Tether (USDT), the biggest stable coin cryptocurrency, has lately faced a barrage of negative press. Allegations have resurfaced that the stablecoin’s reserves, which are meant to be backed 1:1 by USD, are instead backed by questionable assets that do not equal US dollars.
a report published recently shed light on the issue. Tether lacked sufficient funds to support its stablecoin supply. It singled out Tether’s Chief Financial Officer, Giancarlo Devasini, for allegedly investing the company’s reserves. Additionally, it claimed that Tether was investing in Chinese businesses and providing crypto-backed loans “worth billions of dollars.”
“Tether has yet to reveal the whereabouts of its funds. If Devasini is willing to take enough risk to achieve even a 1% return on Tether’s total reserve base, he and his partners will make a $690 million yearly profit. However, if even a tiny proportion of those loans fail, one Tether will become worth less than $1,” Faux said.
The report has sparked a fresh round of outrage among cryptocurrency market players. CoinDesk goes on to examine 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 struck 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 transactions and manipulation of their stock prices.
The report cautions that Tether, which now has a market capitalization of more than $68 billion, was “emulating the leveraging technique that made Iceland’s minuscule banks seem big” by not being fully open about its reserves backing.
Meanwhile, Tether has responded to Bloomberg’s story, rejecting all of its allegations. According to their reaction, the piece does nothing more than attempt to create a misleading narrative.
“This post is nothing more than an effort to prolong an outdated narrative arc about Tether based on hearsay and disinformation provided by unhappy people who have no connection with or direct knowledge of the business’s activities. This is just another old effort to discredit a market leader whose record of innovation, liquidity, and success speaks for itself.” They finish their answer by emphasizing once again how completely supported Tether coins are.
“The business has established a precedent for openness by releasing quarterly assurance attestations (as recently as the goal date of June 30, 2021) verifying that all Tether tokens are properly backed,” the statement said. However, market sentiment remains negative for Tether as the stable coin struggles to shrug off the accusations.
Also Read: El Salvador Will Construct A $4 Million Veterinary Hospital With Proceeds From A Bitcoin Trust
Wallets