Tether Archives -
During a recent conference in South Korea, Binance CEO Changpeng Zhao responded to questions about the company’s relationship with controversial stablecoin Tether. He acknowledged that “concern is always there,” according to regional reporting. Binance is one of the largest holders of Tether.
Binance CEO Voices Concern Over Tether
According to Anca Faget of Romania-based Coindoo, the CEO of Binance, Changpeng Zhao, responded to questions about the company’s relationship with controversial stablecoin Tether. One question came from Ran Neu-Ner who asked about the impact a Tether crash would have on Binance.
Mr. Zhao answered, “We have seen fiat currencies go down in history a lot. Probably more times than they have been in cryptocurrencies. So yes, the concern is always there and that’s also why we’re listing other stable coins as well, so we actively promote other stable coins including True USD and others.”
Binance launched in the summer of last year with an initial coin offering that raised around $ 15 million. It’s a cryptocurrency exchange, catering to a multi-language, international clientele. This year has been a busy one for the exchange. On its way to a very ambitious goal of earning $ 1 billion this year, Binance invested in a Maltese bank, is attempting to conquer the South Korean market, and recently teamed up with Libra Credit.
Tether and Bitfinex
Mr. Neu-Her also asked about the connection between Tether and Bitfinex. Many in the ecosystem have long accused both of bitcoin price manipulation, with some actually attributing the entire price run-up of 2017 to Tether’s inflation (another study, however, came to the opposite conclusion).
“I haven’t personally seen their bank accounts,” Mr. Zhao assured, “but from a logical point of view they have so many profits from their regular exchange business, they don’t need to do anything crazy about the Tethering. I think the reason they cannot release their bank account details is because if they release whichever bank they’re using, then the bank account gets shut down,” the CEO said at a Korea Blockchain event.
Ironically, accusations against Tether have slowed toward the middle of this year. When yet another study suggests a Tether collusion, this time between it and Kraken, the exchange took to its blog and blasted journalists whom it felt understood little how its business works. Last month Tether brought in an establishment figure to head its compliance division, perhaps in an effort to assuage future fears.
How important is Tether to the ecosystem? Let us know in the comments section below.
Images via Pixabay, Binance, and Tether.
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Tether has announced the appointed of Leonardo Real, a former anti-money laundering (AML) quality control manager at Bank of Montreal, as the company’s new chief compliance officer (CSO). The announcement comes just one week after Phil Potter, one of Tether’s directors, announced that he will be leaving sister company, Bitfinex.
Tether Announces New CCO
Leonardo Real, former AML control manager of Canada’s fourth-largest financial institution, Bank of Montreal, has been announced as Tether’s new chief compliance officer.
A press release issued by Tether has stated that Mr. Real has been brought in “to assist in setting the highest standards in compliance.” Jean-Louis van der Velde, the chief executive officer of Tether welcomed the arrival of Mr. True, stating “We are all very excited to introduce Leonardo as Chief Compliance Officer at Tether, as he joins us on what has already been a remarkable journey to date disrupting the legacy financial system. His depth of experience managing AML risk in capital markets, as well as the wealth management and commercial banking sectors, combined with his proven expertise in quality control management and strategy formulation will make him an invaluable asset to our company. All of us at Tether have every confidence in his ability to oversee and manage all relevant compliance issues as we continue to move forward and grow.”
“We are particularly excited to announce this key hire at a seminal point in the life of the blockchain and cryptocurrency sector. As the industry matures, all actors within the space shall be expected to meet a higher standard of industry best practices. As Tether continues to work to realize our vision of total transparency and unparalleled security within the cryptocurrency market, we will always endeavor to set the gold standard in regulatory compliance. Leonardo will play an important role in realizing these aims, and we are very excited to welcome him aboard as we look forward to all that lies ahead,” the Tether CEO added.
Mr. Real’s Cryptocurrency Resume
Before working with Bank of Montreal, Tether states that Mr. Real “also has experience working in financial day, stock, and futures trading,” adding that “Real is a proven thought leader in the industry, having co-written the 2016 ACAMS Today Article of the Year which focused on money laundering risks associated with cryptocurrencies.”
“Joining Tether as CCO is an incredibly exciting move for me personally, and I am particularly impressed by the motivation, dedication, and talent of the Tether team. I look forward to helping showcase Tether’s commitment to transparency and regulatory compliance within the blockchain and cryptocurrency space. As a longtime advocate of blockchain technology and the integration of cryptocurrencies into the mainstream, I am looking forward to putting my experience in AML and regulatory compliance in traditional financial institutions to use, to ensure that the Tether project can continue its work disrupting traditional industries,” said Mr. Real.
