Peter Schiff Warns of ‘Tether Run,’ Says Bitcoin May Follow
Cryptocurrency and Bitcoin Critic Peter Schiff has taken to Twitter to share what he believes is ominous for the third largest cryptocurrency and largest stablecoin, Tether (USDT).
Schiff shared a CoinMarketCap chart showing the market cap of Tether, which indicated a drop.
Look at this chart? It is ominous. #Tether have never seen a collapse in market value. Given the turmoil in #crypto, one would expect an increase in Tether’s market cap as crypto sellers park their cash in Tether. This looks like a run on Tether. If so, run on #Bitcoin will soon follow. pic.twitter.com/F6vxVIEeEb
— Peter Schiff (@PeterSchiff) 18 November 2022
As a basis for the argument, he says that Tether has never seen a collapse in market value. Given the ongoing crisis in crypto, one would expect an increase in Tether’s market cap as crypto sellers pack their money into Tether. He added, “This looks like a run on Tether. If so, a run on Bitcoin will soon follow.”
Throughout 2022, the crypto economy has been in a bear market exacerbated by Terra, Celsius, Three Arrows and most recently the FTX collapse. This undoubtedly had a negative impact on investors, platforms and protocols.
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In the wake of the FTX collapse, there have been ongoing fears of contagion due to Alameda being the largest issuer of Tether. On November 10, USDT fell below the intended $1 peg; this also happened during May’s implosion of Terra and its UST stablecoin.
Tether says it has no exposure to FTX/Alameda
In a recent blog post, Tether denies having exposure to FTX or Alameda and likewise zero exposure to Genesis. A well-known fact was that Alameda was one of the larger issuers of USDT, and because of this, there has been ample discussion about whether the failure of Alameda represents a risk to Tether.
Why USD₮ issues insure no risk from FTX/Alameda
— Tether (@Tether_to) 18 November 2022
The stablecoin operator confirms that the failure of FTX/Alameda poses no risk to Tether as each USDT is fully secured by Tether’s reserves. This means that each USDT can be redeemed 1:1 with USD.
As an issuer, Alameda only sends Tether USD, while Tether issues USDT, meaning the reserves remain in Tether’s possession and not on Alameda’s balance sheet. The security backing Alameda’s USDT is not on Alameda’s balance sheet, it explained.
Tether also denied lending Alameda USDT or its funds, saying, “Tether has no outstanding loans of USDT, of Tether’s reserves, or any other funds whatsoever.”
