BitMEX Founder Warns That Tether’s Bitcoin Investment May Lead to USDT Collapse

Tether’s latest financial report shows it holds around $22.8 billion in Bitcoin and gold, a strategy that BitMEX founder Arthur Hayes believes could threaten the stability of USDT. While Tether's CEO Paolo Ardoino asserts the company has a substantial reserve buffer, Hayes warns that fluctuations in the value of these assets could lead to insolvency. The article also discusses the response from Tether's leadership and industry experts who challenge the insolvency claims.

Key Takeaways

Tether holds about $22.8 billion in Bitcoin and gold, raising concerns about USDT’s stability, according to Arthur Hayes.
CEO Paolo Ardoino defends Tether's financial health, stating they possess significant excess equity and retained earnings.
Industry analysts emphasize that Tether's disclosed assets do not fully represent its true corporate holdings.
The S&P Global downgrade of USDT has sparked backlash and could affect its market position against competitors.

BitMEX Founder Warns Tether's Bitcoin Bet Could Trigger USDT Collapse

Tether’s Financial Position and Concerns

In the most recent Q3 2025 attestation, Tether reported that it has around $22.8 billion invested in Bitcoin and gold. This diversification strategy has prompted warnings from Arthur Hayes, the founder of BitMEX, about possible risks to USDT's stability.

Tether CEO Paolo Ardoino has reassured stakeholders, claiming that Tether maintains “a multi-billion-dollar excess reserve buffer and an overall proprietary Group equity approaching $30 billion.” However, Hayes argues that this diversification into volatile assets could pose serious threats.

Hayes suggests that Tether is positioning itself for potential Federal Reserve rate cuts, which could adversely affect its Treasury income. He remarked, “The Tether folks are in the early innings of running a massive interest rate trade,” adding that a drop of about 30% in gold and Bitcoin values could render their equity insufficient, leading to a theoretical insolvency of USDT.

Financial analyst Paul Barron also pointed out that for each 25 basis points drop in Federal rates, Tether’s annual interest revenue could decrease by approximately $318 million, given its substantial Treasury exposure of $127 billion.

Tether CEO Responds to Insolvency Claims

Recently, Ardoino took to social media to counter Hayes’s claims of impending insolvency, providing detailed financial insights. He indicated that at the end of Q3 2025, Tether has about $7 billion in excess equity beyond its stablecoin reserves, including an additional $23 billion in retained earnings.

He emphasized that Tether Group's total assets near $215 billion while its stablecoin liabilities stand at about $184.5 billion, with gold and Bitcoin accounting for just 12.6% of reserves. Ardoino accused critics of misrepresenting Tether's financial situation, stating, “S&P made the same mistake of not considering the additional Group Equity nor the ~500M in monthly base profits generated by U.S Treasury yields alone.”

His assertions come in the wake of S&P Global lowering USDT’s peg-stability rating from 4 to 5, citing increased exposure to “high-risk” assets and persistent disclosure gaps.

Industry Experts Assess Tether’s Financial Viability

Joseph Ayoub, a former head of digital asset research at Citi, pointed out that the assets disclosed by Tether do not cover all corporate holdings. He noted that Tether maintains a separate balance sheet for equity, including mining operations and unreleased reserves.

With around $120 billion in interest-earning Treasuries yielding approximately 4% returns since 2023, Tether generates about $10 billion in liquid profits annually while operating with just 150 employees. According to Ayoub, banks typically function with much lower reserves of only 5-15%, showcasing Tether’s robust overcollateralized structure.

He concluded by stating, “Tether isn’t going insolvent; on the contrary, they own a money-making machine.”

Backlash Following S&P Downgrade

In response to S&P’s rating downgrade and ongoing scrutiny, Ardoino took a defiant stance. “We wear your loathing with pride,” he stated, asserting that Tether is “the first overcapitalized company in the financial industry, with no toxic reserves” and symbolizing a system increasingly acknowledged as flawed.

He further challenged traditional banks to disclose their reserve ratios, suggesting they consist mainly of “3 olives and a half chewed gum.”

Chris Pavlovski, CEO of Rumble, added that “The S&P only targets Tether because it is successfully competing against traditional financial institutions.”

These critiques follow a strong performance by USDT, which successfully maintained its peg during major market events, such as the 2018 crash, the 2022 Terra/Luna collapse, and the 2023 banking crisis.

However, the downgrade holds significant consequences. With a rating of “5” and MiCA regulations restricting USDT from EU exchanges, significant institutional investors may find themselves unable to legally hold USDT, potentially benefiting competitors like Circle’s USDC or PayPal’s PYUSD, which could divert liquidity from Tether, despite its impressive profitability record that outpaced even BlackRock last year.