08-03-2026 
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Tether lost billions of dollars in the second quarter of 2026, but the world’s largest stablecoin issuer chose to rather clumsily move its financial goalposts rather than admit this setback.
- Profits, losses, lies, damned lies, and statistics
- Gold, BTC assets, and controversial ‘secured loans’ all decline
- Tether looks to tokenize Kenya, but inept hitmen keep getting in the way
On July 31, Tether issued its financial report card for the three months ending June 30, during which the company claimed a $1.5 billion ‘net operating profit.’ That would be a significant improvement over the $1.04 billion ‘profit’ Tether reported in its Q1 report, but a closer look at the Q2 numbers shows this ‘apples to oranges’ switcheroo is masking a sobering reality.
The Q2 report shows Tether’s reserve assets worth $187.75 billion, a $4.1 billion surplus to the value of issued USDT tokens as of June 30. But the ‘change in net equity’ figure shows a loss of nearly $3.2 billion in Q2, and there was a $943 million ‘net capital movement’ into Tether’s reserves to boost that surplus to $4.1 billion.
Moreover, Tether’s ‘equity’ position stood at $8.2 billion at the end of Q1, twice the $4.1 billion reported at the end of Q2. So, regardless of Tether’s shifting definition of what constitutes a profit, some $4.1 billion had evaporated from Tether’s coffers as of June 30.
Tether’s new ‘net operating profit’ metric is intended to present a more favorable outcome by eliminating unrealized gains/losses on some of Tether’s more volatile reserve assets, the kind of assets that won’t be allowed under America’s soon-to-be-implemented GENIUS Act requirements.
Tether CEO Paolo Ardoino doubled down on the company’s new profit prestidigitation, tweeting about the “great second quarter” figures having been achieved “despite highly volatile global markets.” Ardoino celebrated USDT’s user base hitting “the new all-time-high of 650M+, with the widest surge across all emerging markets.” These figures allegedly prove that Tether has “the liquidity, discipline and scale to remain resilient across market cycles.”
As for what would motivate Tether to employ such a transparent fiscal kludge, recall that the company unsuccessfully tried to raise $20 billion last year but later lowered that figure to $5 billion, reportedly due to investors demanding greater transparency regarding Tether’s true financial picture.
Those demands were reportedly the impetus behind Tether’s March declaration that it would finally submit its books to a comprehensive and independent audit by a ‘Big Four’ accounting firm later revealed to be KPMG. (We’re still waiting on that audit, as Tether’s Q2 one-day snapshot ‘attestation’ of its reserves was conducted, as usual, by BDO Italia.)
If this KPMG audit is more than yet another delaying tactic in the decade-long wait for a proper USDT accounting, this Q2 report could be the last time the crypto camp and the wider financial sector have to take Tether at its word that its reserves are what they say they are. If Q3 comes and goes with BDO still at the helm, Tether’s ability to raise billions from investors will be an even steeper climb.
Gold bars, digital gold tokens, not so golden loans
While USDT closed out Q2 with a market cap ~$446 million higher than at the end of Q1, recent months haven’t been kind to the crypto sector, and stablecoins weren’t spared this negative sentiment.
USDT’s market cap was flirting with a record $190 billion in May, but took a serious tumble over the past two months and currently sits at $183.3 billion. Tether isn’t unique in this regard, as its chief rival, USDC, issued by Circle (NASDAQ: CRCL), saw its own cap fall by $6 billion to $71.9 billion over the same span.
Accordingly, Tether’s stash of U.S. Treasury bills shrank in Q2, falling by $2 billion to just under $115 billion. Overnight reverse repurchase agreements fell by ~$700 million to $18.6 billion, while term reserve repurchase agreements rose by ~$2.5 billion to $7 billion. Tether’s cash pile continues to shrink, falling by $67 million to just $40.3 million.As for those more volatile GENIUS-incompatible reserves, the value of Tether’s pile of gold bricks fell by $1 billion to $18.8 billion, thanks in part to the price of an ounce of the shiny stuff falling ~14% from Q1 to Q2. Tether’s stack of BTC fell by nearly $800 million to $5.8 billion as the token’s price slid by nearly $10,000 from March 31 to June 30.
Tether’s ‘public equities’ category, which “comprises indirect gold, bitcoin and other asset exposure,” rose ~$350 million to $3.7 billion, while the mystery meat known as ‘other investments’ gained ~$400 million to $5.24 billion.
And then there’s Tether’s ‘secured loans,’ which declined by ~$2.3 billion to just under $13.5 billion. These loans have always been controversial, and it’s now been four years since Tether pledged to purge them from its balance sheet.
These markers became even more controversial following recent reports that Tether issued loans to a trust benefiting the children of Howard Lutnick, founder of Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX) and the current U.S. Secretary of Commerce. Cantor claims to custody Tether’s T-bills, a service that apparently entitled Cantor to claim a 5% stake in Tether for well below market price.
Last month brought reports of how Tether, Lutnick, and others conspired to ensure Tether got a three-year grace period for complying with the new GENIUS asset rules. Tether’s new USAT stablecoin, which officially launched in January, will reportedly be GENIUS-compliant, but USAT’s market cap currently stands at a mere $185 million, a rounding error compared with USDT.
Tether said last week that USAT had made its debut on the CELO network, marking the token’s first expansion beyond its original home on Ethereum. The CELO plans were first announced this spring but it’s apparently taken this long to dot the i’s and cross the USAT’s (sorry, couldn’t resist).
Tether loves Nigeria, criminals love Tether
Tether suffered a setback last month following the demise of its plan for a three-way merger of its digital asset treasury firm, Twenty One Capital (NASDAQ: XXI), with the Tether-linked mining outfit Elektron Energy and Jack Mallers’ digital payments firm Strike, with Mallers resigning as XXI CEO following news of the aborted plans.
But Tether’s dealmaking addiction shows no sign of retrenchment, as the company just signed a memorandum of understanding with the Nairobi Securities Exchange (NSE) to “explore digital asset education, tokenization, and financial market innovation in Nairobi.”
The MoU includes plans to utilize Tether’s Hadron tokenization platform to “enable fractionalized access to securities for both local and diaspora investors,” as well as tokenizing real-world assets (RWAs). Tether also plans to collaborate with the NSE to “design and pilot secured onboarding flows tailored to the Kenyan regulatory environment to streamline Anti-Money Laundering (AML) and Know Your Customer (KYC) processes.”
Longtime Tether observers might chuckle at that last bit, given USDT’s prominent role in laundering the proceeds of crime, as well as facilitating the evasion of Western economic sanctions. This year has seen Tether comply with multiple U.S. government requests to freeze wallets containing hundreds of millions of dollars’ worth of USDT linked to Iranian sanctions-evading efforts.
Try as it might, Tether can’t seem to shake the public associations between USDT and criminal activity. On July 30, the U.S. Department of Justice announced the arrest of a cross-border currency exchange CEO for hiring a hitman “to murder someone over an unpaid debt.” The currency of choice? No points for guessing USDT.
Fortunately, the hitmen the CEO thought he was hiring were actually undercover Homeland Security Investigations agents. Or maybe we could call them ‘net operating assassins’ or something, if Tether’s new vernacular is any guide.
Watch | Tokenization on public blockchain: Transforming RWAs and finance
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