse of TerraUSD, critics began to dig into Tether even more actively. Recently, there has been a lot of questions on the Internet about Tether and their main product — USDT. People are concerned about the USDT dollar backing.

At the end of May CEO Ki Young Ju addressed CTO Tether Paolo Ardoino on Twitter. He expressed general concern about the USDT dollar collateral and asked Paolo, “whether $75B worth of USDT is fully-backed or not.” To which Paolo replied that “Tether is fully backed.”

Tether on USDT backing refers to the report on the total amount of the company’s reserves as of March 31, 2022, 11:59 PM UTC. The report was prepared by a small company MHA Cayman, which is located in the Cayman Islands and provides audit services to investment funds in offshore jurisdictions.

According to the report, Tether has $82,424,821,101 in reserves, about half of which is based on U.S. treasury bills with a maturity of less than 120 days in the amount of $39,199,221,428. And the rest in commercial paper (short-term debt issued by corporations) and certificates of deposit (negotiable short-term deposits issued by financial institutions) with an average duration of items in this category being 44 days and the average rating being A-1 in the amount of $20,096,579,998.

Recently, against the background of the collapse of TerraUSD, information began to spread that Tether’s portfolio of commercial papers is 85% backed by Chinese or Asian commercial papers and is traded at a discount of 30%. It is this information that Tether recently denied in its blog, calling the statements rumours.

“Tether is aware of rumours being spread that its commercial paper portfolio is 85% backed by Chinese or Asian commercial papers and being traded at a 30% discount. These rumours are completely false and likely spread to induce further panic in order to generate additional profits from an already stressed market. Tether condemns such attempts which oftentimes see simple users take the biggest hit, while few coordinated funds increase their profits.”

Also, the company denied as false information that Tether lends to Three Arrows Capital Ltd. — a hedge fund established in 2012, founded by Su Zhu and Kyle Davies.

In addition to the rumours, Tether has faced a major DDOS attack. On the morning of June 18, the attackers demanded a ransom, and the number of requests increased to 8 million requests in five minutes (normally two thousand requests in the same time). The attack was successfully repelled not without the help of Cloudflare. Paolo Ardoino wrote about this on his Twitter.

A lot of people keep their funds in USDT. None of them wants to lose these assets. But, there are also people in the world who could benefit from the collapse of the USDT. The massive spread of rumours about Tether may be a signal that a planned attack is being prepared on the company from different fronts. Or maybe it’s all just coincidences. In any case, you should draw your own conclusions based on verified information. Well, we continue to observe.

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