Peter Brandt has expressed serious doubts about the stability of Tether, the world’s largest stablecoin. This concern echoes that of various financial watchdogs and analysts criticizing USDT and Tether’s management.

Brandt’s comments were in response to a post by Consumers’ Research, the nation’s oldest consumer protection organization. The nonprofit exposed several disturbing aspects of Tether’s operations. 

Among the revelations was the allegation that Tether has misled the public about the solid backing of its U.S. dollars, a claim that, per the report, lays the groundwork for skepticism and mistrust.

Brandt’s response states, “Interesting perspective. My contention for years is that Tether is headed eventually for disaster. I agree with this all. The USD will eventually meet its demise, but years after the same is experienced by Tether.”

Further causing mistrust is Tether’s stubborn refusal to submit to a rigorous, independent financial audit—an omission that speaks volumes. Consumers’ Research pointedly criticized this lack of transparency, bolstering its stance with a stark warning about the risks to potential Tether users.

The critique doesn’t end here. Tether’s creditworthiness, or lack thereof, was spotlighted last December when S&P issued a risk assessment of leading stablecoins, ranking Tether distressingly low with a score close to the bottom of their scale. The report highlighted multiple red flags, including Tether’s reserve management and non-compliance with regulatory frameworks.

Adding to Tether’s woes are disclosures from a probe by the New York Attorney General, which revealed that Tether’s reserves had significant exposure to commercial paper and securities from Chinese entities, some of which were major state-owned banks. Despite Tether’s assurance of no longer holding China-related assets, the absence of an independent audit leaves these claims unverified, thus feeding into the narrative of risk and uncertainty surrounding the stablecoin.

JPMorgan has shared similar concerns, noting an “increasing concentration in Tether” as a negative trend affecting the entire crypto industry. The report noted that Tether is particularly vulnerable due to its “lack of regulatory compliance and transparency.” 

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