Concerns that Tether is not being truthful about the reserves backing its USDT stablecoin or faces an imminent threat of decapitalization are so old and creaky, that the crypto industry has developed its own dismissive two-word response: “Tether FUD.”
Through surging bull markets, the most brutal bear market, the comings and goings of charlatans like 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. Additionally, Tether has become one of the most profitable companies in the world, earning more than $10 billion during the first nine months of 2025, similar levels to Wall Street titans Goldman Sachs and Morgan Stanley.
However, the current bear market (and stop saying “zoom out,” it’s a bear market) has some in traditional finance sharpening their nails once again.
During the quiet session the day before Americans celebrated Thanksgiving, S&P Global cut Tether’s USDT rating from 4 to 5, the weakest level on its stablecoin stability scale (yes, the agency whose rating antics helped enable the global financial crisis has a stablecoin stability scale).
Behind the downgrade were the usual concerns about the opacity of Tether’s reporting combined with something somewhat new: bitcoin now pledges more than 5% of the reserves backing USDT; Therefore, continued declines in the price of BTC could lead to a possible lack of collateral.
There is smoke. Any fire?
“We wear their hate with pride,” Tether CEO Paolo Ardoino said shortly after S&P’s move. Noting the well-worn past failures of rating agency models, Ardoino said that “the traditional financial propaganda machine is increasingly concerned when any company attempts to defy the force of gravity of the broken financial system… Tether, in contrast, built the first overcapitalized company in the financial industry, without toxic reserves.”
Tether, he concluded, “is living proof that the traditional financial system is so broken that naked emperors fear it.”
Possibly trying to be helpful or perhaps just trying to provoke, well-known angel investor Jason Calacanis took to X over the weekend to offer his advice.
“Tether has a lot of cleaning left to do, but they are getting closer,” Calacanis said. He urged Tether to 1) sell all of its bitcoins, 2) own only US Treasuries, and 3) get not just one, but two audits by US companies.
Calacanis’ post sparked a swift and fierce response from bitcoiners, with the general reaction being the absurdity of a stablecoin/bitcoin company exchanging its relatively small BTC holdings for government paper. Several drew attention to Calacanis’s panicked request for a bailout of all bank deposits while Silicon Valley Bank was failing in March 2023, thanks in part to a drop in the value of the U.S. Treasury bonds it held.
That seems fine to me. But even if Tether keeps its bitcoins, what about a traditional audit? On that topic, Calacanis was later joined by popular financial blogger Quoth the Raven, a veteran gold fan who began approaching bitcoin in 2024.
“I’ve been in this game long enough to know that when a company refuses to perform a full, independent audit, it’s never because things are spotless and they simply forgot to schedule one,” QTR wrote. “I’ve only found one reason why a company refuses to undergo an audit when everyone asks for it. And it’s not a good reason.”
“Markets have a long and bloody history of devouring the naive,” he continued. “[An audit is] “The bare minimum anyone should demand from an entity that issues tens of billions of synthetic dollars that underpin entire markets.”
