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After huge losses following the collapse of cryptocurrency exchange FTX, users lost confidence in lending, custody and cryptocurrency service providers.
As is the case with FTX, fears of losing assets after the turmoil haunt people.
Some experts believe it will take some time for fear, uncertainty and suspicion (FUD) to fade from people’s minds.
This is an important time for cryptocurrency companies as many of them are experiencing the FUD impact of the FTX collapse.
Many are struggling to regain customer trust. In this light, Tether has pledged to stop lending funds from its reserves.
The largest stablecoin issuer has argued that it is important to restore consumer confidence in the cryptocurrency market.
Tether Debunks Rumors That Secured Loans Are Dangerous
On December 13th press releaseTether responded to media FUD on secured loans.
Contrary to popular rumors, Tether has assured that its secured loans are fully collateralized and backed by “extremely liquid assets.”
It also announced plans to stop lending services by the end of 2023.
The company says the so-called secured loans work similarly to secured loans from commercial banks.
However, in contrast to bank loans that use fractional reserves, Tether’s loans are fully backed, he said.
Tether’s statement may be in response to this The Wall Street Journal claims Earlier this month, it claimed the company’s secured loans were risky.
The magazine argued that in the event of a crisis, Tether could lack the liquidity needed to pay off loans.
This wasn’t the first time Tether had been attacked by The Wall Street Journal.
Tether Faces Repeated FUD Attacks From The Wall Street Journal
The media outlet claimed in August that Tether could technically go bankrupt if its assets fell just 0.3%. However, Tether refuted this statement at the time.
The stablecoin issuer said it has hired top five accounting firms to increase the legitimacy and transparency of financial proofs.
Eighty-two percent of its reserves were held as “extremely liquid assets,” according to Tether’s certification.
In October, Tether removed commercial paper from its reserves in response to further media FUD and issued US Treasury Bills instead.
In its latest statement, Tether said it would cut its lending services without loss and focus on promoting transparency and accountability.
Tether is determined to prove the media wrong through resilience, transparency and accountability.
Tether remains the leading stablecoin issuer. According to CoinGeko data, Tether has a circulation of about 66 billion USDT, with a market share of 46.6%.
The Tether stablecoin is trading at $1, down -0.1% in 24 hours and currently ranks third in terms of market capitalization.
Meanwhile, the broader cryptocurrency market appears to be seeing price increases. got a bitcoin It is trading at $17,817.13, up 2.32% over the last 12 hours. Ethereum is trading at $1.323.40, up 3.28% over the past 24 hours.