Hold it right thereTether is laying down the law by freezing funds associated with troubled FTX as its stablecoin suffers its worst de-peg since the Terra collapse.
- Tether has frozen $46.3m in USDT owned by FTX after being requested to do so by law enforcement. The move comes as FTX pauses user withdrawals for several days as it struggles with an $8bn shortfall – a shortfall that founder Sam Bankman-Fried finally broke his silence on to admit that he “f*cked up”, which some would say is putting it lightly…
- The stablecoin also briefly depegged from the dollar on Thursday amid the FTX chaos, reaching a low of $0.971. The last time USDT had fallen so low was in May as a result of the collapse of Terra, furthering the argument that SBF’s company is Terra 2.0 as well as fears that this collapse won’t be the last in the cryptoverse. USDT recovered partially in Friday morning trading but is still below the $1 mark.
- FTX is getting the silent treatment around the world. Japanese authorities ordered FTX to halt its operations in the country, saying the exchange had halted withdrawals without explaining why to its customers. For now, FTX’s US arm is still operating, but has warned that withdrawals may be halted in the next few days. On top of that, the SEC is officially investigating SBF for the fallout.
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Tethered to transparencyStablecoin issuer Tether has turned over a new leaf by finally changing the heavily criticized backing of USDT.
- Tether has finally completely eliminated commercial paper from its reserves, replaced by US Treasury bills. Commercial paper is a short-term unsecured debt which carries pretty high credit risk, and the stablecoin issuer had long been criticized by regulators for its over-dependence on it as backing for its USDT stablecoin.
- The group’s been battling to improve its reputation after rumors circulated earlier this year that USDT was as much as 85% backed by Chinese commercial paper. It’s a pretty big deal as USDT is often described as the ‘backbone’ of the industry and remains one of the most highly traded cryptos.
- The move might help USDT maintain its dominance in the stablecoin space. Its closest competitor USDC has a lower market cap of $45bn compared to Tether’s $68bn, but has relied less heavily on commercial paper backing in the past.
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Talking time’s overTether’s been asked to put its money where its mouth is as concerns grow around how its stablecoin is backed.
- A US judge has ordered Tether to produce records proving the backing of its USDT stablecoin as part of a lawsuit alleging the company has conspired to inflate Bitcoin’s price and caused losses in the crypto market of $1.4tn. Not a great position to be in then.
- As you’d imagine, Tether’s not too happy about it. The group stated that the documents are “commercially sensitive” and could be damaging if published. It’s not the first time they’ve been in hot water, having paid a settlement of $18.5m last year after a probe into their finances alleged they hid losses and lied about their reserves.
- Regulators have been getting busy drafting new stablecoin regs, with the White House recently releasing a framework for tougher backing-requirements. Even Ethereum’s been in the regulatory spotlight recently with the SEC claiming it falls into their jurisdiction. The days of ‘easy money’ for stablecoin issuers could be drawing to an end.
Tether tussles with the Wall Street JournalTether’s getting touchy about its balance sheet as questions are raised about the stablecoin issuer’s solvency.
- Tether has rebutted claims that it could be teetering on insolvency after The Wall Street Journal released a report on Saturday describing the stablecoin issuer to be sitting on a “thin cushion of equity”. The newspaper claims the USDT operator has just a $191m margin between its assets and its liabilities – and a 0.3% slump would cause insolvency.
- The stablecoin giant described the claims as “erroneous” and tweeted that “the article seeks to discredit the work that Tether has put into transparent and honest communication with the public.” WSJ isn’t alone tho, Bloomberg has similarly raised concerns about how heavily the group relies on commercial paper based backing.
- Stablecoins are coming under scrutiny for how they are backed, and further regulation of the space seems likely to come in the near future. The collapse of Terra’s UST stablecoin in May this year caused Tether’s USDT to drop to a price of $0.95. Just goes to show – algorithmic or not – stablecoins need to be careful with how they’re backed.
A tale of two stablecoinsUSDT and USDC have been left divided on how to adhere to new rules set out by the Office of Foreign Assets Control and its ban on crypto-mixer Tornado Cash.
- The market cap of Tether’s USDT stablecoin is up by around $2bn since Tornado Cash was blacklisted by OFAC, and has reversed a three month downward trend. The reason for this? Its main competitor, Circle’s USDC, has been freezing the assets of wallets interacting with the now-banned service – while Tether has not.
