Experts question Tether, and from crypto they respond: this is what each party argued

An investigative report reveals critical issues regarding the supply of Tether, the leading stablecoin. The company denies the allegations

Much has long been questioned about the funds that back the largest stablecoin by market volume: Tether. In an investigation into Tether, the journalist Zeke Faux and a team from Bloomberg unearthed new information about the assets that back the stablecoin Tether pegged to the US dollar.

With a marketcap of $ 69 billion and a transaction movement in the last 24 hours of $ 86 billion, according to CryptoMarkets charts, Tether’s support and transparency have long drawn great interest.

In the Bloomberg report, the journalist reports: “I also learned that Tether had loaned billions of dollars more to other cryptocurrency companies, with Bitcoin as collateral. One of them is Celsius Network Ltd., a giant quasi-bank for investors. in cryptocurrencies, its founder Alex Mashinsky told me. He said he pays an interest rate of 5% to 6% on $ 1 billion in loans from Tether. “

It is not the first time that there are questions, and even investigations, about the crypto Tether

The Bloomberg Report

“It has always been a mystery how Tether is endorsed, or if it is actually endorsed. For years, a persistent group of critics have argued that, despite the company’s guarantees, Tether Holdings You don’t have enough assets to hold the 1-to-1 exchange rate, which means your currency is essentially a fraud. But in the world of cryptocurrencies, where prank coins with pictures of dogs can be worth billions of dollars and scammers periodically make fortunes with absurd-sounding schemes, Tether seemed like just another curiosity.

So this year, Tether Holdings started putting a huge number of digital currencies into circulation. There are now 69 billion Tethers in circulation, 48 billion of them issued this year. That means the company reportedly has $ 69 billion in real money to back the coins, an amount that would make it one of the 50 largest banks in the United States, if it were a US bank and not an unregulated offshore company.

Why does Tether mint so many coins?

He goes on to say in the report: “On Twitter, on business TV, and in the trading rooms of hedge funds and investment banks, everyone began to wonder why Tether was minting so many coins and if he really had the money. money he claimed to have. An anonymous blog against Tether titled “The Bit Short: Inside Crypto’s Doomsday Machine” went viral, and the CNBC host, Jim Cramer, told viewers to sell their cryptocurrencies. “If Tether collapses, then it is going to eviscerate the entire cryptocurrency ecosystem,” he warned.

As far as regulators go, the size of Tether’s alleged dollar holdings is so large that it would be dangerous even assuming the dollars are real. If a sufficient number of traders requested the return of their dollars at the same time, the company could have to liquidate its assets at a loss, triggering a run towards the non-bank. Losses could cascade to the regulated financial system as credit markets collapse. If the trolls are right, and Tether is a Ponzi scheme, it would be bigger than Bernie Madoff.

So earlier this year I set out to solve the mystery. The money trail led from Taiwan to Puerto Rico, the French Riviera, mainland China and the Bahamas. One of Tether’s former bankers told me that his chief executive officer had put his reserves at risk by investing them to potentially make hundreds of millions of dollars of profit for himself. “It’s not a stablecoin, it’s a high-risk offshore hedge fund,” said John Betts, who ran a bank in Puerto Rico that Tether used. “Even their own banking partners don’t know the extent of their holdings, or if they exist.”

So far Tether has come out successfully from everything that has been accused, until when will the same happen?

So far Tether has come out successfully from everything that has been accused, until when will the same happen?

Tether’s response

Following publication, Tether issued a public statement in which it states: “The Bloomberg BusinessWeek article published today is a one-act play that the industry has seen many times before, taking snippets of old news from various places and dubious sources. , and fitting it into a pre-packaged and predetermined narrative. ”

He adds: “Crypto, and Tether in particular, are fostering a revolution in financial inclusion, transforming a model that does not work in a modern world. This article does nothing more than try to perpetuate a false and aging story about Tether based on innuendo and misinformation, shared by disgruntled people without direct involvement or knowledge of the company’s operations. ”

He states: “The reporter … trusts John Betts, the former director of Noble Bank, whom Tether fired as his banker. In an ongoing lawsuit, Betts has also been accused of engaging in heinous and wasteful personal dealings and seeking to enrich himself at Noble’s expense. It shows a complete lack of diligent investigation and is full of outlandish anecdotes that are not geared toward ethical reporting but character assassinations. “They’re backed up, according to Tether

In the statement he continues: “Here are the facts: all Tether tokens are fully backed, as we have consistently demonstrated.”

He adds: “There will always be a market for Tether as it presents an opportunity for merchants to engage with the larger crypto ecosystem. It is a resource for the unbanked, a tool for an evolving payment system and a leader in driving the widespread adoption of a new financial revolution. Tether is the most liquid stablecoin on the market, it was the first stablecoin and has weathered years of volatility. ”

CEO disappears from Twitter

The Cryptobriefing medium reports today that the Twitter account that belongs to the CEO of Tether, Jan Ludovicus van der Velde, Was eliminated. The removal came shortly after Bloomberg published the aforementioned investigation into the company’s USDT reserves. The latest statement from the CEO said “stay tuned.”

Van der Velde’s account was previously under the username @urwhatuknow. His latest tweet, posted on October 4, is still available as an archived page and anticipated the content of the Bloomberg article by several days. That post reads: “Another financially enslaved dying magazine trying to create a Tether FUD to bring in some money and delay its extinction for a few more days, stay tuned …. #dinosaurs”

Even before his account was deleted, Van der Velde was still extremely elusive, says Cryptobriefing, saying some have questioned whether the CEO exists or whether the name is simply a pseudonym.

Source: Bitcoin Daily

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Experts question Tether, and from crypto they respond: this is what each party argued

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