Mr. Real “also organized a Blockchain, Cryptocurrency, and AML event held in Toronto, Canada in August 2016, bringing together regulators, bankers, law enforcement professionals, and companies in the blockchain space to discuss responsible use of cryptocurrencies.”
Phil Potter to Stand Down From Bitfinex
Tether director, Phil Potter, recently announced that he would stand down from his role as the Bitfinex’s chief security officer, before soon leaving Tether’s supposed sister company.
Mr. Potter stated: “As Bitfinex pivots away from the U.S., I felt that, as a U.S. person, it was time for me to rethink my position as a member of the executive team.”
Tether Sends 100 Million USDT to Bitfinex
At 12:53:29 AM, 13th of July, 2018, 100 million USDT was sent to wallet that is owned by Bitfinex, following one of few major Tether issuances of recent months.
At 11:59:27 PM on the 25th of June, Tether created 250 million USDT, following the creation of the same quantity of USDT on the 19th of May.
What is your response to Tether’s appointment of Leonardo Real to the position of chief compliance officer? Share your thoughts in the comments section below!
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Following a Bloomberg News expose, alleging market manipulation of controversial alternative token Tether (USDT) on its exchange, Kraken fires off a savage blog post mocking journalists and defending their business’ integrity.
Kraken Goes Savage On Bloomberg
On Tether: Journalists Defy Logic, Raising Red Flags reveals the San Francisco-based cryptocurrency exchange is having exactly none of it. A journalist “covering market structure for Bloomberg News inexplicably fails to comprehend basic market concepts such as arbitrage, order books and currency pegs. More troubling, however, was the applause from other ‘journalist’ lemmings as they followed in walking their reputations off a cliff. It defies logic.”
Kraken is a scrappier exchange in the crypto world, and if the present rebuttal doesn’t convince readers of that fact, remembering back to its verbal joust with no less than the New York Attorney General would suffice. The AG issued its notorious Virtual Markets Integrity Initiative Questionnaire to leading cryptocurrency exchanges throughout the United States, and then, as now, Kraken went savage. CEO Jesse Powell shot back, referring to the AG’s request directly, “When I saw this 34-point demand, with a deadline 2 weeks out, I immediately thought ‘The audacity of these guys — the entitlement, the disrespect for our business, our time!’”
True too is the fact it has been one hell of a week for Kraken’s current object of scorn and derision, journalist Matt Leising. Not only was he principal author in the offending Tether story, he also released viral speculation about Satoshi Nakamoto’s reemergence via new writings. For Kraken, however, “The would-be Tether takedown was indefensible and handily dismantled by the community. Each comment a prelude to a thorough evisceration,” and nearly half a dozen scathing Tweets follow. Mr. Leising has since announced he is “off Twitter until July 9. Go yell at someone else.”
For the exchange, the need to push back on Mr. Leising’s work in this manner comes down to the presumption “lawmakers are reading this stuff. The title sure was sensational, and it undoubtedly grabbed eyeballs but what of the readers who are not following the outrage on Reddit and Twitter? What of those who rely on the journalistic integrity and expertise of their news sources? If we are to take up our pitchforks against market manipulation, guide your torches toward this illumination: the Bloomberg News piece was published on June 29th, the last business day of trading for Q2, and expiration date of numerous futures contracts. It raises red flags,” the post chastised at Mr. Leising’s methodology.
Tether’s Price is Not Being Manipulated by Kraken
After explaining USDT’s price stability is a function of the token’s inherent design and rather banal arbitrage, the exchange turns to its overall influence on the tether market at large. “As much as we pride ourselves on the level of recognition we enjoy in the industry,” Kraken explains, “we sadly cannot claim to be the arbiters of the price of USDT. It is more likely determined by the billions of USDT traded over markets like BTC/USDT or ETH/USDT on other platforms. If 1 BTC trades for ~6,350 USDT on one platform and ~$ 6,350 US dollars on Kraken, then the implied price of each USDT is logically $ 1 US dollar. This level of USDT price discovery happens on markets with hundreds of millions of dollars of volume, not on Kraken’s USDT/USD market, which has currently traded less than $ 1 million in the last 24 hours.” They further invite anyone to check their logic against publicly available data.
