A Closer Look at Tether (USDT)
Tether (USDT) logo - cryptocoinspy

A Closer Look at Tether (USDT)


USDT logo - flowbank

Tether (USDT) is a stablecoin, which means it is a type of crypto which aims to keep crypto valuations stable.  They claim to be backed by an equivalent amount of traditional fiat currencies, such as the US dollar or Euro, which are supposed to be held in a designated bank account.  Stablecoins are used by investors as an escape route from the extreme volatility of the market, ensuring they keep value in their portfolio.

Tether has been gaining a lot of attention within the past week... and it's not exactly for great reasons.  People are now worried that the 3rd highest volume cryptocurrency is, in fact, another great ponzi scheme.  Investors are concerned that Tether isn't fully backed by traditional currencies and assets like they claim to be.  In this article, we will be taking a closer look as to why this is.

 

I am not sponsored by anyone or anything mentioned in this article. 
This is not financial advice.  I am not a financial advisor.
Please do your own research before making any decisions before investing. 
This article is meant for educational purposes only.

 

Tether logo - bitcoinexchange

Tether was specifically designed to build a bridge between fiat currency and cryptocurrency.  It's meant to provide stability, transparency, and minimal transaction fees for their users.  Claimed to be pegged to the US dollar, it should maintain a 1-to-1 ratio with the US dollar in terms of value.  This sounds fantastic, but there is no real guarantee provided by Tether for exchanging it for real, physical US dollars... and it only gets worse from here.

Back in November 2017, Tether claimed to be hacked for over $31 million dollars worth of Tether stolen after a hard fork was performed.  Fast forward to January 2018, with plans of an audit to be performed to ensure that Tether is actually backed by fiat currency and real-world assets, Tether backed out and parted ways with the audit firm due to a subpoena issued by regulators.  This raised many eyebrows in the crypto community, as the lack of transparency and illegitimate proof of backed value was a major red flag.

Don't worry, the fun continues.  In April 2019, iFinex Inc, the parent company of Tether and operator of Bitfinex, was accused of hiding a loss of $850 million.  According to court documents, these funds were distributed to a Panamanian company called Crypto Capital Corporation without an official contract or agreement made.  This money was taken from client and corporate funds from investors.  Allegedly, Bitfinex took at least $700 million from Tether's cash reserve to hide the value gap after the money mysteriously disappeared.

According to the company's LinkedIn, Tether employs only 13 people.  If this is truly all of their workforce, it means that each employee is in control of over $5 billion worth of assets.  This is an absurd amount of money to be handled without proper auditing being in place to ensure the money is being moved around and backed by assets correctly.  Tether has since refused to complete an audit to show transparency in their operation at the time of writing this article.

On Tether's website, they make a claim that's quite unusual as well.  "Every Tether is always backed 1-to-1 by traditional currency held in our reserves.".  The website also says that each Tether can be redeemed for $1.  If you look in the terms of service, it states, "There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money.  We do not guarantee any right of redemption or exchange of Tethers by us for money.".  I don't know about you, but this seems awfully suspicious to me.

 

What do you think about Tether (USDT)?
Let us know in the comments down below!

 

Thanks so much for reading! 
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Gongo
Gongo

I like to write about anything crypto! If you are also on Hive/LeoFinance, give my page a follow at leofinance.io/@cryptosota!


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Keeping A Close Eye on Crypto

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