Tether’s top executive, Paolo Ardoino, has made a statement in response to S&P Global Ratings after the agency downgraded USDT on its stablecoin stability scale.
He accused the firm of being part of a broken traditional financial system, and claimed the agency does not understand its business model.
Tether CEO’s Response
The S&P Global Ratings recently assigned Tether’s USDT a score of “5 (weak)” on its stablecoin stability scale, the lowest rating on the five-point scale.
The firm said the downgrade was due to “persistent gaps in disclosure” and a growing share of “high-risk assets” in Tether’s reserves, which include Bitcoin, gold, secured loans, and corporate bonds. It also argued that USDT’s transparency and governance practices were not as strong as those of its competitors, like USDC.
Ardoino has since fired back at the decision on X, saying Tether would “wear your loathing with pride.” He went on to criticize classical grading models used in conventional finance, arguing that they had historically guided investors toward companies that later collapsed, which caused regulators to question the independence and objectivity of major rating agencies.
He further suggested that the low score was because the traditional finance sector is not able to handle it when a company tries to distance itself from the broken financial system. The CEO also defended Tether, maintaining that it is the first overcapitalized company in the industry, which also operates without toxic reserves while remaining profitable.
“Tether is living proof that the traditional financial system is so broken that it’s becoming feared by the emperors with no clothes,” he added.
Transparency and High-Risk Asset Concerns
In its stablecoin stability report, S&P explained that Bitcoin (BTC) now makes up about 5.6% of USDT in circulation, surpassing its 3.9% overcollateralization buffer. The agency warned that a drop in the value of BTC or other high-risk assets, including corporate bonds, precious metals, or secured loans, could leave USDT undersecured, and reductions in reserve coverage could further increase this risk.
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Additionally, a large portion of USDT’s reserves is held in short-term U.S. Treasury bills and other dollar-denominated cash equivalents. Despite this, S&P said the stablecoin issuer continues to provide limited transparency on the financial stability of its custodians, counterparties, and banking partners, a factor contributing to the low rating.
The report also suggested that the rating could improve if Tether reduces its exposure to high-risk assets and provides clearer information about its reserves and partners. USDT remains the largest stablecoin, with a market capitalization of $184 billion.