The exchange bills itself in terms of euro liquidity and volume “the world’s largest bitcoin exchange.” It operates in the United States, European Union, Canada, and Japan. Owned by Payward Inc., ironically it provides bitcoin core (BTC) pricing to the Bloomberg Terminal. It was founded largely in the wake of the Mt. Gox implosion, and established itself as a viable alternative. It was launched by Mr. Powell in Fall of 2013, and, with some noted hiccups, has been an ecosystem staple.
“We take allegations of manipulation very seriously,” the exchange insisted. “We strive to operate a platform that is open and fair to all of our users.” Nevertheless, “After reading the Bloomberg article, we scratched our heads, questioning just what type of manipulation was being claimed.” Rhetorically, it asks, “Is it so hard to believe that an asset-backed stablecoin could trade, well… with so much stability? As we discussed previously, one need only take a look at the order book to understand why trades of different sizes result in little-to-no change in price levels. If an order book is too hard a concept to grasp, think about stock at your grocery store. Why doesn’t the price on avocados change every time you put one in your basket?”
As for the charge of wash trading, “If you’re looking around for potential wash trading in USDT, we recommend you look elsewhere. That said, it’s not clear what harm could come from wash trading of a pegged asset against its peg. In Kraken’s case, USDT is only traded against its peg, USD, which itself is an explicitly manipulated asset.” And that pesky 13,076.389 number thought to be so very maniacal? They “asked the botter responsible for the mysterious 13076.389 orders. The answer: ‘literally randomly selected.’ So, there you have it,” they conclude.
Is tether’s price being manipulated? Let us know in the comments.
Images via the Pixabay, Twitter.
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If you thought that only proof of work coins were susceptible to double spending attacks, you haven’t met tether. The world’s ninth largest crypto by market cap and second largest by volume is meant to be a haven in a sea of uncertainty, but even it’s not immune to jiggery-pokery, as we’ll learn in today’s Bitcoin in Brief.
How to Have Your Dollar Peg and Spend It
If you were told that another cryptocurrency had been double spent, you’d probably guess it was a low hashrate PoW coin, not USDT. By rights, it ought to be impossible to double spend tether, but that’s what happened on June 28 according to one Chinese cybersecurity firm. Someone sent 694 tether to an exchange and was credited for the deposit due to a certain field value pertaining to the transaction being altered. An Omni dev (whose blockchain tether operates on) has since confirmed this did occur, but was the fault of the exchange for poor integration, rather than a flaw in tether itself. Still, the news has prompted at least one exchange, Okex, to issue reassurances that its exchange is safe from this bug.
Tether’s most prominent critics have long asserted that the company doesn’t have enough US dollars in the bank to cover the amount of USDT in circulation. If rampant double spending starts to occur, they’ll be right.
Big Exchanges Get Bigger
The last 72 hours has witnessed a flurry of activity from the world’s leading cryptocurrency exchanges, who have have been expanding aggressively – except for the ones who’ve been retreating. Kucoin has announced it is ceasing its operations in Japan, following other platforms such as Binance out the door. The country’s FSA has been ramping up pressure on non-licensed exchanges to stop trading in Japanese territory, and the pressure has paid off. Rather than ruffle feathers, major exchanges have been beating a dignified retreat.
Elsewhere, though, crypto exchanges have been actively expanding, including Uganda of all places, where Binance has just announced the launch of a fiat-crypto platform. It’s offering zero trading fees for the first month and giving away 10,000 BNB tokens to sweeten the deal for new signups. In the UK, meanwhile, Coinbase is apparently set to start introducing GBP deposits and withdrawals within the coming weeks. The exchange recently partnered with the UK’s Barclays bank.
Brave Adds Tor Browser Tabs
Brave, the web browser with opt-in ads, which recompenses viewers with its native BAT token, is that rare thing: a crypto project that actually has users. 2.8 million of them in fact, which is pretty impressive given the hegemony of Google Chrome, Firefox, and Safari. On Thursday, the latest version of the Brave browser was updated to include optional Tor private browsing tabs. This makes it possible to enjoy anonymity without the need to launch a standalone Tor browser.
Deanonymizing Zcash Transactions
While Brave users are gaining a degree of anonymity, a number of zcash users are losing theirs. A new report from Motherboard reveals how individuals who purchased hacking tools from the Shadow Brokers in 2016 could now be identified. Researchers at the University College London have been examining zcash transactions and traced the movement of some of the coins associated with the Shadow Brokers to a crypto exchange. Zcash has previously faced criticism for not enabling anonymous transactions by default, making it theoretically easier to deanonymize those who have enabled private sending.
