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- Due to the lack of regulatory clarity in the United States, individuals are losing their confidence in cryptos
- To entertain some critics, a harmful Tether fud is being created in the ecosystem
- The relation between USDT and BTC has nothing with manipulating the market
- USDT tokens help stabilize the price of highly volatile asset
- The investigation of NYAG has nothing to concern, as it only wants to ensure whether the firm is maintaining a reserve for each token or not
- If the tokens win the legal war, then the cryptosphere will gain back a more substantial confidence
Where every eye is on the market’s bullish and bearish performance, there are things going in the cryptosphere right now. Such things need a deep-yet-frantic grasp of the entire ecosystem. On the one hand, XRP, the native token of one of the largest fintech firms globally, is facing challenges to be confirmed as a utility token due to the allegations to be securities by the US SEC. And the other side Bitfinex, a major crypto exchange, along with Tether, the issuer of dollar-pegged stablecoin, is facing challenges due to the investigation of the New York Attorney General (NYAG). However, the main fud is coming from different conspiracy theories, which need to be observed deeply with clarity.
Why is there a fud in the industry regarding Tether?
Back in 2019, the NYAG announced the court orders regarding the investigation of Bitfinex and Tether for fraud. Since then, several conspiracies are being spread in the economy, because of which the users are losing their confidence. In light of the renewed wave of such panic, several facts need to be debunked.
Such conspiracies can turn anyone into concern before entering the industry. Although those are just conspiracies, whereas the actual reality is entirely different. According to several critics, the firm’s claim that each USDT token is 100% backed by $1 worth of assets is a fallacious statement. Although such a claim came because the firm doesn’t want to reveal its investment, which is an acceptable logic. There are also claims of critics that Tether, along with Bitfiniex, is manipulating the market by pumping the Bitcoin bubble into the crypto economy. And the investigation of the NYAG has also become a significant point of concern among the users.
Do Bitcoin has any relation with the USDT tokens
In a recent podcast episode entitled “Questions for Tether”, Stuart Hoegner, the General Counsel of Tether and Bitfinex, mentioned that the USDT tokens are 74% backed by cash reserves, and the rest with other assets, but each token is entirely backed with assets worth $1. A part of the reserve consists of Bitcoin too. According to Paolo Ardoino, the CTO of Bitfinex, BTC is only used for paying the Omni Layer fees. On the other hand, in the podcast episode, Ardoino also revealed that the flagship crypto token was purchased back in 2015 at a very cheap price, which is still being used to pay the bitcoin-backed blockchain fees.
Ardoino also mentioned clarifying that there are several digital asset exchanges available issuing Bitcoins, for a reason, there is no sense of issuing a USDT token to have the leading crypto-token in a portfolio. However, the users should only follow facts instead of fiction, for which they need to understand the scenario.
Indeed, the token is used to stabilize the price of Bitcoin. Observing the data from SSRN, it is clear that the issuers of USDT are pushing out the token to stabilize the price of Bitcoin. Even so, such support to reduce volatility doesn’t mean that the token is manipulating the entire market.
No filed lawsuits against Bitfinex or Tether
The investigation of NYAG is creating concerns among the users of the token. But following the details about the investigation, it is observed that there are no such matters to worry about, as it is clear that NYAG is only investigating whether the firm has reserved for each USDT token or not. Nothing to panic about, as there isn’t any investigation regarding the fueling of the Bitcoin Bubble, printing fake USD, or any security issues. Ardoino also clarified via a tweet that both Tether and Bitfinex had produced more than 2.5 million documentation pages to give the NYAG what they are finding. Additionally, he is confident because the tokens are fully backed and work inclusive of strong KYC/AML.
There is another concern due to the assets being kept confidential, and the firm is lacking to audit. According to Stuart, instead of auditing, the firm has other unique plans which will be introduced soon, as the firm wants to remain transparent and uncovered towards its community. However, the firm denied disclosing the details about the assets. Ardoino highlighted that after being kept under the microscope if the firm still lacks keep reserves, it would have to halt the daily operations.
After tremendous criticism and lack of clarity, the token is currently the third-largest crypto token by market cap. Ardoino and other Tether and Bitfinex officers are giving their best priority to public communication to reduce the fud and working every second to keep private keys of the token sale. However, such legal war being faced by XRP or USDT is not regarding the entire ecosystem, and we need to support such tokens. As if these tokens come out looking legit, then a vote of confidence could be witnessed towards the industry.
