Further Investigations Into World’s Leading Stablecoin

Further Investigations Into World’s Leading Stablecoin

Reports have surfaced that suggest Tether has got the billions to back its promises to suggest that the stablecoin could be backed one-to-one by dollars. That said, the reserves do not necessarily prove the innocence of Tether in a laundry list of other mismanagement.

Earlier in the week, it was reported by Bloomberg that “Crypto-Mystery Clues Suggest Tether Has the Billions It Promised,” alluding to statements which go back four months of money cash held in Tether’s dollar reserves. Unfortunately, though, these claims don’t ensure the leading stablecoin to be backed one-to-one prior to the date of the bank statements, or even somewhere in between reporting periods.

As found by Bloomberg, the information they have obtained doesn’t eradicate Tether potential misconduct or alleged manipulation in the market.

As reported by one of Bloomberg’s recent new pieces, “one statement shows $2.2 billion was in Tether’s account at Puerto Rico’s Noble Bank Ltd. on Jan. 31. That same day, 2.195 billion Tethers existed.”

As reported by CryptoSlate, “these claims could suggest Tether really is backed one-to-one by dollars, calming the overwhelming skepticism around Tether’s marketing claims. Some in the media have trumpeted the report, falsely suggesting that Tether is backed by deposits of USD and downplaying the risks involved with owning the coin.”

Tether’s controversy

There is a huge amount of Tether tokens (USDT) in the circulating supply right now, considering the crucial importance of Tether in the crypto space, the amount of controversy around it is jaw-dropping.

There have been a lot of inquiries asking whether the leading stablecoin is a scam with several news outlets writing on the topic, there is even an army of authors on Medium and similar platforms spreading the controversy.

Manipulation

On top of all this, a research paper authored by the Chairman in Finance at McCombs School of Business at the University of Texas in Austin, John Griffin studied the chances of the manipulation for the price of Bitcoin by utilising Tether.

In the Study, it says that if Tether was sent onto exchanges instead of demanded by investors with dollars in hand, then the stablecoin might be fully backed by dollars when it gets issued. In addition to this, using Tether’s digital currency reserves, the firm will be able to move its assets around to claim that their holding is completely backed.

“However, if the issuers [Tether Ltd.] wished to post monthly bank statements to shore up dollar reserves and appear fully backed, this would necessitate the liquidation of the purchased Bitcoins at the end-of-the-months.” later in study is confirms the relationship between demand from the investor to the price of Bitcoin, ”these patterns cannot be explained by investor demand proxies but are most consistent with the supply-based hypothesis where Tether is used to provide price support and manipulate cryptocurrency prices.”

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