Tether’s general counsel revealed today that their stablecoin cryptocurrency USDT is only 74% backed.
- It was revealed today that Tether, the firm behind the stablecoin cryptocurrency USDT, only holds around 74% of the total value of USDT in circulation.
- Tether and the cryptocurrency exchange Bitfinex are currently defending allegations from the New York Attorney General’s office that Bitfinex had borrowed $600 million from Tether in order to continue operating after they had reportedly lost $850 million.
- The news sparked immediate controversy in the cryptocurrency community, some claiming that it didn’t come as much of a surprise and others worried about the legitimacy of Tether and other firms backing stablecoin cryptocurrencies, which operate as a peg to the US Dollar.
According to an affidavit filed by Stuart Hoeger, the general counsel at both Tether and Bitfinex, the stablecoin cryptocurrency USDT is only backed by around $2.1 billion, 74% of the $2.8 billion worth of USDT in circulation today. He also claims that the credit agreement between Tether and Bitfinex did indeed exist and in some ways was necessary to the protection of the cryptocurrency market.
In no particular approval or disavowal, some prominent cryptocurrency figureheads like venture capitalist Max Keiser poked fun at the fact that most banks that we know and trust have far less than 74% of cash on hand.
Tether is 74% backed.— Max Keiser, tweet poet. (@maxkeiser) April 30, 2019
Fed is 1% backed.
JP Morgan is -20% (un)backed.
Others were upset that members of their community were so quick to joke about a problem that they take very seriously. Head Analyst at The Block, Larry Cermak, cited that banks operate on a fractional reserve system which isn’t quite comparable, and in the below thread states that normalizing such behavior is “going against the extract values that Bitcoin was meant to uphold.”
Others took a more macro perspective. Founder of Africa’s Crypto Wallet, Sarah Austin urged people that this is an opportunity to highlight the need to filter out bad actors and focus our attention towards innovators in the space.
With other stablecoins like USDC, TUSD and DAI in the mix, the fiat-backed cryptocurrency story is just getting started.
This post was created with our nice and easy submission form. Create your post!