Stablecoin issuer Tether has restarted lending, as its Q2 financial report shows an increase in loans compared to Q1.
Tether, which issues the USDT stablecoin, has faced skepticism about its reserves in the past. Now a new Wall Street Journal (WSJ) report revealed that Tether has again started lending its stablecoin.
Tether Resumes Lending to Help Long-Term Clients
According to the WSJ, Tether’s loans increased from $5.3 billion in Q1 2023 to $5.5 billion in Q2 2023. Its spokesperson confirmed that the company has accommodated new loan requests from its long-term clients.
Tether Holdings spokesperson Alex Welch said:
“During the second quarter of 2023, we received a few short-term loan requests from clients with whom we have cultivated longstanding relationships, and we made the decision to accommodate these requests,”
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WSJ has raised concerns about whether Tether could honor the sudden surge in redemption requests of USDT as there is uncertainty if the borrower makes timely repayment of loans. However, Tether has maintained its stance that the loans are overcollateralized.
Nonetheless, Tether does not disclose the information about the borrowers and what assets it accepted as collateral.
The development has invited criticism because Tether committed to bringing down its loans to zero by 2023. Now, Welch said that the company would eliminate loans by 2024.
Tether and WSJ have been in disagreements over several occasions previously. In December 2022, Tether hit back at WSJ when the latter questioned the longer-term liquidity of the former.
Also, in August 2022, Tether accused WSJ of propagating false information after WSJ reported that hedge funds were shorting Tether. The stablecoin issuer claims that WSJ wants to harm its reputation.
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Regarding WSJ’s latest report on Tether loans, the stablecoin issuer has yet to release an official statement yet.
An X (Twitter) account that has an agenda to expose Tether and its sister company Bitfinex wrote:
“Tether printing tethers out of thin air and calling them loans. Give tether shitcoins you print out of thin air as collateral.
“It worked great for Luna. When you can’t dump your shitcoins without crashing the market you can count on Tether bailout.”
In a separate development, Tether Group invested $420 million in 10,000 Nvidia H100 GPUs by acquiring a 20% stake in Bitcoin miner Northern Data.
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