The leading stablecoin Tether (USDT) continued to plummet by another 2.2 billion in the last 24 hours. Additionally, another 250 million coins are out of circulation. Customers continue to withdraw based on suspicion about whether the currency is actually fiat-backed. Furthermore, the company still didn’t provide proof of this.
Tether (USDT) does not reveal this on their website, but their CEO is also the CEO of Bitfinex
Jan Ludovicus van der Velde heads both, which led to suspicion about ulterior motives. Therefore, newly issued tokens are fed straight into the Bitfinex exchange. Additionally, some speculate that Tether (USDT) could be a ploy to manipulate the value of Bitcoin (BTC).
Furthermore, Tether claims their token is backed by fiat. Therefore, many wonder how it is possible for its value to drop below $1. Right now, it is hovering at about $0.95 following a drop as low as $0.85 on Kraken this past Monday. Although Tether assured traders that it is backed 1:1, they are yet to release any proof confirming their claims, or even which banks they’re using.
What may have begun as a decreased dollar parity has since snowballed
The decline clearly reflects the lack of faith based on the company’s poor transparency. Their value dropped 25% in the last month. Furthermore, the token launched last August with a volume of 3 billion. However, Tether has since withdrawn 560 million.
This mass exodus had a positive effect on other coins. A competing stablecoin, Paxos Standard (PAX), rose to over $15 million in total market cap since Monday.
If the trend continues, the loss for Tether (USDT) will be a long, devastating fall
Just a few months ago, the token accounted for 80% of Bitcoin (BTC) trading volume, and even now it’s one of the top 10 currencies.
Bitfinex issued a press statement this week. The company assured customers that they can still trade as normal using Tether (USDT). However, they’ve restricted fiat deposits for many. Moreover, the announcement did little to stop more and more people from withdrawing.
This year has been a string of bad news for the companies
The CFTC subpoenaed both Tether and Bitfinex at the end of last year to investigate potential price-manipulation. Following this, their chief strategy officer stepped down. However, authorities did not reveal the results of the investigation. Regardless, at this point, it may be imperative for Tether and Bitfinex to improve their transparency to regain the public trust.
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