Tether (USDT), a stablecoin that is reportedly backed to US Dollar on a 1:1 ratio, has just printed 250 million of USDT tokens. This would indicate that $250 million has been deposited into Tether’s bank accounts. Despite its widespread use and significant market cap, USDT is a subject of constant controversy as the crypto world is doubtful about the solvency of the project.
Among the most recent controversies are the allegations that USDT was behind the bitcoin price manipulation in 2017, when BTC almost eclipsed the $20,000 mark. A study by the researchers at the University of Texas claimed that BTC price spike was impacted by a ”conscious strategy to provide price support” using Tether tokens.
However, the controversies do not stop here and have in fact started as early as last October, when it was revealed that USDT shared very similar ownership with the crypto exchange Bitfinex. The negative sentiment surrounding the stablecoin further deepened in January when the company fired Friedman LLP, an independent law firm that was hired to perform an official audit on Tether’s holdings.
Nonetheless, Tether has finally provided some clarity on its USD assets, as a US-based law firm Freeh Sporkin and Sullivan LLP checked the bank accounts of the company. The auditors came to a conclusion that Tether’s USD reserves are equal to USDT tokens in circulation and amount to $2.55 billion, clearing at least some of the controversy.
Tether’s CEO JL van der Velde said at the time that, “Despite speculation, we have consistently stated that Tether is backed by USD reserves at or exceeding the Tethers in circulation at a given moment, and we’re glad to have independent verification of this to answer some of the questions posed by the public.“
Being a stablecoin means token provides value that does not change even when the market undergoes periods of volatility, as has been the case with crypto markets for most of their existence. Even though, there are minimal fluctuations the price of USDT has not changed by more than $0.05.
The ingestion of new Tether tokens usually results in increasing prices of bitcoin and subsequently most other digital currencies. The last such influx of USDT tokens happened on May 18th, and BTC climbed from $8100 to $8500 in the next couple of days. However, the spike did not last long and BTC price has dipped by almost 25% since then.
Immediately after the issuance of new USDT, BTC price jumped by over $150 but has slightly decreased since then to trade around $6210 at press time. The release of additional Tether tokens raised the market cap for the stablecoin to over $2.7 billion. This, coupled with the slight decrease in the price of TRON, despite it launching the mainnet today, let Tether finally enter the top 10 of biggest cryptocurrencies, according to CoinMarketCap data.
According to official statements on the Tether website, the firm is holding over $3 billion in its reserve bank accounts, indicating that a further influx of around $300 million worth of USDT tokens could be on the cards soon.
However, not everyone is convinced new USDT tokens will help the crypto market rebound after a prolonged slump, as Litecoin founder Charlie Lee commented on the event:
Generally, this has been a precursor of price going up. Tether gets printed when people deposit USD and get USDT back. This USDT will then be used to buy crypto. This is similar to someone depositing $250MM to exchanges. Of course, that doesn't mean they will buy right away. DYOR https://t.co/zg2PEjGohv
— Charlie Lee [LTC⚡] (@SatoshiLite) June 25, 2018
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