Tether Explains Why FTX And Alameda’s Collapse Won’t Affect USDT
Tether, the world’s biggest stablecoin issuer, has issued a statement assuring investors that USDT is unaffected by the collapse of crypto exchange FTX and its trading arm Alameda Research.
In a recent blog post, Tether states that as Alameda was a significant issuer of USDT, concern has arisen as to whether the collapse of the trading business poses a danger to Tether.
According to Tether, for Alameda to be an issuer of USDT, it must have given USD to Tether and received USDT in return. Now, Alameda’s only choice is to refund USDT to Tether in exchange for USD.
“Those reserves are still in Tether’s possession; they are not on Alameda’s balance sheet. The collateral backing Alameda’s USDT is not on Alameda’s balance sheet.
What can Alameda do with their USDT? Their only option is to redeem any USDT they have for USD via Tether’s redemption facility. This is the same as any other USDT holder around the world…
Tether has no outstanding loans of USDT, of Tether’s reserves, or any other funds whatsoever.
The main problem countless other companies are facing is that they recklessly lent Alameda various assets relying on extremely illiquid collateral. Since Alameda cannot repay those loans at this time, those companies have a hole in their balance sheet. This is not how USDT issuance works and is not behaviour Tether engaged in with Alameda in any way.”
Additionally, the Hong Kong-based business addressed the decision by numerous cryptocurrency exchanges to stop USDT transfers on the Solana (SOL) network. Tether asserts that this does not affect it.
“USDT issued on Solana is the same as USDT issued on any other chain. The token simply represents a claim to $1 of Tether’s reserves and collateral. Alameda’s heavy involvement in Solana doesn’t impact the underlying dynamics of how USDT functions and USDT issuance works whatsoever.
The move to suspend USDT deposits on these exchanges is likely just due to the heavy connections between FTX, Alameda, and Solana. If holders of USD? Want to redeem USDT with Tether, they still can. USDT on Solana is equivalent to USDT on any other Blockchain. It is not issued by Solana and is not reserved by Alameda or FTX.”
Tether launched a $1 billion USDT chain transfer from Solana to Ethereum on Friday.
In few minutes Tether will coordinate with a 3rd party to perform a chain swap, converting from Solana to Ethereum ERC20, for 1B USDt. The #tether total supply will not change during this process. Learn more about chain swaps ⬇️https://t.co/abfgnELSvi
A chain swap is a mechanism that transfers crypto assets across blockchains. A Tether-supported exchange may request a chain swap if it has a surplus of money on one blockchain but a deficit on another.
