Yesterday brought to the open something that many within the cryptocurrency community had feared/believed for a long time. Tether is not 100% backed. While a revelation like this would ordinarily sink the market in a pit of despair, this time was different, in fact, Bitcoin cited a modest rise of 2.2%… not bad considering this could be classed as pretty earth-shattering news. So why didn’t the market collapse after this latest Tether FUD?
For those of you not fully clued up, a recent investigation into Tether was launched by the New York Attorney General’s office, shortly after Bitfinex dipped into is USDT stabilizing cash reserves.
According to Tether representatives, the company did this in order to regain what they dub as “temporary” losses of $850 million which – according to the firm – is currently frozen within a Panama based account. The proceeding court filings forced the hand of Tether’s legal counsel who signed an affidavit which read:
“As of the date [April 30] I am signing this affidavit, Tether has cash and cash equivalents (short term securities) on hand totaling approximately $2.1 billion, representing approximately 74 percent of the current outstanding tethers.”
So why didn’t this latest piece of Tether FUD cause Bitcoin and the wider market to dump?
Let’s first start by laying down why Tether not being fully backed is pretty worrying…
For starters – and not to pour fuel on the flames of controversy – but Tether has a fairly chequered past when it comes to checks and balances; so much so in fact that the firm and its sister company, Bitfinex actually have their very own detractor, the anonymous blogger, Bitfinex’ed (how many stablecoins can claim a dedicated antagonist, ey?).
