Tether Resumes Issuing Tokens with $300 Million Already Issued
In a surprising twist to an ongoing saga, Tether, it seems, has resumed issuing tokens. This comes after a two-month hiatus in which it was issued a subpoena by the U.S. Commodity Futures Trading Commission (CFTC).
The subpoena which was issued to both Tether and Bitfinex was sent in December 2017 but was apparently received by Tether on January 23, 2018. This incidentally is also the day that Tether stopped issuing new tokens.
Back in the Game
According to the data revealed by Omni blockchain transaction, Tether on Tuesday, March 20, 2018, created a fresh batch of USDT tokens worth $300 million. As soon as the move was noticed, experts began to wait to see if it was the real deal as this isn’t the first time that Tether has issued tokens since its January 23, 2018, hiatus. A week after it stopped issuing tokens, Tether issued a surprise $30 million. However, the tokens were subsequently revoked the next day. On March 12, 2018, Tether also froze about $5 million worth of USDT tokens.
While the news of Tether releasing such a substantial number of tokens isn’t new by any stretch of the imagination, its proximity to the crypto market price reversal has caused some speculation to arise. In some circles, critics are even beginning to go as far as stating outright that Tether is manipulating the price of cryptocurrencies with its actions. During the Tether hiatus, the prices of cryptocurrencies have taken a hit.
Between February and March 2018, many cryptos have taken a nosedive in terms of prices. Tether issues new tokens and the downward trend appears to reverse itself significantly. This has been pointed out as justification by some critics of their claims that Tether is propping up the prices of crypto. BTCManager previously outlined the possible theories behind the Tether ‘labrynth’ in November 2017.
A Litany of Lingering Unanswered Questions
As far as the operation of Tether is concerned, there remain a litany of unanswered questions. Lack of transparency in the operation of the so-called “stablecoin” has left some financial experts claiming foul play in way Tether operates. The entire premise behind Tether and the USDT is to have a cryptocoin that is backed up by a corresponding fiat value.
In theory, 1 USDT token = $1
For the most part, Tether has remained fairly stable, but many have wondered about the dynamics of how the token remains “tethered” to the USD. Based on the information contained in the Tether white paper, this crypto-fiat peg comes from users actually depositing fiat into its bank account. As a result, every tether token in circulation should be backed by the same amount of USD held in Tether’s bank account.
This is where it gets tricky as Tether has been subject to a bank blockade since 2017, which then raises the question of how exactly users are depositing fiat into its bank account. No audit of its account has been published for a number of months now. BitMEX recently published a report suggesting that Tether’s core banking partners may be Noble Bank, based out of Puerto Rico.
According to the Tether whitepaper, proof its fiat holdings ought to be provided via publishing of bank balances and frequent auditing of its accounts by professional auditors. In January 2018, Friedman LLP, the firm that had been auditing the cryptocurrency pulled out of its relationship with Tether.