- USDC’s market cap now sits at $53bn, down from $55bn, after its decision to freeze over 75k tokens in at least 44 different wallets for their links to the crypto-mixer in a move that defos made it the less popular choice for crypto criminals. I guess in crypto, doing the ‘right thing’ isn’t always the best thing.
- So far, OFAC hasn’t explicitly told stablecoin issuers to freeze assets but millions in Tornado Cash-associated USDC are now pouring over into USDT. Tether’s approach might be paying off for now but if OFAC gets more specific about what stablecoin issuers need to do, Circle might have played the winning strategy.
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Merge groupies gatherStablecoin issuers are rallying behind Ethereum’s upcoming merge while altcoins have a moment in the market.
- Stablecoin giant Tether has put its weight behind the Merge. The issuer of the world’s largest stablecoin on Tuesday committed its support to the switch to proof-of-stake and, saying the Merge one of the “most significant moments in blockchain history” and is essential for the long-term health of the DeFi system. So no pressure then.
- It’s hot on the heels of a similar statement from USD Coin issuer Circle, and support like this from some of the biggest players in the stablecoin space could help with a smooth transition to ETH 2.0 – tho it’s bad news for ETH miners who are facing a loss of income and are pushing for a hard fork after the merge, which both issuers (among others) said they were against.
- Ethereum’s market share has been on the up and up as everyone gets excited about its transition, another clue of a potential altcoin rally on the way. Bitcoin’s dominance is at a 6-month low and the currency currently makes up only 41% of the overall crypto market cap, while Ethereum’s dominance has jumped from 14.3% in mid-June to now stand at around 19%.
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Tether touts newfound privacyTether is teaming up with Bitfinex and Hypercore to create a peer-to-peer app suite.
- Tether, Bitfinex, and Hypercore have launched Holepunch – a desktop platform that seeks to develop peer-to-peer (P2P) apps that will become part of the shift to web3. For now, it’s not ready for mobile, but when it does launch, the companies believe the video quality will be v impressive.
- Keet – a video chat and social messaging app – will be the first to launch. The idea is that Keet will be fully encrypted and offer better privacy than its competitors like Google Meet, Microsoft Teams, and Zoom. Users will be able to make direct calls on a P2P basis, with nothing stored on a third-party central server.
- Tether claim that “breaking free from technology monopolies” is a key motivator guiding Holepunch. The platform itself will not rely on any blockchain, but the built-in payments API will run, operate, and be powered by Bitcoin’s Lightning Network. USDT, meanwhile, will be supported as the default micropayments system.
Tether’s big weekTether shrugs off all the stablecoin fiascos, brokering two big deals in the space of a week which are set to expand its ecosystem.
- Tether is coming to Mexico after the launch of its new stablecoin MXNT. The token will be pegged to the Mexican peso, the first of its kind in Latin America. Tether dubs the launch as a “testing ground” in the region to potentially “pave the way” for more fiat-pegged tokens.
- Elsewhere, USDT will now be added to Polygon. On Friday, Tether announced that its stablecoin will support Polygon’s DeFi network which is currently home to 19k dApps and has over 142m users making transactions.
- It seems Tether has finally got some good news behind it. Sure, all the attention has been on stablecoins lately thanks to the collapse of Terra’s UST, but Tether has been feeling the heat in particular. Questions over its reserves, as well as USDT briefly losing its peg shortly after UST, has left many users worried about the #1 stablecoin.
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It’s awfully quiet over at Tether HQTether has decided to stop reporting what its supply is apparently, and peeps are getting a ‘lil worried.
- Tether’s market cap has fallen by $8bn in the last few days, leading some inquisitive folk to take a look at its ‘Transparency Page’, which gives daily updates on its supply. Turns out, it’s been neglecting that for several days, which is not quelling the nerves of those who want to know how much USDT is actually getting withdrawn.
- It also handed out $7.6bn in redemptions to users after it briefly lost its dollar peg last week. This had left a few peeps on social media trying to work out the math – if Tether only has $4.1bn in its cash reserves, where did the other $3.5bn come from?
- Others think the only way to settle this is through an audit report. On Twitter, CTO Paolo Ardoino hit back at the suggestion, claiming Tether has “all the liquidity to handle big redemptions.” So no audit report just yet, it seems.
Trouble in Tether TownIt wouldn’t be the cryptoverse if people weren’t asking where Tether is getting its money from.
