Hey Bloomberg, Here’s The Short of It!

As a whole, the crypto community has conceded that the FTX/Alameda debacle has set the industry back several years (if not decades). Less trust. More misinformation. Increased panic. The events that have unfolded this year are a disgrace to our industry. It goes against everything that Bitcoin’s technology sought to solve, and has caused the decentralized movement incalculable harm.

Our hope for any silver lining is that this will create new opportunities for discourse to take place between regulators, the public, and industry participants on how to move forward together. 

At such a critical juncture in time, rather than apologizing for overlooking reporting on allegations of criminal fraud concerning bad actors in the ecosystem, Bloomberg has taken upon itself to continue speculating and perpetuating unfounded rumors about Tether and citing the least credible sources they can find or to which they can get access. Let us be clear: this is not a Tether story.

Oftentimes, we can tell by the inbound inquiries we receive from Bloomberg reporters that their inexperienced editorial team falls victim to the ploys of short-sellers, either knowingly or unwittingly. Ironically, what’s come to light in the last week about FTX/Alameda and Tether’s relationship was that it wasn’t such a walk in the park. In fact, it appears even FTX may have tried to short Tether in times of desperation. 

So, here’s the real short of it: 

FTX was the main exchange offering a USD₮/USD future which accounted for $200 million. When FTX blew up, short sellers were left high and dry and in a financial hole. 

Since lenders like Genesis, BlockFi, Voyager, Celsius, and others have all defaulted, there are fewer opportunities in the market for short sellers to be in the position to borrow USD₮ to short sell into the market. Moreover, in the current markets, people actually prefer to keep their assets in USD₮ instead of taking the risk of lending USD₮ to a third-party willing to speculate against Tether.


Because lenders, which are USD₮ holders, actually perceive it to be highly risky to lend out to borrowers shorting USD₮ as the borrowers could go bankrupt and become unable to return the borrowed USD₮ to the lender and get back the collateral. 

Given Tether’s extremely liquid assets that include >80% in cash equivalents, any short seller attempting to borrow USD₮ to sell is knowingly putting LP funds and their respective investors in extreme danger with a highly speculative bet not supported by the required professional assessment of the business and what Tether represent for the market and for its users, as the acceptance of investors’ money and diligence standards would seem to require. 

While this may be news to some reporters who are just starting to cover the crypto industry, “shorting Tether” has been an almost decade-long organized campaign that has failed multiple times, in the process losing their clients' money. 

For a publication that touts financial news and real-time data as its core offering, it’s been the consistent practice of Bloomberg’s editorial team to ignore facts and historical data in their reporting. There are multiple sources for verifying and validating the performance of Tether every day – there have been for years. Choosing to rumor-monger and spread misinformation instead of citing publicly available data is the height of sloppiness. 

As part of the recent Bloomberg inquiry we received, its reporters took another leap of faith that the overlapping of banking relationships between FTX and Tether are, somehow, a cause for concern. This once again goes to show how green Bloomberg’s reporters are when it comes to their understanding of the crypto community. 

As Tether has stated time and time again its relationship with FTX was no different than any other exchange where Tether is offered. At the time of its insolvency and amid market volatility, Tether also confirmed that it had absolutely no credit towards FTX or Alameda Research. No special deal whatsoever was established between FTX/Alameda and Tether. Any allegation in this respect is categorically false and we remain absolutely sure that the multiple regulators working on the FTX case will confirm the same. It should be noted that Alameda was a prominent customer of all the stablecoins in the market.

Due to the snail-like pace of regulation, there are actually only a handful of qualified banking partners, custodians, KYC/AML providers, fiat on-off ramps and the like with which crypto companies can work. In fact, only few traditional players understand the crypto industry well enough to innovate and implement the required controls to develop their own business in a sound way instead of fighting something they do not understand because it might or is disrupting their business model. Finding out that many of the larger crypto companies use the same service providers or technology solutions shouldn’t be surprising. Apparently it is for Bloomberg. 

While we continue to welcome productive discourse around the future of stablecoins, regulatory frameworks that can bring transparency and accountability to crypto, and how we can set and enforce industry standards and best practices, we won’t stand mute while poor and uninformed reporting tries to set the narrative for our company or the community.  

Tether is the preeminent stablecoin and a pioneer for financial freedom. It has proved time and time again to be an irreplaceable asset, performing in ways traditional fiat currencies cannot. It has also gone above and beyond to prioritize the security of its assets which was demonstrated yet again in its
recent promise to reduce secured loans to zero.
Contrary to what some who are new to the desk may parrot, Tether’s reserves remain extremely liquid and we continue to see robust trading and bidding activity, even in this bear market. 

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