USDT Redemptions and Depeg

USDT sustained its deepest depeg below $1 this week for the longest time since FTX’s collapse. In previous depegging events, Tether’s market cap significantly decreased as redemptions typically rose. Despite August 7 marking the highest amount of USDT redeemed since November 2022, its circulating supply remains at similar levels, and USDT appears to be returning to its peg.

This recent instability comes off the back of Tether’s massive Q2 report last week, generating over $1 billion in operation profits. Its $72.5 billion exposure in U.S. T-bills (including direct ownership, overnight reverse repos, and look-through of money market funds) is greater than Australia, Mexico, and UAE. Tether also holds ~8.5% of its total assets in Bitcoin, precious metals, and other investments in energy production.

However, many Tether skeptics are questioning the resilience of their redemption mechanism. Some projects avoid it altogether. Others accuse them of predatory tactics. Regardless, Tether had an inarguably monster quarter, gaining an even larger edge in market share.

Yet Tether FUD still persists. Paolo Ardoino, Tether and Bitfinex’s CTO, poked fun at users questioning Tether’s redemption process, pointing to the over $325 million they redeemed August 7. However, three wallets helped facilitate a total of $246 million, sending funds to Bitfinex, which ultimately landed in Tether’s treasury:

• Potentially Cumberland, whose activity only sparks on depegging events, gathering $146 million USDT in deposits from Coinbase, Binance, and Kraken
• This Bitfinex address received $49 million USDT from Kraken