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Tether scandal

05/08/2019
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Increasingly, there are tweets calling to remove the USDT from the largest crypto trading platforms. Some exchanges have already responded to the scandal around Tezer and removed the coin from their listings. And all the fault of the Bitfinex site problem, in which the US prosecutor’s office became interested.

What is Tether?

Tether (USDT) is a token released by Tether Ltd in 2015. The purpose of the issue is to ensure the use of a stable digital coin that is not subject to exchange rate fluctuations, like another cryptocurrency, due to its binding to Fiat, specifically to the US dollar.

The first USDT launched on the Bitfinex exchange listing. After a couple of months, the Poloniex playground already covered it. The token is developed based on the bitcoin blockchain technology. Theoretically, in this way, the coin creators tried to achieve maximum transparency of cryptocurrency operations. The cost of 1 Tether token was $ 1.

In 2018, the CFTC regulator initiated legal proceedings against Bitfinex and Tether Limited, as there were doubts that the issued tokens in the amount of 2.3 billion were actually supported by an equivalent amount of Fiat.

Who has already deleted Tether?

The burst wave has already forced some exchanges to remove the USDT in order to preserve the reputation and its customers, of course. IQFinex has made an official statement that the coin will soon be removed. Digifinex (exchange, which is in the TOP 20) announced its intention to replace Tether with its closest competitors - TrueUSD, TrustToken.

Interestingly, a similar situation has already happened in April. Chappen Zhao, the head of Binance, immediately reacted to the fraudulent activities of the founder of Bitcoin SV, Craig Wright, and removed the coin from the list of traded crypto assets. It is important to note that the head of Binance has not responded to the rumors and accusations towards Tether.

Brian Armstrong, CEO of Coinbase, the largest trading platform, also made a statement and voiced the idea that it is time for the cryptocurrency market to move to a more reliable steylcoin and replace Tether with USD COin.

However, not only the scandal caused the reaction of the exchanges and the replacement of the USDT with other coins. Kina Shek, co-founder of Digifinex, noted that she did not believe in the USDT and had been looking for a reason to replace her for several months. Tether still owns most of the market, however, the popularity of such steyblokinoov as Paxos, USDC, True USD is growing, gradually knocking out the first stable coin from the market. Since its introduction, the USDT has lost 75% of its market, just such data published by TradeBlock.

How do Tether и Bitfinex Comments the situation?

Parent company Bitfinex has published its response on the website of the judicial system in New York (recall that Tether and Bitfinex frauds were received by prosecutors from New York). The essence of the statement is that the accusation was made without any facts. Representatives of IFinex do not deny that the credit line was provided by the issuer Tether, however, they argue that none of the clients was hurt, so there should be no interference.

The company emphasizes that USDT holders can still freely exchange it for a dollar, and Tether has enough reserve to meet demand.

In addition, in their letter they stated that Tether has sufficient foreign exchange reserves, and is able to satisfy any demand, if suddenly the USDT holders decide to urgently exchange their coins.

One thing is clear, that the outcome is not long to wait. And the likelihood that Tether "sinks into oblivion," remains great.

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