Guess who controls over 73% of USDT (Tether) currency in circulation?

tdharris (25)in #tether • 7 years ago (edited)

One man's brilliant investigative journalism into the blockchain has brought up some serious concerns regarding Tether's power to act similar to the Federal Reserve, printing USDT in huge amounts, which is supposed to be backed by USD. The facts found in the blockchain raise some legitimate questions regarding the integrity of this claim, which could lead to potential market manipulation.

For an in-depth look, please refer to the user's original post.

What's the scoop?

Basically, some entity is acting like the Federal Reserve - printing USDT (Tether) and funneling it through Bitfinex to Bittrex and Poloniex. The user presenting this evidence makes a really good argument that the same person owns all of these addresses.

This would mean that over 73% of USDT is controlled by a single individual, ~623,000,000 USDT (~74%) of the total ~844,000,00. And on any given day, USDT accounts for 6 - 17% of daily BTC volume.

Exchanges may even be trading BTC/USDT under BTC/USD. Now we very much hope this isn't the case, but if true for Bitfinex, "the number one highest volume trader of BTC/USD," the "daily BTC/USDT volume would increase to over $3billion, which would make up about 17% of BTC's daily trading volume."

What's the concern?

There are two reasons why these findings are potentially worrisome:

Owning Tether gives no legal right to settle into US Dollars (USD).
As far as I know, and please do correct me if I am mistaken, as I surely hope I am, there have been no verifiable third-party verifications of this reserve supposedly backing up every Tether 1:1 with USD. Yet they claim the reserve account is regularly audited.

Can `USD` be claimed from Tether?

Prominently displayed on Tether's website is the following promise:

"Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USDT is always equivalent to 1 USD."

Yet, their legal disclaimer suggests there might be no USD backing:

"Tethers are not money and are not monetary instruments. They are also not stored value or currency. There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers."

Can we verify the Tether reserve?

In a recent announcement, Tether states:

"The Tether Reserve remains in surplus of the 1:1 backing of USDT and has more than the necessary currency on deposit to redeem all existing tethers."

Tether's Transparency page highlights their real-time reserve and claims:

"All tethers are backed 100% by actual assets in our reserve account"
"Our reserve account is regularly audited"

We have hope that these claims are accurate, but up until this point, there is a lack of publicly-available audits. We aren't able to validate this claim!

Conclusion

I surely hope more evidence comes to light that can verify the USD reserve backing USDT (Tether). The recent evidence is interesting and further discussion regarding it will surely be important. There is something bizarre about it..

The worry here is that some entity is able to "print" or generate Tether with no verifiable backing of actual USD, yet this generated token can be used to buy other cryptocurrencies as if it were the US Dollar. With Tether's high trading volumes, there may be potential here for high saturation, inflating the value of certain markets artificially.

There is still hope that Tether is able to provide verifiable evidence to their claim of being backed 1:1 against the USD or other FIAT currency and I suspect news will come out shortly.

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