Tether published a blog post that indicates the company has adjusted its reserve assets.
That marks a significant decrease in commercial paper, from $24 billion to $20 billion in the first quarter of 2022. An additional 20% reduction is to show up on the company's Q2 report.
CTO Paolo Ardoino commented:
"Tether has maintained its stability through multiple black swan events and highly volatile market conditions and, even in its darkest days, Tether has never once failed to honor a redemption request from any of its verified customers. This latest attestation further highlights that Tether is fully backed and that the composition of its reserves is strong, conservative and liquid."
Tether has been consistently increasing its cash and cash equivalent reserves after Evergrande, a Chinese real estate developer, almost missed a US Treasury Bond payment in September 2021. Back then, Tether's commercial paper reserves were still significantly higher, with Evergrande featuring among them. That prompted market fears that Tether might not be able to honor its commitments.
However, Tether did include a disclaimer in its report, stressing that asset valuations reflect "normal trading conditions:"
"The valuation of the assets of the Group have been based upon normal trading conditions and do not reflect an unexpected large-scale sale of assets, or the case of any key custodians or counterparties defaulting or experiencing substantial illiquidity, which may result in materially different or delayed realisable values. No provision for expected credit losses was identified by management at the financial reporting date."
The report was accompanied by Tether's CTO Paolo Ardoino commeting on the failure of UST. During a podcast this week, Ardoino called LUNA "poorly designed" and a "castle of cards" that was going to collapse, even if Do Kwon didn't have bad intentions.