Tether has never seen collapse in market cap
Cryptocurrency and bitcoin critics Peter Schiff took to Twitter to share what he sees as ominous for Tether (USDT), the third largest cryptocurrency and largest stablecoin.
Schiff shared a CoinMarketCap chart showing the market capitalization of Tether, which indicated a drop.
As a basis for his argument, he says that Tether has never seen a decline in market cap. Given the ongoing crisis in crypto, Tether’s market cap would be expected to rise as crypto sellers pack their cash into Tether. “It looks like a run on Tether. If so, there will soon be a run on bitcoin,” he added.
Throughout 2022, the crypto economy has been in the throes of a bear market exacerbated by the Terra, Celsius, Three Arrows and most recently the FTX collapse. This, no doubt, had a negative impact on investors, platforms and protocols.
In the wake of FTX’s collapse, fears of contagion remain due to Alameda being the largest issuer of Tether. On 10 November, USDT fell below its intended $1 peg; This also happened during the May explosion of Terra and its UST stablecoin.
Tether says it has no exposure to FTX/Alameda
In a recent blog post, Tether denies having exposure to FTX or Alameda and likewise zero exposure to Genesis. A well-known fact was that Alameda was one of the larger issuers of USDT, and due to this, there has been ample discussion of whether the failure of Alameda represents a risk to Tether.
The stablecoin operator confirms that a failure of FTX/Almeida poses no threat to Tether as each USDT is fully collateralized by Tether’s reserves. This means that each USDT can be redeemed 1:1 with USD.
As an issuer, Alameda only sends Tether USD, while Tether issues USDT, which means that the reserves remain in Tether’s possession and not on Alameda’s balance sheet. The collateral backing Alameda’s USDT is not on Alameda’s balance sheet, it explained.
Tether denied lending Alameda USDT or its funds, saying “Tether has no outstanding debt in USDT, Tether’s reserves or any other funds.”
