Total supply of Tether (USDT) drops by 7 billion USD in a week because of user withdrawal – Community calls for “audit”

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2022-05-17 20:24:57

The voices calling for Tether to publish an audit of collateral assets for USDT have resurfaced after the stablecoin was recently de-peg.

Total supply of Tether (USDT) drops by 7 billion USD in a week because of user withdrawal – Community calls for “audit”

Wave of de-peg stablecoins spreads from UST

As reported by CHK, the de-peg event of stablecoin UST (losing the value of 1 USD) in the past week has caused a knock-on effect throughout the cryptocurrency market in general and the stablecoin array in particular.

Immediately after that, algorithmic stablecoin projects (crypto-backed) similar to UST such as Kava’s USDX, Waves’ USDN or Deus Finance’s DEI lost peg in turn, dropping deeply from the $1 threshold.

Not stopping there, even the “traditional” stablecoin (denominated in USD) with the largest market capitalization, Tether (USDT), was also sold off on May 12, sometimes falling to $0.95. Although USDT then quickly recovered to the area of ​​0.98 – 0.99 USD, many people were afraid of the risk even after holding stablecoins.

Price movement of USDT, USDC, BUSD and DAI in the last 1 week. Source: Glassnode

According to CHK, the reason USDT is de-peg, not rivals USD Coin (USDC) or Binance (BUSD) is because this stablecoin has long been questioned about the issue of “security assets”. .

Quote most recent report published by Tether in December 2021, the company is only holding 4 billion USD in cash to “back” 78 billion USDT issued to the market, while the rest is US Treasury bonds (34.5 billion USD), corporate bonds $24.1 billion) and the rest are other high-risk investments, including crypto. Newspaper Bloomberg In October 2021, they published an investigative report, claiming they were unable to verify the origin of Tether’s money and warning it was a “slow-exploding bomb” for the crypto industry.

Tether Asset Report December 2021

Compared to USDC as of April 2022, the company Circle issued 50.6 billion USDC, backed by 11.6 billion USD in cash (22.9%) and 39 billion USD in US Treasuries with maturities of 3 months or less (77.1 USD) %). Meanwhile, BUSD is 1:1 guarantee in USD for 17.4 billion BUSD released by them as of the end of March.

Because of the belief that USDC and BUSD are safer than USDT, crypto investors on May 12th massively fled from USDT to USDC and BUSD, causing USDT to depreciate severely while the exchange rate against USDC and BUSD increased. leap.

As revealed by Tether, on May 12 alone, had 2 billion USDT converted back to USD by users, the company commits to still have enough liquidity to meet the needs of investors who no longer want to hold this stablecoin and the risk of project insolvency is non-existent.

Since then, Tether’s capitalization has declined from more than $83.2 billion to $75.7 billion without the company’s announcement of a supply adjustment, meaning this is the amount that has been lost. converted to USD by USDT investors in the last 1 week.

Changes in total supply of USDT from November 2021 to present. Source: Glassnode

This information has also been confirmed by Tether.

The community calls for Tether to be “transparent”

Although USDT has since returned to a price close to 1 USD and restored stability, the crypto community still wants more reassurance from the largest stablecoin in the crypto market, as shown by an audit report. Comprehensive audit conducted by a reputable 3rd party.

Mr. Ki Young Ju, CEO of information analysis firm CryptoQuant from Korea, directly raised the above question to Mr. Paolo Ardoino, Chief Technology Officer and spokesperson of Tether.

“Dear Sir Paolo Ardoino,

With all due respect, when will the USDT audit report be out?

We have all been scared by the recent collapse of the UST and the market is in need of an ETF based on Bitcoin spot.

Both regulators, financial institutions and crypto investors are waiting for your answer on whether 75 billion USDT is fully securitized or not?

“The SEC keeps rejecting the Bitcoin spot ETF because of Tether.

I don’t mean to post fud or anything, sir.”

In response, Mr. Paolo Ardoino wrote:

“We converted $7 billion within 48 hours with no problems. How many organizations can do that? We can still exchange more if the market needs it, there is still liquidity to meet even large transactions and guarantee a 1:1 ratio.

Yes, Tether is fully securitized.”

But it seems that the answer of the Tether CTO is not enough for Ki Young Ju. He continued:

“I have no doubt that Tether has a stronger and more abundant reserve than other stablecoins.

And I also think that the issue of full margin or not is not too big because the cash reserve ratio of commercial banks is only 10%.

But it is important that the financial authorities need a validated number to allow the sector to move forward.”

“So answer my original question.

When will the Tether audit report come out?

As of the time of writing this article, Mr. Paolo Ardoino has not yet responded to this question.

However, in other comments on Twitter, the Tether CTO stated:

“By the way, we are still in the process of composing an audit report (which was announced long ago) and hope the regulator will push more auditors to become more crypto-friendly. .”

“Nothing will happen to USDT.

We can convert if necessary. Tether is designed to be a liquid reserve asset.”

Last week, Paolo Ardoino revealed that Tether had cut its corporate bond holdings in half, but did not disclose a specific number.

CHK synthesis

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