Is USDT insolvent? Arthur Hayes publicly questions Tether

Original Title: "Arthur Hayes Warns USDT May Be Insolvent: Why the Recent Surge in FUD?"

Author: Azuma,  Odaily

After a public spat with Monad, "Black Brother" Arthur Hayes has now unexpectedly started a quarrel with the king of stablecoins, Tether.

Arthur Hayes: USDT May Become "Insolvent"

The incident began on November 30, when Arthur Hayes posted on X about Tether's Q3 reserve attestation, which was made public at the end of October. He analyzed that Tether's reserves have too high a proportion of volatile assets such as gold and bitcoin, and that USDT could face insolvency risk if these assets decline in value.

"The Tether team is in the early stages of betting on a massive interest rate trade. Based on my understanding of their audit report, they believe the Federal Reserve will start cutting rates, which would significantly compress their interest income. In response, they began buying gold and bitcoin—in theory, when 'money prices fall' (rate cuts), these assets should rise. But if their gold + bitcoin positions fall by about 30%, Tether's equity will be wiped out, and USDT will theoretically become insolvent."

As shown in the image above, out of Tether's total reserve assets of $181.223 billion, $12.921 billion is in precious metals (7.1%) and $9.856 billion is in bitcoin (5.4%)—together, these two assets account for 12.5% of Tether's total reserves.

From Tether's reserve structure, it appears Arthur Hayes was objectively pointing out an extreme scenario Tether could face: if both gold and bitcoin reserves were to depreciate sharply at the same time, in theory, the value of Tether's reserve assets would not fully cover the issuance of USDT.

This point was also mentioned by the well-known rating agency S&P last week when it downgraded Tether and USDT's stability rating: "Tether's bitcoin reserves account for about 5.6% of USDT's total circulation (Odaily note: S&P compares to circulation, so the percentage is slightly higher than when compared to reserves), which exceeds USDT's own 3.9% over-collateralization rate. This means that other low-risk reserve assets (mainly government bonds) can no longer fully support USDT's value. If the value of BTC and other high-risk assets falls, it could weaken the coverage ability of USDT's reserves, leading to under-collateralization of USDT."

Is USDT Still Safe?

Arthur Hayes is actually describing the same scenario as S&P, but the likelihood of this scenario occurring is extremely low for two main reasons.

· First, it's hard to imagine the price of gold and bitcoin suddenly plummeting (here referring to a drop of at least several dozen percentage points in a very short time). Even if there is a prolonged downtrend, Tether would theoretically have time to sell and replenish its reserves with low-risk assets.

· Second, aside from reserve assets, Tether itself holds a huge amount of proprietary assets, which are sufficient to serve as a reserve buffer for USDT and maintain the operation of its money-printing business.

Joseph, former head of crypto research at Citigroup, also commented on the second point, stating that the assets Tether discloses are not equal to all the assets it holds—when Tether generates profits, they have a separate equity balance sheet, which is not disclosed together with the reserve status; Tether is highly profitable and its equity value is very high, so they can sell equity to fill any gaps on the balance sheet; Tether will not go bankrupt, on the contrary, they have a money-printing machine.

Tether's Response

Last night, as the related FUD spread, Tether CEO Paolo Ardoino responded in a post, stating that as of the end of Q3 2025, Tether has about $7 billion in excess equity (in addition to about $184.5 billion in stablecoin reserves), as well as an additional $23 billion in retained earnings, which together constitute Tether Group's proprietary equity.

The comparison of assets and liabilities is clear at a glance:

· Tether Group total assets: about $215 billion;

· Stablecoin liabilities: about $184.5 billion;

S&P made the same mistake, failing to account for these additional group equities, and also not considering the roughly $500 million in base profits generated each month solely from U.S. Treasury yields.

Interestingly, Paolo Ardoino added at the end: "Some influencers are either bad at math or have ulterior motives."

· Odaily note: Arthur Hayes and his family office Maelstrom are among the main investors in yield-bearing stablecoin Ethena (USDe), and have repeatedly predicted that USDe will become the largest stablecoin by issuance.

After Paolo Ardoino's direct response, Arthur Hayes replied again, though his tone was somewhat sarcastic: "You guys are making so much money, I'm so jealous. Do you have a specific dividend policy? Or a target over-collateralization rate based on asset type (discounted for volatility)? Obviously, when your liabilities are in dollars and your assets are U.S. Treasuries, there's no problem, but if your assets are illiquid private investments, in the event of an emergency, people might question your claim of over-collateralization."

After this exchange, neither side responded further. Arthur Hayes did post another update this morning, but it was just a call for a market rebound.

Judging from the photo Arthur Hayes posted, after consecutively arguing with Monad and Tether, he seems to be in a pretty good mood...