Tether Resumes Lending to Help Long-Term Clients
Stablecoin issuer Tether has restarted lending, according to its Q2 financial report. Tether, which issues the USDT stablecoin, has faced skepticism about its reserves in the past. The Wall Street Journal (WSJ) reported that Tether’s loans increased from $5.3 billion in Q1 2023 to $5.5 billion in Q2 2023. The company confirmed that it accommodated new loan requests from its long-term clients.
Tether spokesperson Alex Welch stated that during the second quarter, they received short-term loan requests from clients with longstanding relationships and decided to accommodate these requests.
Concerns Over Loan Repayment and Lack of Transparency
WSJ raised concerns about whether Tether could honor the sudden surge in redemption requests for USDT if borrowers fail to make timely loan repayments. However, Tether maintains that the loans are overcollateralized. The company does not disclose information about borrowers or accepted collateral assets.
This development has drawn criticism because Tether previously committed to eliminating loans by 2023, but now plans to do so by 2024. Tether and WSJ have had disagreements in the past, with Tether accusing WSJ of spreading false information.
Tether’s Response and Criticism
Tether has not yet released an official statement in response to WSJ’s report on its loans. However, an account on Twitter known for criticizing Tether and Bitfinex wrote a scathing comment about Tether’s lending practices.
In a separate development, Tether Group invested $420 million in Bitcoin miner Northern Data by acquiring a 20% stake and purchasing 10,000 Nvidia H100 GPUs.
Hot Take: Tether Faces Scrutiny over Resumed Lending
Tether’s decision to resume lending has raised concerns about its ability to honor redemption requests and lack of transparency regarding borrowers and collateral assets. This move contradicts the company’s previous commitment to eliminate loans by 2023. Tether and the Wall Street Journal have a history of disagreements, with Tether accusing WSJ of spreading false information. As Tether faces scrutiny, it remains to be seen how this will impact the stability and credibility of the stablecoin issuer in the future.
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