The Withdrawal Surge
Tether Holdings pulled a jaw-dropping $4.5 billion out of banks in the first quarter of 2023, and you thought your last bank withdrawal was significant! This strategic move led to what the company described as a “substantial reduction” in counterparty risk. Now that’s a smart hedge against a banking system that’s been wobbling like a penguin on ice.
Market Growth Amidst Bank Reductions
While this radical withdrawal was going on, Tether’s market capitalization made a leap from $66 billion to over $82 billion. In the same breath, Tether slashed its bank deposits by more than 90%, cutting down from $5.3 billion to a mere $481 million. Smartly, these remaining deposits are now diversified across various banks, likely eyeing competition closely in a post-bank-failure world.
Treasury Bills to the Rescue
Tether hasn’t just been sitting on its hands, though. They also beefed up their portfolio of U.S. Treasury bills, reaching over $53 billion or 64% of their reserves. Can I get a standing ovation for Tether’s shrewdness? When you couple this with other assets, it becomes clear that Tether’s USDT token is backed by a whopping 85% cash, cash equivalents, and quick-to-sell short-term deposits. This gives them a financial cushion thicker than your grandma’s favorite quilt.
Transparency: The New Trend
In a bold twist, Tether revealed for the first time its holdings of gold and Bitcoin (BTC), showcasing their foray into transparency. Tether is not just tooting its own horn either; during this impressive quarter, they claimed that profits outpaced giants like BlackRock and Netflix, giving us all a reason to question if they’ve got the real Midas touch.
Addressing Skepticism
Despite Tether’s bold claims, skepticism still lurks around like a cat at a mouse convention. John Reed Stark, a former SEC enforcement officer, dubbed Tether as “a Mammoth House of Cards” in an assertive Twitter exchange with Tether’s CTO Paolo Ardoino. The skepticism largely stems from Tether’s past misrepresentation mishaps and their still-expanding timeline for delivering a full audit. An attestation? Sure. But where’s that golden audit certificate they promised in 2021, huh?
