Tether, the second most traded cryptocurrency by volume after Bitcoin, issued another 300 million tokens priced at $1 each on Tuesday, bringing the total amount of its USDT 'stablecoin' in circulation to $2,220,680,000. The sudden release of such a large number of new tokens, coupled with Tether’s notorious lack of transparency, has raised concerns that Tether is propping up the entire cryptocurrency market with false funds.
Traders use USDT instead of fiat to transfer holdings from one cryptocurrency to another. Tether’s token is ostensibly “tethered” to the USD so that 1 USDT = $1 USD.
Tuesday’s token release follows Tether’s release of 61.1 million in USDT and 86 million euro-backed EURT on the Ethereum blockchain in February. Tether's massive release of new tokens this year has been, perhaps not coincidentally, accompanied a widespread reversal of the recent worldwide slump in cryptocurrency prices.
Tether fired auditor Friedman LLP in January before an audit of its cash reserves was released. Bitfinex, a Tether partner and the fifth biggest cryptocurrency exchange by volume, has also refused to submit itself to a third party audit. Tether and Bitfinex were subpoenaed in December by the Commodities and Futures Trading Commission (CFTC). This shot across the bow put both companies on notice that they must reform their KYC/AML procedures or risk getting shut down.
The latest release of Tether tokens elicited a sarcastic tweet from anonymous Bitfinex/Tether critic Bitfinex’ed (@Bitfinexed): “$300,000,000 New Tethers in One Day. The largest grant of fraudulent and unaudited Tether tokens in history. Oh look, Bitcoin jumped up big time today. What a surprise. First new Tethers since they fired their auditor.” Bitfinex’ed is Twitter’s most prominent critic of both the Tether and Bitfinex.
Tether has declined to comment during interviews and has released no official statement about its unaudited cash reserve claims. Tether website states that: “Tether Platform currencies are 100% backed by actual fiat currency assets in our reserve account. Tethers are redeemable and exchangeable pursuant to Tether Limited’s terms of service. The conversion rate is 1 tether USDT equals 1 USD. The Tether Platform is fully reserved when the sum of all tethers in circulation is less than or equal to the balance of fiat currency held in our reserve.”
By: BGN Editorial Staff