A quarter of Tether (USDT) Stablecoins are not Backed by Fiat Currency

On April 30 Bloomberg published a report which states that only 75% of Tether stablecoins (USDT) are backed by dollars or short term liquid funds.

General Counsel for blockchain startup Tether Stuart Hoegner said the company owns fiat currencies and short-term liquid funds totaling $2.1 billion. According to CoinMarketCap, there are about 2.8 billion USDT coins in circulation, so 694 million tokens are not backed up by foreign exchange reserves.

Hoegner’s statement triggered a wave of criticism against Tether, which claimed that every USDT asset was backed by a US dollar in a 1:1 ratio. In reality, this figure is 1:0.75. Therefore, the asset rate should not be $1, but $0.75.

CEO of the blockchain project Justin Sun has made a post on Twitter that the reward for USDT tokens will be postponed until the information appears. The company was supposed to launch Tether’s Airdrop tokens on May 5 but abandoned its plans.

Most likely, the startup Tether missed $694 million due to the difficult financial situation of the Bitfinex exchange. The New York State Prosecutor’s Office is accusing the Hong Kong marketplace of misuse of clients’ financial assets. The exchange spent USDT tokens worth $600 million to cover part of the loss.

Representatives of Bitfinex and Tether claim that their companies do not fall under the jurisdiction of the United States because they do not provide services to residents of New York and do not work in the United States. Bitfinex executives stated that 600 million USDT coins were issued on credit, and not spent on repaying losses.

In March 2019, Tether made changes to the documentation of the cryptocurrency project USDT. According to the new edition, each token is secured by company reserves consisting of fiat currencies and their equivalents, as well as other assets and loan receivables. The previous version of Whitepaper said that the cryptocurrency rate is supported only by the US dollar.

We want to remind you:

Bitfinex Exchange Plans to Hold the First $1 billion IEO

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