Tether and Bitfinex are at the center of an ongoing raging controversy which does not seem to die down any time soon. It all started with Bitfinex covering their losses with its USDT reserve and then manipulating their financial sheets to show no losses at all. It was followed by New York Attorney General filing a lawsuit against Tether and Bitfinex for defrauding investors by covering their losses.
The lawsuit was followed by Tether making amendments to their user policy, where it had earlier mentioned that all of its USDT reserves are backed by US dollar, however, it was later revealed that only 70 percent of the total USDT is backed by US dollar. In the court proceedings, the company also admitted that a certain portion of its reserves is backed by Bitcoin as well. The news is surely going to make many consumers unhappy and make them feel cheated, as using Bitcoin as a reserve for the stable coin is not just ethically wrong, but it might also attract several lawsuits against the firm.
If these revelations were not bad enough, data from CoinMarketCap suggest that Tether's market capitalization swelled by a couple hundred million in the past month. Along with that, a total sum of $12 million in USDT has been moved from Tether's treasury to unknown wallets. The news came into the public domain via a tweet made by Whale Alert, which read,
“4,994,990 #USDT (5,038,694 USD) transferred from Tether Treasury to unknown wallet”
The total fund being sent out from the Tether's treasury was split into two transactions, one being around $5 million while the other one being around $6.7 million. Apparently, the sender of the funds had $42 million worth of USDT reserves. Apart from that the total market cap of Tether has increased by over $300 million in the last month, taking its total market cap from $2.6 billion to $2.9 billion.
Looking at the number of debacles that has surfaced regarding the
Tether and its USDT, it won't be a big surprise if Tether vanishes into oblivion in the course of ongoing court proceedings. Tether has been controversial ever since its arrival onto the crypto scene, as the company has never been transparent about its working and USDT reserves. Now, that various worrying facts have surfaced, people are surely going to lose their trust in the stable coin.
The ongoing lawsuit against Tether and BitFinex is in its early stages, but the number of revelations against Tether is surely going to impact the market value of the stable coin, and once the case commences, it is to be seen whether Tether survives the battle or perishes like many other crypto projects which promised big but delivered little.