Concerns are so old and so festering that Tether is not being upfront about the reserves backing its USDT stablecoin or facing imminent threat of being undercapitalized, that the crypto industry has developed its own dismissive two-word response: “Tether FUD.”
Thanks to soaring bull markets, the most brutal of bear markets, the comings and goings of charlatans like Sam Bankman-Fried, Alex Mashinsky and dozens of others, Tether’s USDT has continued to grow and perform as intended – pegged to the US dollar and available for redemption at any time. At the same time, Tether has become one of the most profitable companies in the world, earning more than $10 billion in the first nine months of 2025, levels similar to those of Wall Street titans Goldman Sachs and Morgan Stanley.
The current bear market (and stop saying “zoom in,” it’s a bear market), however, has some in traditional finance sharpening their nails once again.
During the sleepy session the day before Americans celebrated Thanksgiving, S&P Global lowered Tether’s USDT rating from 4 to 5, the lowest level on its stablecoin stability scale (yes, the agency whose ratings shenanigans helped enable the global financial crisis has a stablecoin stability scale).
Behind this downgrade are the usual concerns about the opacity of Tether’s reporting, combined with something somewhat new: bitcoin is now compromising more than 5% of the reserves backing USDT — so a continued decline in the price of BTC could lead to potential undercollateralization.
There is smoke. A fire?
“We carry your hatred with pride,” Tether CEO Paolo Ardoino said shortly after S&P’s move. Noting previous failures of rating agency models, Ardoino said: “The traditional financial propaganda machine becomes increasingly concerned when a company attempts to defy the force of gravity of a broken financial system…Tether has instead built the financial industry’s first overcapitalized company, free of toxic reserves.”
Tether, he concluded, “is living proof that the traditional financial system is so broken that it is beginning to be feared by naked emperors.”
Perhaps in an attempt to be helpful or perhaps just to heat things up, famed angel investor Jason Calacanis took to X this weekend to offer his advice.
“Tether still has a lot to clean up, but they are getting closer,” Calacanis said. He urged Tether to 1) sell all of its bitcoin, 2) own only U.S. Treasuries, and 3) get not one, but two audits from U.S. companies.
Calacanis’ post sparked a quick and fiery response from bitcoiners, with the general reaction being the absurdity of a stablecoin/bitcoin company swapping its relatively small holdings of BTC for government securities. Many drew attention to Calacanis’ panicked demand for a bailout of all bank deposits as Silicon Valley Bank failed in March 2023, in part due to the fall in the value of the U.S. Treasuries it held.
Fair enough. But even if Tether keeps its bitcoin, what about a traditional audit? On this, Calacanis was later joined by popular financial blogger Quoth the Raven, a long-time gold enthusiast who began showing interest in Bitcoin in 2024.
“I’ve been in this game long enough to know that when a company refuses to provide a full, independent audit, it’s never because things are spotless and they simply forgot to schedule one,” QTR wrote. “I’ve only found one reason why a company is stubborn and doesn’t submit to an audit when everyone is asking for it. And it’s not a good reason.”
“Markets have a long and bloody history of bashing the naive,” he continued. “[An audit is] This is the bare minimum that should be required of an entity issuing tens of billions of synthetic dollars that support entire markets. »
