Tether has been under spotlight again since the past few weeks for manipulation in Bitcoin prices as the supply of Tether keeps on increasing. This has been primarily due to raising concerns that Tether is being used to manipulate the price of Bitcoin, and no real transactions are going on at the moment.
Paolo Ardiono, the CTO of Bitfinex and Tether tweeted about the $100 million in USDT that was minted on Bitfinex on 4th July 2019. According to tweet, it is primarily being performed to move the Tether from OMNI to Ethereum’s ERC-20. He tweeted,
We are getting more and more requests to swap Tether from Omni to ERC20. That’s why these Tethers got minted: https://etherscan.io/tx/0x0fc2fc3f07570328b3d86f8db29119468a429398806a8b3dd7f57add1e23563c … As you can see https://www.omniexplorer.info/search/1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz … is growing since it is receiving Tether-Omni leg. Once the swap flow will be stable we’ll burn the excess.
The price of Bitcoin moved by around 1.5% in the subsequent hour of the new Tether. While Paolo confirmed that the excess Tether would eventually be burned, the issue with Tether continues to raise doubts about manipulation in Bitcoin price movements.
The AG of New York filed a court case against Bitfinex and Tether earlier this year, accusing the two of implementing shadow banking and falsely reporting the amount of US dollar that is backed for the amount of USDT released in the market. Nevertheless, the two firms cleared their stance in court by accepting that they operate as a fractional reserve, just like the banks.
Recently, Jesse Powell, the CEO of Kraken, a crypto Exchange, talked about the accusations of manipulation at Tether in an interview with TD Ameritrade. According to him, the retail volume is real, and since Tether is the most popular and widely used exchange medium, its volume is rising as well. Powell told the media,
“Recently, we’ve had massive inflows of fiat currency, so I believe the Tether prints are a result of new fiat coming in,” added Powell.
However, a contrary view is held by some other parties on the issue. In an interview, Jason Fernandes of AEToken noted,
“… Sure, CEO of Kraken Exchange might be an unbiased source. But in terms of looking at Tether and believing anything that comes out of them… I would be very wary of that.” He also added, “This is a company for a long time said that they were a stablecoin and they are 100% backed. Suddenly they came out and said they were a fractional reserve currency which they never said before or apologized for the change.”
Furthermore, whenever new Tether is mined or released in the market, it is usually a precursor for an upcoming rise in Bitcoin [BTC]. As the price of Bitcoin [BTC] keeps moving up with rising interest, the traders and investors can hope that Tether and Bitfinex are legitimate.
Do you think Tether is the best stablecoin in the market? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com