Tether strikes back at S&P ratings! USDT earns 500 million a month, is the bankruptcy theory panic or truth?

S&P Global lowered the dollar peg rating of USDT to “weak,” the lowest score in its rating system, triggering panic in the crypto market. Tether CEO Paolo Ardoino countered that as of the end of the third quarter of 2025, Tether's total assets are approximately $215 billion. Ardoino emphasized that the monthly yield from U.S. Treasury bonds alone generates $500 million in basic profit, but S&P's rating ignores these key figures.

S&P Rating Sparks USDT Panic Sentiment

(Source: Tether)

Last Wednesday, S&P Global downgraded the dollar peg rating of USDT to “weak”, the lowest score in its rating system, which sparked fears, uncertainty, and doubt (FUD) among some analysts regarding the company that has become a key component of the crypto market infrastructure. Previously, S&P had downgraded the rating of USDT's ability to maintain its peg to the dollar and listed Tether's Bitcoin and gold reserves as concerns.

S&P's core concerns focus on Tether's asset composition. Traditionally, stablecoin issuers are expected to hold highly liquid, low-risk assets, such as short-term U.S. Treasury bills and cash. However, Tether has gradually increased its allocation to more volatile assets like Bitcoin and gold in recent years. S&P believes that the price volatility of these assets could threaten USDT's 1:1 peg to the dollar under extreme market conditions.

The recent downgrade has sparked widespread attention in the market, as USDT is the largest circulating stablecoin in the world, with a market value exceeding 180 billion USD, playing a key role in cryptocurrency trading, cross-border payments, and the DeFi ecosystem. Any questions regarding the stability of USDT could trigger a chain reaction, leading to a redemption wave and a market liquidity crisis. As a result, S&P's decision has immediately become a hot topic of discussion in both the crypto community and traditional finance.

Tether CEO strongly strikes back: S&P ignores key data

Tether CEO Paolo Ardoino objected to S&P Global's decision to downgrade the USDT rating, stating that the rating agency did not take into account all of Tether's assets and income. According to Ardoino, citing Tether's third-quarter attestation report, as of the end of the third quarter of 2025, the total assets of the Tether Group were approximately $215 billion, while its total liabilities for stablecoins were about $184.5 billion.

Ardoino posted on social media in response to the S&P rating, emphasizing: “As of the end of Q3 2025, Tether has approximately 7 billion USD in excess equity, along with about 184.5 billion USD in stablecoin reserves, and approximately 23 billion USD in retained earnings as part of the Tether Group's equity.”

He further pointed out: “S&P made the same mistake by not taking into account additional group stocks, nor considering the approximately $500 million in basic profits generated monthly from U.S. Treasury yields.” This figure is highly persuasive, indicating that Tether can earn approximately $6 billion in stable income annually just from U.S. Treasury interest.

Tether Financial Condition Key Data

Total Assets: 215 billion USD (including US Treasuries, cash, Bitcoin, gold, etc.)

Stablecoin liabilities: 184.5 billion USD (mainly the circulation of USDT)

Excess Equity: 7 billion USD (the portion of assets exceeding liabilities)

Retained Earnings: 23 billion USD (cumulative profit)

Monthly Profit: Approximately 500 million USD (only from US Treasury yield)

From these numbers, Tether's financial condition is much healthier than the S&P rating suggests. The $7 billion in excess equity means that even if USDT holders simultaneously request redemption, Tether still has enough buffer capital. The $23 billion in retained earnings shows that the company has been profitable for a long time and has retained its profits rather than distributing all its income. The $500 million in stable monthly profits provides the company with a continuous cash flow to cope with market fluctuations.

Ardoino's rebuttal centers on the fact that S&P's rating only focuses on Tether's asset composition while ignoring its overall financial health and profitability. He believes that rating agencies should adopt a more comprehensive perspective, taking into account the company's revenue, retained earnings, and excess capital, rather than just the liquidity and volatility of its assets.

Market analysts engage in heated debates

Legendary trader Arthur Hayes speculated that Tether is buying large amounts of gold and Bitcoin to offset the income gap caused by the decline in U.S. Treasury yields. Hayes stated that as the Federal Reserve significantly lowers interest rates, the value of gold and Bitcoin should rise, but he also warned that sharp pullbacks in these assets could pose problems for Tether.

“If the holdings of gold and Bitcoin fall by about 30%, their equity will be wiped out, and theoretically, USDT will go bankrupt,” Hayes wrote on social media. This argument assumes that Tether's Bitcoin and gold holdings constitute a significant portion of its total assets, and a price crash would directly erode its $7 billion surplus equity. Hayes' analysis has sparked a new round of concerns in the market regarding the stability of USDT.

However, Joseph Ayoub, former chief digital asset analyst at financial services giant Citigroup, stated that he spent “hundreds” of hours researching Tether as the company's analyst and refuted Hayes' analysis. Ayoub indicated that Tether's assets far exceed the amounts it has disclosed, and its business profits are extremely rich, generating billions of dollars in interest income with just 150 employees, and its collateral is more ample than that of traditional banks.

Ayoub's rebuttal is based on several key observations. First, Tether's business model is extremely streamlined, lacking the vast branches and employee costs of traditional banks, which results in profit margins far exceeding those of traditional financial institutions. Second, Tether still holds a high proportion of US Treasury bonds, which continue to generate stable income in an environment of rising interest rates. Third, even if the prices of Bitcoin and gold drop by 30%, considering Tether's excess equity and retained earnings, the company still has sufficient financial buffers.

FUD or reasonable concerns? How does the market interpret it?

S&P ratings, Hayes' warnings, and Ayoub's rebuttals together form the three main viewpoints in the current debate on the stability of USDT. S&P ratings represent the cautious perspective of traditional financial institutions, which tend to require stablecoins to hold high liquidity and low volatility assets. Hayes' analysis represents an extreme scenario stress test of Tether's asset allocation strategy. Meanwhile, Ayoub's rebuttal provides an optimistic perspective based on in-depth research.

From the market reaction, USDT has not experienced a massive decoupling or redemption wave due to the downgrade by S&P. This indicates that the market's actual confidence in Tether may be higher than what the S&P rating suggests. Cryptocurrency traders and DeFi users are more concerned with Tether's actual redemption ability and historical performance rather than the scores from traditional rating agencies.

Key Question: Does USDT Really Face Bankruptcy Risks?

From the data, the answer is negative. The excess equity of 7 billion USD plus 23 billion USD of retained earnings provides Tether with a financial buffer of about 30 billion USD. Even if Bitcoin and gold holdings drop by 30%, assuming these assets account for 10% of total assets (about 21.5 billion USD), the loss would be about 6.45 billion USD, and Tether would still have more than 23.5 billion USD in buffer capital. Therefore, the bankruptcy scenario described by Hayes requires more extreme assumptions to hold.