So old and crusty are concerns that Tether is either not upfront about the reserves backing its USDT stablecoin, or faces an imminent threat of being undercapitalized, that the crypto industry has developed its own two-word dismissive response: “Tether FUD.”
Through soaring bull markets, the most brutal bear markets, the coming and going of charlatans like Sam Bankman-Fried, Alex Mashinsky and dozens of others, Tethers USDT has continued to grow and function as designed – pegged to the US dollar and available for redemption at any time. In parallel, Tether has become one of the world’s most profitable companies, earning more than $10 billion through the first nine months of 2025, matching the levels of Wall Street titans Goldman Sachs and Morgan Stanley.
However, the current bear market (and don’t say “zoom out”, it’s a bear market) has some in traditional finance sharpening their nails again.
During the sleepy session the day before Americans celebrated Thanksgiving, S&P Global lowered the rating on Tether’s USDT from 4 to 5, the weakest level on its stablecoin stability scale (yes, the agency whose ratings helped enable the global financial crisis has a stablecoin stability scale).
Behind the downgrade were usual concerns about the opacity of Tether’s reporting combined with something somewhat new: bitcoin now compromises more than 5% of the reserves backing USDT – thus continued declines in BTC’s price could lead to potential undersecurity.
There is smoke. Any fire?
“We wear your disgust with pride,” said Tether CEO Paolo Ardoino, shortly after the S&P move. Noting the well-trodden past failures of ratings agency models, Ardoino said, “the traditional financial propaganda machine gets worried when any company tries to defy the gravity of the broken financial system…Tether instead built the first over-capitalized company in the financial industry, with no toxic reserves.”
Tether, he concluded, “is living proof that the traditional financial system is so broken that it is being feared by emperors without clothes.”
Perhaps in an attempt to be helpful or maybe just to flare up, well-known angel investor Jason Calacanis took to X over the weekend to offer his advice.
“Tether has a lot of cleaning up to do, but they’re getting there,” Calacanis said. He called on Tether to 1) sell all its bitcoin, 2) only own US Treasuries and 3) get not just one, but two audits done by US firms.
The Calacanis post drew a swift and fiery response from bitcoiners, with the general reaction being the absurdity of a stablecoin/bitcoin company exchanging its relatively small holdings of BTC for government securities. Several drew attention to Calacanis’ frantic request for a bailout of all bank deposits when Silicon Valley Bank went bankrupt in March 2023, thanks in part to a plunge in the value of US Treasuries it held.
Fair enough. But even if Tether holds on to its bitcoin, what about a traditional audit? On that subject, Calacanis was later joined by popular financial blogger Quoth the Raven, a long-time gold bug who started making the rounds to 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 pristine and they just forgot to schedule one,” QTR wrote. “I’ve only found one reason for an outfit to dig in its heels and not submit to an audit when everyone requests one. And it’s not a good reason.”
“Markets have a long, bloody track record of chewing up the naive,” he continued. “[An audit is] the bare minimum anyone should demand from an entity that issues tens of billions of synthetic dollars that support entire markets.”
