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According to The Wall Street Journal (WSJ), in its latest quarterly financial report, Tether reported $5.5 billion in loans issued.
“Previously, Tether promised investorsreduce the volume of lending to the company’s partners in USDT stablecoins to zero by 2024 and work throughout 2023 to improve the quality of stable coin reserves. However, instead of a reduction, we see an increase in the debt of Tether customers from $5.35 billion to $5.5 billion,” the publication reports.
According to WSJ journalists, inconsistentTether's lending policy is a major concern among crypto investors, as it poses potential risks to the entire industry and increases the likelihood of destabilization of the digital asset market.
Tether's lending model, according toin which customers can borrow US dollars in exchange for USDT collateral, has been repeatedly criticized by financial regulators, especially due to the alleged opacity of the nature of the collateral and the identity of the borrowers.
Tether strongly disagreed withThe WSJ stated that the journalists' stance reflects a lack of detailed understanding of how stablecoins function, as well as common misconceptions about security measures.
"The banking industry is facingserious problems and found itself unable to keep pace with the developing global financial markets. The Wall Street Journal has ignored this countless times in an effort to tarnish the reputation of companies like Tether."
in the response statement of the USDT issuer.
The Tether administration called the WSJ publication“spreading tabloid-style disinformation” that panders to vested interests and caters to the “old guard” who do not embrace innovative change.
“In the second quarter of 2023 we receivedreceived several requests for short-term loans from clients with whom we had long-standing relationships and decided to accommodate these requests. We sought to protect them from a lack of liquidity or the sale of assets at unsuitable rates,” says Tether Holdings spokesman Alex Welch.
Previously Tether CTO PaoloPaolo Ardoino said stablecoin issuer USDT has improved the quality of its reserves and moved up three spots in the ranking of the largest holders of US Treasuries.