BitMEX Co-Founder Warns 30% Asset Drop Could Wipe Out Tether's Equity Buffer

Arthur Hayes, co-founder of BitMEX, warned that a 30% decline in Tether's Bitcoin and gold holdings could eliminate the stablecoin issuer's equity cushion, potentially leaving USDT technically insolvent during a severe market downturn. James Butterfill, head of research at CoinShares, disputed the concern, citing Tether's Q3 2025 attestation showing $181 billion in reserves against $174.45 billion in liabilities, resulting in a $6.8 billion surplus. The debate highlights ongoing scrutiny of Tether's reserve composition as it expands holdings in volatile assets while maintaining dominance with $185.5 billion in circulation.