Arthur Hayes Questions Tether's Solvency: Leading Crypto Analyst Asks Grok To Compare Stablecoin Issuer With Traditional Banks And Here's What It Said

Well-known cryptocurrency analyst Willy Woo asked an AI agent to provide a comparative analysis of Tether's (CRYPTO: USDT) asset backing versus a traditional bank, following concerns about the stablecoin issuer’s liquidity profile.

Questions Over Tether’s Solvency Arise

The conversation was sparked by BitMex co-founder Arthur Hayes' initial X post, where he analyzed Tether's third-quarter reserves attestation and called for a real-time view of its balance sheet to assess solvency risks.

Hayes said that a 30% decline in Tether’s gold and Bitcoin (CRYPTO: BTC) positions would wipe out its equity and theoretically render USDT, the world’s biggest stablecoin by market capitalization, insolvent.

Tether's latest attestation report shows $181 billion in reserves backing its tokens, with roughly $139 billion worth of cash and cash equivalents and $174 billion in liabilities.

See Also: South Korea’s Stablecoin War Heats Up As Tech Giants Race To Challenge Dollar Dominance

Greg Osuri, founder of decentralized compute marketplace Akash Network, called Tether a “ticking time bomb,” adding that he would exit USDT to be safe.

What Is Grok’s Verdict?

Woo, who has previously backed Tether, stepped in, asking Grok to compare Tether’s liquidity profile with traditional banks.

Grok replied, saying that Tether's reserves, with nearly 75-80% liquid cash vs. a bank's 10-20% liquid assets, with the rest in illiquid loans, give it a liquidity edge. However, it added that banks are more resilient due to the government’s financial backstop, while Tether's stability hinges on market conditions.

“Banks are more resilient overall, ” Grok AI said.

Controversy Around S&P Downgrade

The arguments come after S&P downgraded Tether's ability to maintain its peg with the dollar from "Constrained" to the lowest tier, "Weak," citing a higher allocation to "high-risk" reserve assets, including Bitcoin and gold.

CEO Paolo Ardoino fired back, questioning the methodologies adopted by traditional rating agencies. He called it a "traditional finance propaganda” to target decentralized projects like Tether.

Read Next: 

• Tether’s Gold Royalty Shift – And What It Means For Your Portfolio

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