Stablecoin giant Tether has strongly criticized Deutsche Bank over a recently published report suggesting potential risks for stablecoins, including Tether’s USDT token, likening it to a “peso moment” that could disrupt the crypto industry.
Deutsche Bank’s research report, released on May 7, highlighted concerns about stablecoins, citing the collapse of Terraform Lab’s TerraUSD (TUSD) in 2022, which led to a significant market loss. The report analyzed historical currency pegs and concluded that many pegged assets in the crypto space may experience turbulence and de-pegging events due to speculative sentiment and lack of transparency.
Tether vehemently criticized Deutsche Bank’s report, stating that it lacked clarity and substantial evidence, relying instead on vague assertions. Tether disputed the comparison to Terra, emphasizing that it is an algorithmic stablecoin and not relevant to the discussion on reserve-backed coins. Tether also questioned Deutsche Bank’s credibility, pointing to its own history of fines and penalties.
Tether has faced criticism regarding the transparency of its reserves, although it has released financial attestations indicating over $110 billion in fiat-denominated reserves. Critics argue that these attestations are not equivalent to a financial audit. Despite never conducting an official audit since its inception, Tether’s CEO Howard Lutnick believes the company has sufficient funds.
In 2021, Tether settled with the New York Attorney General, paying an $18.5 million fine and facing restrictions in the state for allegedly misrepresenting the extent of its fiat collateral backing. This legal history adds to the ongoing scrutiny surrounding Tether’s operations and transparency.
Tether’s clash with Deutsche Bank underscores the ongoing debate over stablecoin stability and transparency. While Tether refutes allegations and asserts its financial standing, concerns persist within the crypto community regarding the regulation and oversight of stablecoin issuers.
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