Why Tether «printed» $500 million USDT
The crypto community has long doubted the financial security of Tether stable coin. But there were even more questions when in April the number of USDT tokens increased sharply.
In 2019, Tether changed the rules of the use of its cryptocurrency. If earlier the company stated that all 1 to 1 coins were backed up by the American dollar, now, in addition to fiat, the asset was also secured by loans that the company had given to third parties.
Since Tether has not been independently audited just yet, the
crypto community still has doubts about the security of this stable coin. Even though Deltec Bank, a small private bank in the Bahamas, claimed it had provided a document confirming $1.8 billion crediting to the company's account.
New USDT tokens emission
Twitter user Bitfinex has added fuel to the fire. According to him, the offer of coins has increased by $400 million. He recalled that the last time, when "they injected this much fake money, we found out about the CFTC subpoenas, and the market crashed."
Indeed, if you look at the dynamics of Tether’s capitalisation growth, over the period from April 1 to 18, it grew by more than $480 million.
The company is not even trying to hide it. The data change history on the Tether website says that from April 2 to 18, Total Liabilities actively grew, which implies the dollar equivalent of all issued USDT.
As we can see, within 16 days Tether’s total liabilities increased by $483.9 million, and according to Coinmarketcap, the capitalisation of USDT also increased by around that number. The tracker defines the capitalisation with a simple formula: the number of tokens in circulation multiplied by their price. Since the fluctuation of the USDT price for this period did not exceed $ 0.01, the growth can only be explained by an increase in the supply of coins.
As you know, Tether uses two platforms for the coins emission: Omni Layer and
Ethereum. At the same time, Tether emitted $356 million worth of coins on Omni blockchain in 16 days. Their issue was allowed earlier, but the company put them into circulation only recently.
In addition, Tether emitted another $170 million of tokens on the Ethereum blockchain. And these stable coins already in use. Company also allowed to “print” coins worth $42 million. But they are not on the market yet.
Tether and Bitfinex connection
Our editors analysed all transactions with USDT in the Ethereum blockchain in April and ranked the addresses with the largest translations. The largest transactions passed through the address 0x0e7770b63ca9782b9883455f45282ab2a40df347.
In April, the total amount of transactions from this address amounted at 171 million USDT. It is exactly the number of emitted tokens on Ethereum that Tether showed in its report available on Tether website.
It is noteworthy that all transactions start from Bitfinex crypto
exchange address and then lead to Huobi.
The fact of Tether and Bitfinex being related is confirmed by top management of both companies. Given that the position of financial director in both organisations is occupied by the same person - Giancarlo Devazini, just like the CEO of both companies is Jean-Louis van der Velde.
At the same time, Tether and Bitfinex were involved in money laundering cases in Panama Papers. In addition, University of Texas researchers John M. Griffin and Amin Shams claim that Tether and Bitfinex were used to manipulate the price of bitcoin. According to their data, each emission of USDT tokens was followed by an increase in the rate of the primary cryptocurrency during the rally at the end of 2017.
By the way, if you compare the cost of Bitcoin on April 1 and April 2, 2019, you can see that on April Fool's Day, the BTC rate was at the level of $ 4,123. And the next day, when the emission of Tether tokens began, it jumped to $ 4678.
But so far, Tether and Bitfinex cannot be accused or discharged, since so far none of these two related companies have been audited. On the other hand, the influence of these two players on the state of the crypto market should not be underestimated. Especially if taking into account the fact that, in less than a month, the company has heaped up the market with half a billion tokens.
Author: Annabella Lapshin