CoinShares Research Director Dismisses Tether Bankruptcy Concerns
CoinShares research director James Butterfill has dismissed concerns surrounding Tether’s potential bankruptcy, following warnings from BitMEX founder Arthur Hayes. Hayes claimed that a 30% decline in stablecoin issuers’ Bitcoin and gold holdings could destroy his equity. However, Butterfill’s December 5 market update revealed that Tether has total reserves of over $181 billion against approximately $174.45 billion in liabilities, leaving a surplus of approximately $6.78 billion.
Tether CEO Counters Bankruptcy Claims with Financial Data
Tether CEO Paolo Ardoino quickly refuted Hayes’ assessment with detailed disclosures showing that Tether Group’s total assets reached approximately $215 billion. The executive explained that in addition to its stablecoin reserves, the company holds approximately $7 billion in excess equity, as well as another $23 billion in retained earnings as part of Tether Group’s equity. Bitcoin and gold make up just 12.6% of total reserves, with over 70% held in short-term US Treasury bonds.
Ardoino suggested that critics “either bad at math or have the incentive to push our competitors.” The company made more than $10 billion in profit this year from interest income on foreign reserves, making it one of the most efficient cash-generating companies in the world with just 150 employees.
Industry Veterans Challenge Hayes’ Fundamental Analysis
Joseph Ayoub, former head of digital asset research at Citi, noted that Hayes overlooked important differences between Tether’s disclosed reserves and the company’s overall holdings. The analyst explained that Tether maintains a separate equity balance sheet that includes mining operations and corporate reserves that are not publicly reported as part of the company. Ayoub concluded that “Tether is not going bankrupt, quite the opposite; they own a money printing machine,” pointing to the company’s roughly $120 billion in interest-bearing government bonds, which have yielded about 4% since 2023.
Former FT Alphaville editor Izabella Kaminska offered a deeper structural analysis, suggesting that Tether’s thick equity buffer and retained earnings model creates “a capital structure that looks a lot like banking model scholar Anat Admati: much thicker equity buffers, far less debt and minimal maturity mismatch.” Kaminska noted that if Tether’s depositor base proves willing to redeem directly for gold in times of stress, the metal will “become the natural last resort for funding its shadow/grey exposures and a tough substitute for the lenders of last resort that banks receive from central banks.”
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