USDT tokens are now fully secured by Tether reserves. The company announced this in a publication that serves as a response to a study on the manipulation of the cryptocurrency market by professors John M. Griffin and Amin Shams.
Tether Response to Flawed Paper by Griffin and Shamshttps://t.co/5DymkhOOHX
— Tether (@Tether_to) November 7, 2019
Recall that Griffin and Shamsi updated the 2018 study. According to it the Tether cryptocurrency was used to manipulate the Bitcoin exchange rate. The authors also wrote that for these purposes, USDT tokens were issued in large volumes. therefore experts concluded, that USDT is not secured by the US dollar.
In an updated version of the study, the authors argue that there is only one major investor behind the manipulation of the Bitcoin exchange rate. According to version, this player “had an extremely large impact on the price of Bitcoin”.
Stuart Hoegner, the chief legal adviser to the Bitfinex cryptocurrency exchange and Tether Limited, described the study as “fundamentally wrong.” The cryptocurrency community has also criticized the work of experts. Morgan Creek Digital co-founder Anthony Popliano wrote that he considers this study a lie.
Narrator: This is false. https://t.co/BzSKomWMe0
— Pomp 🌪 (@APompliano) November 4, 2019
At the same time, Tether is involved in market manipulations, but the question of whether the USDT is fully secured by the US dollar has long been a matter of debate. The company promised to conduct an internal audit of its reserve, but instead, it severed relations with the audit firm Friedman LLP, which conducted the audit.
Last year, Tether Limited became a partner of the Bahamian Deltec Bank & Trust. According to an official statement, the bank accepted the company as a permanent resident, while conducting a full analysis of its activities. Deltec experts then concluded that each USDT token is secured by a US dollar. As proof of this, Tether Limited shared a copy of a letter from Deltec with reporters.
Only in the spring of 2019, when the office of the New York State Attorney General accused the Bitfinex cryptocurrency exchange of concealing losses of a total of $ 850 million from Tether, the company announced that USDT could not be 100% backed by fiat currency.
At first, Tether changed the text on its official website. Where it was argued that “every token is always provided with traditional currency stored in reserves, in a one-to-one ratio”, it is now written that stablecoin is backed up with reserves that “include currencies and cash equivalents, as well as, from time to time, other assets and upcoming income from borrowers. ”
A little later, Hegner personally confirmed that USDT is not 100% secured by the US dollar. The legal adviser gave written testimony in which he admitted that as of April 30, 2019, Tether had about $ 2.1 billion, which means that stablecoin is provided with approximately 74%.
Tether now states that all Tether tokens are fully backed up and issued by market demand. According to the company’s data, it now owns assets totaling more than $ 4.6 billion, including $ 4.56 billion in US dollars, $ 44 million in euros and $ 3.3 million in Chinese yuan. In an email that Hegner responded to a Coindesk request, information is cited from the Tether website.
Hegner emphasized that “the number 74%” of his testimony refers to “specific assets at that point in time, and not to total reserves”.
Regarding the remainder of the article, Tether said in a statement that the authors demonstrate a fundamental misunderstanding of the cryptocurrency market. Also, the company noted that experts themselves acknowledge that the trading models they observe may well correspond to market operations with Tether, and not with the issue of new stablecoins
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