In a statement released on Wednesday, Tether, the company behind the USDT stablecoin, scoffed at the notion that the currency is backed by subprime debt.
There are no Chinese or Asian business papers utilized to underpin the USDT, according to a press statement from the corporation.
In addition, Celsius and Three Arrows Capital, both of which have been hit hard by decreasing crypto prices, were not included.
BitFinex-owned crypto exchange Tether claims that the allegations are being spread in order to benefit from a market that is already under pressure. However, the company made no mention of how or where these reports were spreading.
At a time when both Bitcoin and Ethereum have witnessed large losses in value, Tether’s remarks are particularly poignant. The value of the USDT has likewise plummeted below $1.
According to Tether, the stablecoin’s reserves are backed by U.S. Treasuries at a ratio of 47 percent to commercial paper at a ratio of 25 percent.
Considering that commercial debt is among the most volatile forms of conventional debt, the business has been steadily reducing its holdings of the instrument. 28 percent of Tether’s cash equivalents are made up of commercial debt, according to data on the company’s website.
From $11 billion at the end of March, the company said it will cut its commercial debt to $8.4 billion by the end of June. That number will finally be zeroed out.
Coinciding with a crypto-crash in May, USDT momentarily depreciated to its lowest level since 2017. After TerraUSD, previously the fourth-largest stablecoin, dropped to zero in less than a week, suspicions about stablecoins have grown.
USDT, on the other hand, is distinct from UST in that it is completely collateralized. UST’s depegging was due to the fact that it was backed by risky assets.
Tether, the company behind USDT, claims that the stablecoin is holding up well in the face of increased redemptions. Tether’s chief technical officer, Paolo Ardoino, said that the business had handled $7 billion in redemptions in only 48 hours during the May crisis.
Currently, USDT is trading at $0.9983 and has a market capitalization of $70.8 billion.