The case of Tether (USDT) and Bitfinex has taken the cryptocurrency community by surprise (or not so). Tether lent Bitfinex almost $1 billion USD to cover up a loss of $850 million arising from trades with Crypto Capital Corp.
The overall effect of the news on the market has slowed down the overall hike in price as cryptocurrency critics fear the impact of USDT given its “systematically embedded” in trading.
The view that trading across most cryptocurrency exchanges will be affected given the value of trades completed is strongly contested by crypto fanatics while hardened skeptics hold the view. One thing however that remains factual is the transfer of funds from the “struggling” USDT market to other types of dollar backed stable coins such as Paxos dollar, TrueUSD and DAI.
‘A marketing pitch strategy’
Neutral Dollar, a stable coin backed by a collection of stable coins (DAI, TrueUSD, the Paxos Standard and USD Coin), is set to be released later in the year.
In his address the CEO of Neutral Dollar, Nelson Chen, believes the Tether problems offers a critical marketing strategy for his team and stablecoin.
Neutral Dollar CEO…
Speaking to Coindesk, Chen said he believes the recent problems are a key talking point for companies in the field as more exchanges look forward to adopting stable coins. He said,
“We’ve already been doing that and the news that happened right now just made it more real that these conversations can maybe turn into something.”
Paxos Standard CEO…
Furthermore, the CEO of Paxos Standard, a component of Neutral Dollar, Chad Cascarilla, believes the news will present a chance for other stable coins to compete favorably with USDT.
The accusations by the New York Attorney General’s office of lack of sufficient backing of USDT provides an “enormous opportunity”. Chad spoke to us saying,
“When we look at the size of the opportunity [Tether troubles] … we actually look at the opportunity and say ‘hey, this is enormous.”
TrustToken, TrueUSD CEO…
The marketing agenda using USDT recent legal battles with the NYAG’s office was further enhanced by TrustToken co-founder Rafael Cosman. Rafael believes that the issue with USDT boils down to lack of trust and the presence of a third part escrow holder would prevent such trading activities. Cosman said,
“This gives TrueUSD token holders the strongest possible legal protections, as the true beneficial owners of the TrueUSD escrow funds,” Cosman said.
While Tether’s reputation crumbles piece by piece as the legal battles drag on, other stable coins have the perfect opportunity to take off some market share from the top stable coin.
Furthermore, these alternative options to Tether have an opportunity to show their users how they aim to enhance trust and protect their funds.