Is Tether Stablecoin facing an implosion?
Last week, Tether’s USDT stablecoin card was unbound. What is happening? Why does it matter? Tether has become one of the largest fee generators in crypto, currently earning $3 billion in annual net profits.
USDT is the most crucial stablecoin with a market capitalization of $83.5 billion. Although most USDT minting was initially done on Ethereum, in recent months most of the USDT has been minted on Tron, calling into question the source of fiat used for the increase in USDT’s market capitalization. Any “leak” of the Tron relationship can be explosive…
Tether is also the last building block of the crypto universe that the US authorities may try to dismantle after their recent prosecution of Binance.
Importantly, Tether operates offshore, and its banking partners operate variously in seven different entities – according to their accounts – but mainly in the Bahamas. They may be beyond the reach of US authorities.
While Chokepoint 2.0 eliminated Silvergate Bank, Silicon Valley Bank, and Signature Bank, the authorities could not limit Tether’s influence yet.
The CFTC sued the managers of Tether in December 2017, and the US Department of Justice (DoJ) investigated possible price manipulation using Tether. In 2021, Tether settled with the CFTC, paying $41 million for claims that US dollars fully supported the stablecoin.
It seems that the crypto news site Coindesk has obtained details of Tether’s financials and the market had tried to price an implosion of USDT through a depeg, as traders were reminded of October 2022 when Coindesk published the financials of Alameda – Sam Bankman-Fried trading company – which led to the implosion of the FTX exchange 10 days later.
But it seems that these Tether documents obtained by Coindesk are outdated documents from the previous settlement that were blocked for some time – instead of “bombshell leaks revealing… smoking gun”.
Tether felt compelled to bring forward any stories that Coindesk might publish on the back of these documents. “we can’t count on fair coverage from Coindesk, which often misrepresented Tether’s position…” – Again, if anything surrounding Tether + Tron can be revealed by Coindesk, it could be explosive.
But let’s see what the folks at Coindesk find; their excellent reporting has revealed many interesting facts and insights…
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