Crypto Exchange Ranks Goes Live
Crypto Exchanges Ranks (CER), a new platform that rates exchanges according to their liquidity, security, volume, and other metrics is now live. We reported on the platform a couple of weeks back, when it was in beta. The project was developed by Hacken, who explain the rationale behind it in a blog post to celebrate the launch.
Finally, Block.one seems to have acknowledged royally screwing up its launch of EOS. In an effort to redress some of these sins, it’s returning to the drawing board and redrafting its constitution. If only members of the crypto community had tried to warn Block.one that freezing accounts and forcing sovereignty on blockchain users wasn’t the way to go. Oh wait, they did.
What are your thoughts on today’s stories in Bitcoin in Brief? Let us know in the comments section below.
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Tether has released a surprise “Transparency Update” that purports to show it has enough funds in the bank to cover the $ 2.6 billion of USDT in circulation. The company has stopped short of a full audit, however, leaving critics bemoaning Tether’s inability to settle the solvency debate once and for all.
Tether Tries to Dispel the FUD
Speculating over the solvency of Tether, and specifically whether its dollar-pegged stablecoin is actually backed by fiat reserves, is a pastime that has spawned entire Twitter personas devoted to the issue. Vocal Tether critic Bitfinexed has been joined by a growing chorus of critics demanding full transparency from Tether, which is part owned by Bitfinex. Tether has now obliged, producing, for the second time in six months, a legal report into its financial standing.
The report, which was produced by the law firm of a former FBI director, carries weight from a legal perspective. But it fails to provide cast iron guarantees that Tether is not operating a fractional reserve. Until the company’s accounts are professionally audited, the true state of Tether’s finances will remain a point of speculation.
“As many are aware, Tether and related parties have been the subject of scrutiny over the course of the past several months,” begins the Transparency Update. “We have spent our time largely disregarding these allegations, instead letting our efforts, and the continued faith of our community of users, speak for themselves.” Many cryptocurrency traders would rather Tether had addressed these issues sooner rather than letting the blind “faith” of its community serve as a guarantee.
Enter Freeh, Sporkin & Sullivan
The magnificently named Freeh, Sporkin & Sullivan are the legal firm who were handed the task of taking a snapshot of Tether’s bank balance. This they did on June 1, whereupon they confirmed that there were sufficient funds to cover all USDT in circulation on a 1:1 basis.
“Recent reports have opened our eyes to the fundamental lack of understanding surrounding Tether, the issuance and redemption mechanisms, and the compliance procedures that we have built,” continues the Transparency Update document. “To mitigate this, we will be taking additional steps aimed at opening up Tether to the general public and clearing away any uncertainty that may exist.”
The simple answer, and the one that cryptocurrency holders have been screaming out for, is for Tether to commission an independent audit. Only once that has been completed can the lingering doubt disperse and faith in Tether be restored. While today’s report is hardly the all-clear that the crypto community might have hoped for, its release still helped propel BTC up by $ 150, undoing the damage inflicted hours previously by the news of Bithumb’s $ 31 million hack.
Do you think Tether has the funds to cover all of the USDT in circulation? Let us know in the comments section below.
Images courtesy of Shutterstock, and Tether.
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Tether, one of the most-traded cryptocurrencies, shows a pattern of being spent on bitcoin at pivotal moments, helping to drive the world’s first digital asset to a record price in December, according to research by a University of Texas professor known for flagging suspicious activity in the VIX…
Stablecoins aren’t exciting. They don’t pump, moon, or 10x. And yet they have the potential to make traders more money than any other cryptocurrency. These stabilized tokens – usually pegged to the US dollar – scarcely move in price, and yet they’re pivotal in anchoring the crypto markets. Here’s everything you should know about the new class of stablecoins.
The Price of Stability
Tether, the best known stablecoin, is often the second most traded crypto asset after bitcoin. Traders routinely trade in and out of it as they attempt to outmaneuver bitcoin’s price swings. When the markets are down, some will remain in the safety of tether for weeks, venturing back into “proper” crypto only when there are signs of recovery.
Tether is a highly controversial stablecoin, not because of how it works, but due to questions over whether it’s actually dollar-backed with fiat reserves, but that’s a debate for another time. What’s undisputed is that over-reliance on a centralized coin that accounts for $ 4 billion of daily trade volume is a bad thing. Competition for tether is to be encouraged, and was welcomed by Ethfinex no less – whose parent exchange Bitfinex effectively owns Tether.
