Key Takeaways
- The study noted that Tether’s alleged history of misleading claims on reserve holdings could potentially blow up levered trades.
- Tether hit out arguing that the report lacked clarity and relied on vague assertions
Tether has hit out at Deutsche Bank over its report claiming that most stablecoins, including Tether’s USDT, are likely to face ‘significant turbulence’ and fail owing to a lack of transparency and vulnerability to speculative sentiment.
“While some may survive, most will likely fail, particularly due to the lack of transparency in stablecoin operations and vulnerability to speculative sentiment”, reads the report which studied 334 currency pegs since 1800.
The research report found that 49% of fixed currencies failed to maintain their peg over the course of their median life span of approximately eight to ten years. The analysts at Deutsche Bank criticised Tether noting that its monopoly in the stablecoin market has been filled with speculation and lack of transparency.
The study which targeted Tether cited the stablecoin giants’ alleged history of misleading claims on reserve holdings to drive home the point that Tether could fail eventually as it could potentially magnify losses and blow up levered trades.
In 2021, the Commodity Futures Trading Commission (CFTC), charged Tether Holdings Limited with making untrue or misleading statements and omissions in relation to its claims. CFTC Claimed that from June 1, 2016, through Feb. 25, 2019, Tether misrepresented to customers that it maintained sufficient U.S. dollar reserves to back every Tether token in circulation with the equivalent amount of “corresponding fiat currency.”
The report expressed concern regarding Tether’s lack of transparency concerning its reserves and further went on to describe the stablecoin’s solvency status as “questionable.”In response to the claims made in the report, Tether has lashed out at Deutsche’s report, alleging that it “lacks clarity and substantial evidence” and relies on “vague assertions rather than rigorous analysis.”
“Questioning the credibility of any financial institution, especially one with Deutsche Bank’s track record, seems ironic. Deutsche Bank’s history of fines and penalties raises doubts about its own standing to critique others in the industry.”
In response to the analysts citing the 2022 collapse of the Terraform Lab’s algorithmic stablecoin TerraUSD to express speculation over the future of dollar-pegged stablecoins, Tether dubbed the comparison as misleading and irrelevant to the discussion on reserve-backed coins.
