Concerns are so old and serious that Tether is either not being clear about the reserves backing its USDT stablecoin or is facing imminent danger of being undercapitalized, that the crypto industry has developed its own two-word dismissive response: “Tether FUD.”
Through surging bull markets, the most brutal bear markets, the comings and goings of Sam Bankman-Fried, Alex Mashinsky and dozens of others, Tether’s USDT has continued to grow and function as designed – pegged to the US dollar and available for redemption at any time. With this, Tether has become one of the most profitable companies in the world, earning more than $10 billion in the first nine months of 2025, the same level as Wall Street giants Goldman Sachs and Morgan Stanley.
However, in the current bear market (and stop saying “zoom out”, it is a bear market), however, some people in traditional finance are sharpening their nails again.
During a sleep session the day before Americans celebrated Thanksgiving, S&P Global downgraded Tether’s rating on USDT from 4 to 5, the weakest level on its stablecoin stability scale (yes, the agency whose ratings shenanigans helped enable the global financial crisis has a stablecoin stability scale).
Behind the downgrade were the usual concerns about the ambiguity of Tether’s reporting along with some new developments: Bitcoin now compromises over 5% of reserves backing USDT – thus a continued decline in BTC’s price could lead to potential under-collateralization.
There is smoke there. Any fire?
“We accept your hatred with pride,” Tether CEO Paolo Ardoino said shortly after S&P’s move. Noting past failures of the rating agency model, Ardoino said, “The traditional finance hype machine becomes alarmed when a company tries to defy the gravitational force of a broken financial system… Tether instead created the first highly capitalized company in the financial industry with no toxic reserves.”
He concluded, “Tether is living proof that the traditional financial system is so broken that even emperors without clothes fear it.”
Possibly attempting to be helpful or perhaps just trying to provoke, well-known angel investor Jason Calacanis visited Ax over the weekend to offer his advice.
“Tether has a lot of work left to clean up, but they’re getting close,” Calacanis said. He urged Tether to 1) sell all of its Bitcoins, 2) own only US Treasuries, and 3) undergo not just one, but two audits by US companies.
Calacanis’ post received swift and furious reaction from Bitcoiners, with the general reaction being the absurdity of a stablecoin/Bitcoin company swapping relatively small holdings of BTC for government paper. Many drew attention to Calacanis’s panicked request for a bailout of all bank deposits because Silicon Valley Bank was going to fail in March 2023, partly due to the decline in the value of the US Treasuries it held.
Fair enough. But even if Tether keeps possession of its Bitcoins, what about traditional audits? On that topic, Calacanis was later joined by popular financial blogger Quoth the Raven, a longtime gold bug who started coming around to Bitcoin in 2024.
QTR wrote, “I’ve been in the game long enough to know that when a company refuses to submit to a full, independent audit, it’s not because things are out of date and they simply forgot to schedule one.” “The only reason I’ve found is that any organization digs its heels in and doesn’t submit to an audit when everyone else requests an audit. And that’s not a good reason.”
He added, ,The market has a long, bloody track record of gobbling up innocent people., ,[An audit is] This is the minimum any individual should demand from an entity issuing tens of billions of synthetic dollars that underpin entire markets.”