Arthur Hayes Says Tether Is '30% Crash' Away From Insolvency, But Is USDT Really at Risk?

Tether’s balance sheet is back in the spotlight, this time thanks to BitMEX founder Arthur Hayes, who says the stablecoin issuer may be positioning itself for a macro shift that comes with new risks.

In a recent post, Hayes argued that Tether’s latest attestation reveals a strategic bet on Federal Reserve rate cuts, alongside a growing allocation to gold and Bitcoin.

And as with anything involving Tether, the market wasted no time weighing in.

Hayes: Tether is making a big interest rate bet

According to Hayes, Tether’s most recent audit shows the company bracing for lower interest rates. Over the past two years, Tether has generated billions from US Treasury bills, yields that fall if the Fed cuts rates.

Hayes said the company appears to be preparing for that outcome by increasing exposure to assets that typically benefit from looser monetary conditions.

“The Tether folks are in the early innings of running a massive interest rate trade,” he wrote on X, adding that the firm is buying gold and Bitcoin “as the price of money falls.”

Hayes warned that this portfolio shift introduces volatility. A 30% drawdown in its gold and BTC holdings, he said, could theoretically erase Tether’s equity buffer and put USDT at risk of insolvency. He also predicted that large holders and exchanges may soon demand real-time insight into Tether’s financials.

His comments quickly circulated, and Hayes even joked that mainstream media outlets would seize on the narrative, particularly those eager to criticize Tether’s backers.

But not everyone agreed with his conclusions.

Several commenters pushed back, arguing that Tether’s asset purchases come from profits and not from backing capital for USDT.

One user noted that even with a recent decline in Bitcoin’s price, market confidence remains strong. “As long as they can process conversions in and out of fiat, all is well,” they wrote.

Industry figures defend Tether’s position

Former Citi crypto research head Joseph went further, offering a detailed counterpoint.

He said Tether’s public disclosures only reflect reserve assets, not the company’s full corporate balance sheet. According to him, Tether also holds equity investments, mining operations, additional reserves, and other business lines that aren’t reflected in the attestation snapshots.

Joseph argued that Tether is highly profitable and could sell equity if needed, describing it as “one of the most efficient cash-generating businesses in the world” due to its massive Treasury exposure. He estimated the firm’s equity could be worth tens of billions of dollars.

Tether CEO Paolo Ardoino also chimed in, pointing to the company’s Q3 2025 attestation. He said Tether has multibillion-dollar excess reserves and group equity nearing $30 billion, figures he claimed some analysts overlooked, leading to misunderstandings about the company’s solvency.

“Tether had ~7B in excess equity… plus ~23B in retained earnings,” Ardoino wrote. He also emphasized the stable $500 million in monthly income generated by Treasury yields alone.

Hayes on Monad

Notably, Tether isn’t the only project catching Hayes’ attention. Lately the BitMEX founder has also been vocal about the newly launched Layer 1 blockchain Monad, calling it a “high-FDV, low-float VC coin” that could leave retail investors exposed once insider tokens unlock.

Hayes argued that most new L1s won’t survive long term, with only a handful, Bitcoin, Ethereum, Solana and Zcash, having a path to endurance.

Monad Co-founder Keone Hon disagreed, saying the chain isn’t another VC-heavy launch and stressing its technical design and performance goals. Hon even offered to send Hayes some MON so he could test the network himself.

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