- Tether is getting questioned once again after it handed out $7.6bn in redemptions to users freaking out in the face of last week’s Stablecoin Saga. Honoring its promise to cover its investor’s butts, Tether paid out almost double its cash reserves to allow users to trade USDT for $1 during the brief time it lost its parity.
- The No.1 stablecoin had a hiccup after UST’s collapse last week, briefly losing its dollar peg to trade at $0.95. In the time it took to repeg, Tether offered ‘redemptions’ to those redeeming $100k+ worth of Tether – turns out a lotta people did, and now the rest of us are wondering where they got the money from.
- Tether had only $4.1bn in its cash reserves at the end of 2021, so everyone’s curious about where the $7bn has come from. A lot of Tether’s reserves are made up of other assets like debt and corporate bonds, which is why the peeps at Tether got a slap on the wrist for claiming it was backed fully by US dollars – when, in fact, it’s not.
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Tether wobbles amid the LunacyLeading stablecoin Tether strays from its dollar peg amid Terra’s meltdown and market-wide selling pressure.
- Uh oh. USDT dropped to as low as $0.94 early on Thursday morning. As of writing, Tether has somewhat recovered to $0.98 as it tries to re-peg with the dollar. This marks its lowest stray from a dollar in over 2 years. Let’s just hope people aren’t mistaking it for UST.
- It seems it's not just algorithmic stablecoins that are feeling the heat then. Unlike UST that ran (are we allowed to use past-tense yet?) on an algorithm that artificially controlled supply and demand, Tether is a collateralized stablecoin backed with fiat. Seems like people are scared of anything with ‘stable’ in its name atm, though.
- Investors can still trade USDT for a dollar, though. CTO Paolo Ardoino tweeted that Tether is honoring its redemption plan, letting peeps redeem the tokens at a dollar via its website while the slip plays out. Fingers crossed this doesn’t get outta hand.
Coming to the end of its Tether?Tether is cutting down on its commercial debt as peeps still try to work out how much cash the stablecoin actually has in its reserves.
- Tether is reducing its short-term corporate debt, otherwise known as ‘commercial papers’, on its balance sheets. The crypto firm already reduced its commercial papers last year, from 44% in Q3 to 30% in Q4. This is part of an effort to get its stablecoin fully backed with the fiat it has safely in its pockets.
- The crypto firm got itself in a tight spot in 2019 with the Commodity Futures Trading Commission (CFTC). In a court fight with the CFTC, Tether was fined $41m for ‘making untrue or misleading statements’ that USDT was backed 100% by fiat currencies. Then it got banned from operating as a business in New York. Ouch.
- USDT is the biggest stablecoin in terms of market cap, coming in at around $82bn. If it were to ever lose its dollar peg a la USDN due to reserve issues, the cryptoverse would most likely find a new layer of chaos.
Biden is tethered to more stablecoin regulationThe Biden administration is not moving on its stablecoin position, demanding more regulation for the dollar-backed tokens.
👩⚖️ The House of Biden released its long-awaited stablecoin report and says that as “compelling” as they are, they need to be classified as banks for regulatory purposes.
🙃 Some investors are pleased despite the gruntwork of regulation, because they want a safety net after the recent Squid fiasco. Others think the administration is withholding financial freedom.
🏎 Tether has just been overtaken by Solana (SOLUSD) as the fourth largest crypto by market cap.
Tether faces the musicStablecoin Tether has gotten itself into some hot water with the Commodity Futures Trading Commission (CFTC) and has been fined $41 million for claiming to have enough U.S. dollar cash reserves to cover every tokens it issues.
The CFTC has slapped Tether and cryptocurrency exchange Bitfinex, which controls Tether, with a multimillion dollar fine after the regulator found that the stablecoin falsely claimed that its tokens were fully backed by dollars. Tether, which is the biggest issuer world’s largest issuer of stablecoins, made claims between 2016 and 2019 that it had big enough dollar reserves to back every stablecoin in circulation – which apparently, was only true for just over 25% of the 26 month period. As the cherry on top, Tether mixed its reserved funds with its corporate funds and held some of the reserves in non-cash products. As you can imagine, regulators aren't thrilled – especially in the midst of calls for greater regulation over the crypto market – and the pair have been handed a fine of over $41 million. CFTC Chairman Rostin Behnam said:
This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace.
Tether has issued over $69 billion in the face of soaring demand.
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