Last week, Ethfinex introduced dai, a decentralized tether alternative. Here’s how it, and the rest of the current crop of stablecoins, work:
A Brief Guide to Stablecoins
Dai: A decentralized dollar-pegged stable coin from Maker DAO that operates as an ethereum token. The buyer places ethereum in the Maker core smart contract and receives a dollar equivalent of dai in return. It’s tradable on the likes of Bibox, Ethfinex, IDEX, and Bancor Network. It will also soon be available on Omisego’s DEX.
TrueUSD: A collateralized stablecoin backed by USD held in escrow accounts. It’s basically a more transparent tether and is available on Upbit and Bittrex – where it’s even tradable against tether.
Stably: Another USD reserve-backed stablecoin that will work on multiple blockchains when it launches including ethereum and stellar. Stably just raised $ 500,000 in a seed round.
Bitshares: Usable on the Bitshares exchange only, Bit USD is another dollar-pegged coin, implemented using “smartcoins” to collateralize the currency held against it, typically Bitshares.
Havven: A payment network which also has its own stablecoin. e USD is the first of these, which can be exchanged for ether, though nomins (n USD), the official Havven stablecoin, will launch soon to replace e USD.
New Stablecoins Are Incoming
Several other stablecoins are on their way including kowala, basecoin, augmint, and carbon. Each of these coins has their own means of achieving – or at least attempting – stability. Kowala’s k USD for example is an “anonymously stabilized cryptocurrency” whatever that means, and carbon uses “algorithmically adjusted coin supply based on demand” to ensure it closely matches the USD. VC firm General Catalyst has just led a $ 2 million round to invest in carbon and basecoin raised $ 125 million via a SAFT. Stablecoins are big business.
Not everyone is impressed with stablecoins, and specifically their ability to maintain relative stability. Perennial bitcoin bear Preston Byrne has made it his duty to rail against them, and recently highlighted nubits, a lesser known stablecoin, whose value has been anything but stable.
Creating a coin that can stubbornly cling to the US dollar through thick and thin is a lot harder than it sounds; even tether’s prone to wobbling. But for as long as demand for a hedge against crypto volatility persists, stablecoins will perform an essential job. And with so many new entrants poised to launch, the battle for stablecoin supremacy has only just begun.
Do you think other stablecoins can overtake tether, and if so which? Let us know in the comments section below.
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Bitfinex has announced the introduction of 12 new ERC-20 tokens. Among the tokens listed is Dai – a stablecoin competitor to Tether.
Bitfinex Announces Trading Pairs for 12 New Altcoins
On April 7th, Bitfinex announced via Medium the introduction of 12 new altcoins on its trading platform. All of the new tokens are ERC-20 tokens (the technical standard for smart contracts hosted on the Ethereum blockchain).
The newly supported altcoins are Aion (AION), Iostoken (IOST), Request Network (REQ), Raiden Network (RDN), Loopring (LRC) Bnktothefuture Token (BFT), Cofound.it (CFI), Wax (WAX), Singularitynet (AGI), Medicalchain (MTN), Odem (ODEM), and Dai (DAI).
BTC, ETH, and USD trading pairs for the newly supported altcoins went live at 4PM UTC on April 7th. Bitfinex’s announcement stated that “The newly introduced token listings have a combined market capitalization of $ 1.1B+ USD.” Margin trading and lending markets for the new tokens “will be enabled gradually, as sufficient liquidity develops.”
Notable Listings Include Dai and Bnktothefuture
The newly listed ERC-20 tokens include Dai, “a digital, decentralized stablecoin built on Ethereum.” The listing of Dai is significant, as the project appears to be in direct competition with major stablecoin, Tether – which shares the same directors as Bitfinex. The exchange stated that “Dai will initially be made available against BTC, ETH, and USD whilst we explore the possibility adding additional DAI pairs.”
The listing of Bnktothefuture Token is also notable, as Bnktothefuture appears to own shares in Bitfinex. Bnktothefuture was also involved in the controversial conversion of BFX tokens into equity in Bitfinex following the devastating hack suffered by the exchange in 2016. On August 22nd, 2016, Bitifinex “formally signed a letter of intent with Bnktothefuture […] to provide solutions towards compensating customers with equity in Bitfinex.”
The Chief Executive Officer of Bitfinex, Jean-Louis van der Velde, stated “The introduction of such a large selection of tokens, representing a diverse array of blockchain-based projects, marks an exciting development for Bitfinex. We are proud to introduce these as we believe that each token serves to strengthen and enliven a unique aspect of the global blockchain ecosystem, and will offer new and exciting trading options for our users.”
