Tether Generates Another $250m Worth of USDT Tokens
Ever get that feeling something just isn’t right? The more I read about Tether, the more uncomfortable I get. Here’s the latest according to The Toshi Times:
Tether Generates Another $250m Worth of USDT Tokens
Already surrounded by controversy, the Tether stablecoin has minted an additional $250 million worth of its USDT coins. The creation of large amounts of Tether tokens has been a topic of heated debate in the crypto community in the past and it is sure to ignite some controversy this time as well.
Many believe that such USDT token influxes have a direct impact on the price of the two biggest digital currencies – bitcoin and ethereum. Following the creation of USDT tokens, bitcoin’s price gained around $150 in 20 minutes while ethereum rose by $20 in the same time frame.
Similar price movements have been observed in the past cases of USDT token printing, thus there is speculation that new token introduction is a clever way to artificially increase cryptocurrency prices. However, there is no empirical proof supporting this theory yet. The most recent artificial influx of USDT was on March 20th when $300m of tokens were printed.
Tether claims that every USDT is backed by US dollars at a 1:1 ratio. According to the company, after receiving deposits in US dollars, it creates an equivalent amount of USDT and gives the tokens back to the investors. If these claims were correct, it means there are over $2.7 billion dollars backing this token, which, given the lack of transparency within the company, is still hard to believe.
The US Securities and Exchange Commission Audit firm served Tether with subpoenas, which caused them to hire the audit firm Friedman LLP to conduct an official check on the company. However, auditors were shortly relieved of their duties, casting further doubts over the company. At the moment there is still no proof that Tether has the USD reserves to back its token.
Tether has been holding a monopoly on stablecoins for quite a while but it seems that it will have to deal with quickly emerging competition from the likes of Goldman Sachs-backed Circle or other projects, such as TrueUSD and Basis.
TrueUSD is already known for working in tandem with regulators and more significantly it can be claimed for US dollars using smart contracts, adding further credibility to the token. Another attempt at creating a trustworthy stablecoin is Circle that will also attempt to peg its value to the US dollar. Its customers will have to hold the money, required to generate the same amount of the coin, meaning more stability to the project.
Tether might have been the first stablecoin on the market and it still holds a huge lead over its competition, at least in terms of market cap. What it lacks is transparency and regulatory cooperation, which might severely hinder its progress. As more and more alternative stablecoins enter the market, all of which are significantly more transparent, Tether risks losing its users if nothing is done to scatter the clouds over the company.
Full article found here: https://toshitimes.com/tether-generates-another-250m-worth-of-usdt-tokens/
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I have never been all that sure of tether from the get-go. I am just worried about what will happen when/if the news gets out confirming that tethers aren't backed.
Agreed. I’m hoping exchanges switch over to another stable coin, like TrueUSD.
It is very unlikely that they are actually backed 1:1. They fired their independent auditor over some kind of disagreement last I heard. This does not sound good, but the problem is that USDT is so integrated in the crypto markets now, its really going to hurt bad if it collapses. Honestly, I would like to see more exchanges SLOWLY start trimming away USDT pairings to solve this so there is no sudden panic. IF it can happen slowly and carefully I think we can escape this with minimal damage honestly.
Let’s hope so.
I wish people would stop using tether.