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I just don't really buy the "they don't have enough cash to safely operate" opinion
There are two separate concepts here and it's important not to mix them.
1. Solvency
Surplus of assets over liabilities = equity. Solvency is the ability for the balance sheet to absorb asset losses without impairing depositors (i.e. house is not worth enough to pay off mortgage).2. Liquidity
How quickly can you turn assets into cash to pay depositors that want their money back. Problem comes if you have liabilities that are repayable on demand (like current accounts) but illiquid assets (like mortgages).Tether is more than fine on #2 (on their unaudited numbers) but I worry about #1. It's also worth noting that the business model has evolved hugely since it was originally set up as a 1:1 cash to stablecoin proposition.
In your chart they say they have 1.6% of their assets in digital tokens, = c. $1 bn. If those tokens go down in value by 20% they have no equity and their liabilities are worth more than their assets.
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NickCJ
@Stonehedge
I mean, its a fractional reserve. I get that. Its at risk of collapse. I just don't really buy the "they don't have enough cash to safely operate" opinion.