Several major events regarding the crypto world have been dominating the headlines in the last few days, with some conjecture that they might be connected. First, Tether printed $250m additional USDT tokens, which was seen as a hint that the prices might go up yet again. However, $100M of those tokens were sent to Bitfinex after its CSO decided to step down.
Tether: new developments and controversy
The crypto world is taking this as a sign that the market is about to enter a major recovery period, considering that there was no apparent requirement for those coins to be printed. The prices have, indeed, started to change, but thought is that this is a self-fulfilling prophecy and Tether’s real goal was not to announce or prepare for a bullish market.
Tether has been in the spotlight recently due to the suspicion that it manipulates the prices of other cryptos. With the price of BTC changing so dramatically, it appears that the suspicions may be founded. In addition, a large number of various theories regarding Tether and Bitfinex has emerged.
Remember one of the theories prevalent around Tether is that they used Tether to pump the price of Bitcoin and then sold at the higher price to back the tokens. 6/
— Bennett Tomlin (@BennettTomlin) June 26, 2018
One of the more popular ones claims that Tether prints and sends coins to Bitfinex whenever Bitcoin is in trouble. Bitfinex then helps with BTC’s price by trading it through the use of Tether, and within its own exchange. Bitcoin’s price goes up as a result, and Bitfinex sells it off while the value is up. So far, this has not been proven to be true, but if it is, it’s anything but legal.
The entire 2017 bull run was:
>Tether prints money out of thin air
>Uses it to buy Bitcoin
>Bitcoin goes up due to fomo
>Tether sells Bitcoin for real USD
>Now they have $2 billion
>See how tether is backed 1:1 by USD?
And you wonder why the executive from the US left?
— Altcoin Thoreau (@altcointhoreau) June 23, 2018
The biggest question now is whether Tether has the amount of money that is needed to back up all the cryptos that it has released. If it does, it is providing a very useful financial service. On the other hand, if it doesn’t, it is printing an unbacked currency. The reason why this is unknown is that Tether never went through an independent audit, and has even stated that it has no intention of doing so.
The two reasons given by the company for doing this are vague, with the first claiming that the process is too long, and the second that the accounting firms are too tedious to handle Tether. Instead, they provide a letter issued by FSS (Freeh, Sporkin and Sullivan Law Firm), which basically claims that the company has the money to back the cryptos, it just won’t verify or prove anything at this point.