Tether Holdings Limited has clapped back at The Wall Street Journal over an article it claims spread “false information” about the stablecoin issuer’s profitability, solvency and accounting standards. In a Monday article, the Journal claimed that Tether could be deemed “technically insolvent” if its assets fell just 0.3%. That conclusion was drawn from Tether’s reported assets and liabilities as of Thursday. One week prior, Tether published its latest attestation showing $67.7 billion of reported assets against $67.5 billion of liabilities.

[Bourgi, S. Tether responds to Wall Street Journal ‘disinformation’. (Accessed August 31, 2022)].

"The newspaper starts its investigation with obvious truths, ‘Market observers have long questioned whether the firm’s reserves are sufficient and have been demanding audited information.’ Nobody can dispute that. The company has been promising an audit since at least 2017. An audit is ‘likely months’ away, said Paolo Ardoino, chief technology officer of Tether Holdings Ltd. However, the company puts out a reserve report every now and then. Does it not? Well, the WSJ differentiates what we get from what is needed. 'Instead of a full audit, Tether, like other leading stablecoins, publishes an ‘attestation’ showing a snapshot of its reserves and liabilities, signed off by its accounting firm.” [Próspero, E. The Wall Street Journal Attacks, Tether Responds. Who Won?. (Accessed August 31, 2022)].

The WSJ Article quotes the former head of internet enforcement at the Securities and Exchange Commission, John Reed Stark, who said: “Tether needs an audit that’s akin to a corporate colonoscopy, that tells investors everything about what’s in their reserves” [Eaglesham, J. and Huang, V. Tether Says Audit Is Still Months Away as Crypto Market Falters. (Accessed August 31, 2022).

The WSJ Article further questions the recent changes in Tether’s institutional partners, more specifically, "[i]n July, Tether switched accountants, from a small Cayman Islands-based firm to BDO Italia, the Italian member of the global BDO network. That firm, though, is a separate legal entity from BDO in the U.S.

In this regard, Tether’s response is:

The article seeks to discredit the work that Tether has put into transparent and honest communication to the public. BDO, a very reputable and independent Top 5 audit firm, is not a “Tether accounting firm”, as erroneously written by the WSJ. BDO will continue to have unrestricted access to any relevant information to perform their work and Tether will continue to share its attestations, despite continuous attempts by the media to disparage its reputation and that of top-ranking firms like BDO that are working with digital asset companies.

[Tether. Tether Responds to Disinformation in WSJ Article. (Accessed August 31, 2022)].

In clarifying and responding to the various points raised in the WSJ Article, Tether highlighted the following six points (which are set forth at length):

• The assumption that 3 months’ worth of T-Bills is an unsafe asset, completely contradicts the longstanding fact that US Treasuries have been the premier safe asset worldwide for the past several decades.
• To assume that our business is unprofitable is false. According to our Consolidated Reserves Report, Tether has never disclosed any equity despite being profitable for several years. This same report has been deemed appropriate by important stakeholders and it has been accepted by the NYAG. Perhaps the WSJ has confused Tether with some of its competitors.
• To attack Tether’s reserves, when this margin also applies to other stablecoins on the market, further highlights an agenda by the publication to single out Tether and hurt its reputation.
• Tether’s disclosures have been the most honest and transparent in the market - everyone knows that we have not had an audit and they know we are working towards one. Rivals have allowed mainstream consumers to believe they are “safer” because they have been “audited,” but no such audit has occurred. Except perhaps in the context of a capital raise/restructuring being the company that has been audited unprofitable. Other false truths that are out there about the category include being more regulated solely because the Digital token is issued by an entity in the United States and does business with US companies, which could be perceived as a country risk in case the US government imposes restrictions.
• Finally, any reference to a margin of failure existing in Tether’s business model, assumes that the WSJ subscribes to the false short-seller narrative which suggests that short-selling Tether is even remotely possible. Alleged hedge funds that have been trying to create pressure “in the billions” to “harm” Tether liquidity represent a fundamental misunderstanding of both the cryptocurrency market and Tether.
• Most importantly, Tether stands by the fact that it was able to easily redeem over USD 16B of the issued token in recent months, keeping essentially the asset allocation in line with the previous months while significantly reducing its exposure to commercial papers.

[Id].

Tether’s response closes with the following statement: “Tether is committed to maintaining its role as the leading stablecoin in the market and we will continue to demonstrate our transparency, regardless of naysayers” [Id].

“Is this attack on Tether part of The Wall Street Journal’s general campaign against bitcoin and crypto? Or did the newspaper feel the impulse to get in on the Tether FUD action a few months too late? Did Tether competitors pay for this article or is it an organic piece of journalism? The WSJ article […] elicits several questions. Tether’s answer even more so” [Próspero, supra].