According to an article published yeseterday, Tether could be potentially committing fraud in a way that we didn’t expect:

“Speculation around Tether has been rife for months but is now reaching a crescendo. At the heart of the matter is whether the company has the $2 billion or so in reserves that it would need to back its ‘pegged’ currency USDT on a 1:1 basis. If not, the company is running a fractional reserve and would be guilty of inflating the price of bitcoin – leaving traders holding the fake currency used to do it, with serious consequences for them and potentially the wider crypto markets.”

The article explores possible actions taken by Tether and various scenarios in which the USDT may actually backed 1:1 by the US dollar, but that the USDT may have been created prior to being backed by the US dollar, despite assurances to the contrary, which would mean that Tether was potentially minting USDT prior to having the US currency to back that up, and then using those unbacked USDT to purchase bitcoins, which were then sold for US Dollars. This would be problematic, as if it is the case that the USDT was unbacked, then Tether may have been artificially inflating the value of bitcoins by creating money. The articles notes an interesting lack of banking transparency, and a refusal to continue with a thorough audit, among other evidence to support this conclusion.

Read more here!

 

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