It is not new that the Stablecoin Tether (USDT) is cause for suspicion by those who are part of the crypto market. There have been questions for some time related to the integrity of its operations and possible market manipulations.
The Tether, or USDT, is a 1 to 1 dollar-paired stablecoin. It is known for providing liquidity and offering a token that facilitates transactions between various cryptocurrencies, acting as a kind of "digital dollar".
Unlike Bitcoin, it is neither decentralized nor scarce, on the contrary, Tether Limited, the company behind stablecoin and whose partners also have a stake in the Bitfinex exchange, you can mint as many currencies as you like.
Although Tether claims to issue new coins in response to demand, its critics argue otherwise. Several influential investors have accused the company of being part of a scheme that boils down to using stablecoin to manipulate cryptocurrency markets.
Some have raised the possibility that Bitcoin's bullish rally may again be inflated by this Tethers issue in the market.
The USDT is a controversial stablecoin and since its emergence it has been involved in many scandals.
It was originally designed to be backed by the dollar, keeping $ 1.00 in reserves for each Tether issued. However, there is no no official audit evidence that the funds that support these Tethers actually exist.
The main questions are related to the possibility that it does not have the backing in US dollars of all units issued. In addition, in its short life the story of this stablecoin is full of suspicious characters, unsolved hacks, sudden changes between foreign banks and huge and unexplained losses. There is probably much more to come.
This month, NYAG (New York Attorney General) gave a deadline for iFinex, the parent company of Bitfinex and Tether, to present the necessary documentation to defend itself from the process underway since 2019.
In April 2019, the New York attorney general's office claimed that Bitfinex lost $ 850 million and then used Tether's funds to cover the deficit. Trading on the Bitfinex platform; use of financial institutions to move money and process deposits and withdrawals from customers and representations to the market that may have been misleading.
NYAG points out several indications of irregularities involving the two companies and demanded the delivery of documents detailing the history of financial transactions. The deadline was the 15th, when several pages of documents were delivered. In addition, iFinex is required to produce the information necessary for NYAG to continue its investigation and to prove the merits of its claims.
This is a remarkable case for the cryptocurrency market, as USDT is the largest and most used stablecoin.
In 2020, the Tether emission increased significantly.
Currently, Tether's market cap is more than $ 24 billion and is the third largest.
Over 70% of Bitcoin and altcoins traded on exchanges are purchased with USDT.
This leaves many investors uneasy about a possible breakdown of the company Tether, which could affect the crypto market and the price of Bitcoin to some extent.
This is a remarkable fact and, if there is evidence of the irregularities pointed out, it can negatively impact the market, since USDT is the largest and most used stablecoin for trading.
However, it is good to remember that this or any other fraud that may arise in the crypto market, has no impact on the fundamentals of Bitcoin, which since its beginning has continued with its issue limited to 21 million, with a block being mined every 10 minutes and your transactions can be verified by anyone.
Nor can it be said that the Bitcoin rally was sustained by the issuance of Tether, because Bitcoin trades do not only happen on exchanges, but also through the OTC (over the counter) market, or over the counter as it is also known, where they are much higher values are traded and do not enter the daily trading volume. The OTC market is the gateway for large institutions, in other words, it is where smart-money enters the crypto market.
If you use Tether, it may be interesting to review, as it is a time bomb about to explode.
