I don't know if anyone here has been following Tether (USDT), the so-called king of Stable Coins
Tether, the altcoin which is backed by the fiat currencies of USD and Euro has minted $550 million tokens priced at $1 per token in the last two months alone, and has failed to find a replacement auditor after they fired their auditors, Friedman LLP.
I don't have any stakes nor holdings in Tether, but given the importance of Stable coins as a source of liquidity in the market, and the possible implications of fraud, if uncovered at last will have on the markets, I am forced to ask:
Does tether (USDT) Have $2.5 billion dollars in fiat backing their coins in reserve?
Data shows tether has generally lived up to its promise of stability. It's generally been traded between $0.80 to $1.13. Commendable, but their online antics have left pervasive accusations of fraud.
The most vocal denouncer is a guy called Bitfinex'ed, and I scoured through his posts on Medium, up to far back 2017: his predictions are chillingly spot-on. For instance, he predicted in Sept. 2017 that Tether will never allow their books to be audited until after at least two years so that the round-tripping (issuing more USDT than it has dollars in the bank, in order to drive up the price of bitcoin, and then conversion back to fiat to shore up fiat reserves backing tether] can be scrubbed or hidden from their books; and, that's largely what's happened.
Why Are People Concerned?
Well, I found this statement from Weis Ratings, a decades old securities firm that began analyzing cryptocurrencies recently highly enlightening?:
"Tether is the only 'cryptocurrency' with trading volume that regularly exceeds that of its market cap. This means the entire Tether supply changes hands regularly, sometimes more than once a day. ... This is important to know because it tells us that Tether is used for trading A LOT. It's one of the main sources of liquidity in the cryptomarkets." Source.
Let that sink in for a bit: Tether's entire market cap changes hands at least once or twice, sometimes even more daily... when you think about this fact, Bitfinex'ed's claims start making a lot of sense.
My Verdict Plus Another Perspective
Something very bad is going is going on at Tether is my verdict; however, the people at Bitmex, the respected blockchain and cryptocurrency think-thank posit it may well be a case of banking difficulty, and the reality of operation within regulatory grey zones. In their own words:
"We suspect that Tether may have struggled to find appropriate banking relationships. ... We believe this is likely to be the primary reason for the apparent lack of transparency, rather than a lack of USD reserves. The transparency that some Tether stakeholders seem to expect may not be possible in the financial sector when the underlying activity is not clearly authorized or regulated by the authorities."
This explanation is more comforting, but it precludes Transparency, which in the world of crypto and blockchain, is a badly needed quality that should not be lacking in any team or project. What are your thoughts?