Mr. Velde added “We are excited to be going the extra distance to accommodate the needs and expectations of our traders. Looking forward, we will continue to expand our service offerings to best address their needs, and to maintain an advanced and supportive trading platform for the growing digital asset community.”
Do you think that Bitfinex’s decision to list Dai is significant? What do you think the listing of Dai on Bitfinex may indicate for Tether’s future? Share your thoughts in the comments in the section below!
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As some cryptocurrency exchanges are adding new altcoins, tokens and forks all the time, cashing in on massive listing fees from promoters, the need arises to trim the fat ever so often. Now Cobinhood is removing a few, offering a glimpse on how trading venues decide which tokens to cull.
Changes to Token Listings
Taiwan-based cryptocurrency service platform Cobinhood has recently announced a number of changes to its roster of available trading instruments. The following tokens will no longer be supported on the exchange: Funfair (FUN), Gnosis (GNO), ICONOMI (ICN), Santiment (SAN), Substratum (SUB) and Voise (VOISE). Depositing, trading, and all open orders will be cancelled automatically on April 13, 2018.
The exchange team explains that, “After careful consideration, we factored these criteria, while not exhaustive, as determinants of discontinuation. Limited trading volume on the exchange, which could potentially lead to trading malpractice (e.g. pump and dump). Poor community reception. Unestablished cooperation with the token team.”
In contrast, Cobinhood announced the addition of bitcoin cash (BCH) support starting March 30, including the abilities to deposit, withdraw, and trade BCH-BTC, BCH-ETH, and BCH-USDT pairs. The exchange is also launching corporate accounts meant for companies and organization rather than individuals, with no deposit limits.
Limiting Tether Pairs
Cobinhood also decided that Tether (USDT) as a quote currency will only be made available for sixteen base currencies (BRD, BDG, BOT, BTC, COB, CMT, CGC, DXT, ENJ, ETH, LALA, LTC, LYM, MCO, Qtum, and UTNP) starting April 20. After the date passes, open USDT orders paired with all other base currencies will be cancelled automatically. It currently offers about fifty USDT pairs.
This move is perhaps a little bit surprising considering that Cobinhood has only switched from USD to USDT based trading pairs in February. However, this controversial dollar-proxy has been facing growing criticism recently, causing some exchanges to want to limit their dependence on it. For example, earlier this month Bittrex added a second stablecoin in the form Trueusd, in a move seen as a hedge against future Tether regulation.
How should exchanges treat low volume altcoins? Share your thoughts in the comments section below.
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Another outside observer of the controversial tether cryptocurrency is warning about the dangers it presents for the uninterrupted operation of USDT exchanges. Weiss Ratings is seeking to educate investors on the systematic risk tether introduces to the ecosystem.
Inherent Risks of Blind Trust
Weiss Ratings, an independent U.S. agency which recently published letter grades for cryptocurrencies, has issued an alert to investors about the dangers of tether (USDT). It highlights common fears about the stablecoin which is claimed to be fully covered by U.S. dollar reserves.
“The big issue: There’s never been an audit, and the folks behind Tether has been quite shady when asked. They have continuously claimed their tokens are backed 100% by actual dollars, yet they have failed to present any evidence to support this claim. On social media, there appears to be consensus that what Tether is actually doing is running a fractional reserve system. In other words, most observers claim they DO NOT have the dollars to back up all those Tether coins. I tend to agree. It’s just too suspicious,” says Weiss analyst.
What Happens When the Feds Stop USDT Printing?
Weiss explains how the importance of USDT to the entire ecosystem is that many non-fiat exchanges (like Binance or Okex) use it as a proxy for real dollars in trading. Because of this, it is the third most traded cryptocurrency and the only one with trading volumes that regularly exceed its market cap. These exchanges are thus dependent on tether for liquidity and put investors at risk if any government decides to pull the plug out of its printers. Some consider this to be a likely scenario under U.S. law.
“The consequences of hanky-panky could be far-reaching. What happens if Tether does turn out to be fraudulent? Or what happens if a major government determines that cryptocurrencies like Tether are being used by exchanges to avoid regulations? What if this large source of liquidity suddenly evaporates?”asks. “Conceivably, it could cause exchange failures. It could drive investors to liquidate their positions, causing sharp declines in market prices.”
Should cryptocurrency investors worry about the continued liquidity of USDT exchanges? Tell us what you think in the comments section below.
Images courtesy of Shutterstock.
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