Already surrounded by controversy, the Tether stablecoin has minted an additional $250 million worth of its USDT coins. The creation of large amounts of Tether tokens has been a topic of heated debate in the crypto community in the past and it is sure to ignite some controversy this time as well.
Many believe that such USDT token influxes have a direct impact on the price of the two biggest digital currencies – bitcoin and ethereum. Following the creation of USDT tokens, bitcoin’s price gained around $150 in 20 minutes while ethereum rose by $20 in the same time frame.
Similar price movements have been observed in the past cases of USDT token printing, thus there is speculation that new token introduction is a clever way to artificially increase cryptocurrency prices. However, there is no empirical proof supporting this theory yet. The most recent artificial influx of USDT was on March 20th when $300m of tokens were printed.
Tether claims that every USDT is backed by US dollars at a 1:1 ratio. According to the company, after receiving deposits in US dollars, it creates an equivalent amount of USDT and gives the tokens back to the investors. If these claims were correct, it means there are over $2.7 billion dollars backing this token, which, given the lack of transparency within the company, is still hard to believe.
The US Securities and Exchange Commission Audit firm served Tether with subpoenas, which caused them to hire the audit firm Friedman LLP to conduct an official check on the company. However, auditors were shortly relieved of their duties, casting further doubts over the company. At the moment there is still no proof that Tether has the USD reserves to back its token.
Tether has been holding a monopoly on stablecoins for quite a while but it seems that it will have to deal with quickly emerging competition from the likes of Goldman Sachs-backed Circle or other projects, such as TrueUSD and Basis.
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