Scrutiny Intensifies as Tether Exceeds Supply of 1 Billion USDT


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    Scrutiny Intensifies as Tether Exceeds Supply of 1 Billion USDT

    1 billion USDT have now entered into circulation, again drawing attention to the operations of Tether. The eight-figure threshold for Tether was passed during the creation of nearly 300 million USDT that has occurred over the last seven days.

    Also Read: Bitfinex Critic Claims to be Organizing Class Action Lawsuit Against Ifinex

    Tether First Emerged in November 2014, Comprising a Rebranded Incarnation of ‘Realcoin’ – a Cryptocurrency Launched by Brock Pierce in July 2014

    Scrutiny Intensifies as Tether Exceeds Supply of 1 Billion USDTAccording to Coinmarketcap, the number of Tether in circulation as of this writing is approximately 1.127 billion – making Tether the 24th largest cryptocurrency by market capitalization. At the start of the year, there were less than 10 million USDT in existence.

    After assuming the position of director of the Bitcoin Foundation in early 2014, Brock Pierce revealed Realcoin in July 2014, a cryptocurrency that purported to be backed by US dollar value. Realcoin claimed that it would serve as a means for traders to hedge into dollar-value, and also a vehicle through which users could send digital representations of national currencies via the blockchain quickly and efficiently.

    In November of the same year, Realcoin rebranded to ‘Tether’, stating that the move was motivated by the company’s desire not want to be associated with ‘altcoins’. At the time, the company also announced partnerships with a number of major cryptocurrency companies, including Bitfinex. Despite claiming that each USDT is backed by 1 US dollar, Tether’s legal page states that “Tethers are not money and are not monetary instruments. They are also not stored value or currency. There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money.”

    Recent analysis conducted by Twitter user AB33 suggests that the rebranding from Realcoin to Tether may have been conducted under a fraudulent pretext, as documents have surfaced indicating that Tether Limited had been incorporated in Hong Kong on the 8th of September with Bitfinex CFO Giancarlo Devasini and Bitfinex CEO J.L Van Der Velde listed as the company’s directors.

    Information regarding the new directors appears to have been intentionally withheld by both companies as no mention of such is made in Tether’s press releases announcing the rebrand at the time, and J.L Van Der Velde’s LinkedIn profile makes no mention of his ties to Tether as of this writing. Bitfinex’s CSO, Phil Potter, has since admitted that Bitfinex is a majority shareholder of Tether, whilst a Bitfinex shareholder report leaked earlier this month stated that the two companies share banking relationships.

    Controversy Mounts Following the Termination of Bitfinex’s Former Banking Partners in March

    Scrutiny Intensifies as Tether Exceeds Supply of 1 Billion USDTIn April 2017, Bitfinex and Tether launched a lawsuit against Wells Fargo in response to the bank’s termination of wire transfer services to accounts associated with Bitfinex via affiliated financial institutions based in Taiwan. The complaint stated that the “Plaintiffs expressly informed Wells Fargo that its decision to suspend outgoing wire transfers in U.S. dollars from plaintiffs’ correspondent accounts presented an existential threat to their businesses. They informed Wells Fargo that if plaintiffs could not remit to customers U.S. dollars that belong to their customers, plaintiffs’ businesses would be crippled as of Wednesday, April 5, 2017. They would be brought at a standstill.” The complaint, now generally considered to have been a frivolous lawsuit intended to buy time, was dropped a week later, with the exchange claiming to have established ties with an “institutional” investor.

    Concerns surrounding the operations of Tether have grown considerably since the announcement that Bitfinex lost its former banking partners, with the number of USDT having increased from approximately 55 million to more than 1.1 billion in less than 8 months. The recently leaked shareholder report has intensified the scrutiny, as the document states that the majority of Tethers released into supply have been issued to Bitfinex, stating “Because Bitfinex and Tether have common principals and banking, there is no limit to the timing or amount of money that can flow between the two entities even if inbound and outbound customer wires are limited.”

    This admission has intensified concerns relating to the opaque nature of Bitfinex’s management of customer funds following the loss of banking services in March. In lieu of traditional banking, many are suggesting that Bitfinex has increasingly used Tether as means to ensure the circulation of value on the exchange.

    Prominent Bitfinex critic, Bitfinexed, has documented what he claims is a consistent spike in the amount of USD being lent on Bitfinex’s margin markets following the creation of new batches of USDT. Given that there is “no limit to the […] amount of money that can flow between the two entities,” Bitfinexed‘s previous suggestion that the dollars Tether claims back the USDT in circulation could be lent or even traded by Tether on Bitfinex’s margin markets appears to have been strengthened.

    Tether is Purportedly Working With Law Enforcement Following Hack

    Scrutiny Intensifies as Tether Exceeds Supply of 1 Billion USDTA member of Whalepool recently posted stating that he had ”to do some reports for law enforcement for the Tether hack,” suggesting that the company may have invoked the assistance of law enforcement following the hack suffered by the cryptocurrency last month. Tether responded to the breach quickly, isolating the stolen USDT before initiating a hard fork. Last year, Bitfinex claimed that it would work with authorities to attempt to identify the culprits of the devastating 2016 attack on the exchange. However, it now appears that the exchange never filed a complaint with Hong Kong authorities.

    What are your thoughts on the dramatic proliferation of USDT tokens that has occurred this year? Tell us in the comments section below!


    Images courtesy of Shutterstock, Bitfinex, Tether


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    The post Scrutiny Intensifies as Tether Exceeds Supply of 1 Billion USDT appeared first on Bitcoin News.

    https://news.bitcoin.com/93194-2/


 



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