Showing posts with label USDT. Show all posts
Showing posts with label USDT. Show all posts

Tether's $68 billion backing is being called into question as new reports seek to uncover the truth behind USDT.

Tether (USDT), the biggest stablecoin cryptocurrency, has lately gotten a lot of negative press. Allegations have surfaced once again that the stablecoin's reserves, which are meant to be backed one to one by USD, are actually backed by questionable assets that do not equal to US dollars.

A Bloomberg story recently shed light on the issue. Tether was accused of not having adequate reserves to support its stablecoin supply, according to a Bloomberg article authored by Zeke Faux. It accused Tether's Chief Financial Officer, Giancarlo Devasini, of misusing the company's reserves to make investments. Worryingly, it claimed that Tether was investing in Chinese companies and providing crypto-backed loans "worth billions of dollars."

"Tether has yet to reveal where it keeps its money." If Devasini is willing to take enough risk to make even a 1% return on Tether's total reserves, he and his partners would win $690 million each year. "However, if even a tiny proportion of those loans fail, one Tether will be worth less than $1," Faux wrote.

The report has sparked a fresh round of outrage among cryptocurrency market players. A CoinDesk article went on to investigate the ramifications of Tether being an intricate fraud on the crypto market. David Z. Morris' article highlighted similarities between the present issue with Tether and the financial catastrophe that hit Iceland in 2008 and 2009. Iceland's economy was affected harder by the financial crisis than most other countries due to banks' inability to be open in their operations and stock manipulation.

The report cautions that Tether, which has a market value of more than $68 billion, is "mimicking the leverage technique that enabled Iceland's small banks to appear big" by not being fully open about its reserves backing.

Meanwhile, Tether has issued a rebuttal to Bloomberg's story, rejecting all of its allegations. According to their reaction, the piece does nothing except create a misleading narrative.

"This post does nothing more than try to propagate a false and aging narrative arc about Tether that is based on hearsay and disinformation provided by unhappy people who have no connection with or direct knowledge of the business's activities." It's just another old effort to destabilize a market leader whose record of innovation, liquidity, and success speaks for itself."

They finish their answer by stating once again that Tether coins are completely supported.

"The business has taken a leading stance in transparency, issuing quarterly assurance attestations (as recently as the goal date of June 30, 2021) verifying that all Tether tokens are properly backed," according to the statement.

However, market sentiment for Tether remains negative as the accusations that have been a recurrent subject become more difficult for the stablecoin to shrug off.

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Tether denies that it is being investigated again for alleged bank fraud.

Despite reports of recent Justice Department interest and a track record of legal troubles, the world's largest stablecoin disputes a report suggesting the likelihood of a US inquiry. Tether – the world's largest stablecoin — officials are under increasing pressure from US federal authorities in a case involving suspected bank fraud, according to explosive overnight reports.


According to the report, prosecutors are investigating Tether for perhaps concealing the fact that certain transactions from several years ago were crypto-related. Bloomberg identified three sources, all of whom requested anonymity, who claimed to have direct knowledge of the situation.

Tether quickly responded to the piece in a blog post, alleging that Bloomberg was "repackaging outdated accusations as 'news,'" pointing out that the media outlet's sources had chosen to stay anonymous, and implying that the report was part of a "continuous campaign to discredit Tether."

However, the Justice Department's interest appears to be current, as the letters announcing the probe were only mailed out recently, according to sources. Although the Justice Department has yet to make a formal decision on whether or not to file charges, the notices suggest that it is possible.

For the past few years, the stablecoin has been mired in legal issues. In February, Tether and its sibling exchange Bitfinex paid $18.5 million to the New York State Attorney General to settle an investigation. The 22-month probe looked at whether Bitfinex tried to hide a US$850 million fund loss. Bitfinex admitted no wrongdoing as part of the settlement, but promised to produce quarterly updates on its reserves for the next two years, the first of which was released in May.

Stablecoins are digital currencies that are linked to a traditional asset to reduce volatility. Tether had long claimed that it was backed mostly by the US dollar, but its first public report revealed that cash accounted for only a small portion of the currency's holdings, with unsecured loans accounting for the rest.

The fresh charges come as the Securities and Exchange Commission Chair Gary Gensler and Treasury Secretary Janet Yellen have both publicly called for more regulation of the stablecoin business in the United States. Last week, Gensler stated that cryptocurrencies whose prices are based on traditional assets — such as stablecoins — may be subject to the same securities regulations as the underlying assets.

Yellen had only indicated a few days before that authorities needed to "act rapidly to ensure there is a proper US regulatory framework in place" for stablecoins. Yellen was concerned about stablecoins' "possible hazards to end-users, the financial system, and national security," according to her.

Tether is an important part of the cryptocurrency ecosystem, and because of its stability, it is frequently used to exchange for Bitcoin. Any action that has an impact on one coin frequently has an impact on the other.

Bitcoin had had a rollercoaster 24 hours as of press time, soaring more than 15% to temporarily break the US$40,000 barrier for the first time since mid-June before trimming those gains.

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