Tether: Crypto's Ticking Time Bomb
With Tether's recent price drop one has to wonder the catalyst was. Well now we have an answer, the company's online critics have alleged that Tether, (which has close ties to the crypto exchange Bitfinex), has been issuing more USDT than it has dollars in the bank, in order to drive up the price of bitcoin. This is problematic in two main ways:
This is just another form of fractional reserve banking. A form of money fraud that crypto was supposed to do away with.
The more scams and instances like this the less likely the SEC is to approve a bitcoin ETF, for fear of getting involved with an 'immature' market.
Now it hasn't been actually proven that this USDT fraud is going on, however the company refusing to have an audit has to make you wonder. Regardless though, Gemini has launched their own stable coin, the Gemini Dollar which at this point seems far more trustworthy to me. Will Tether go down? It's all about competition, and money will go to wherever it's best treated. With new alternative stable coins coming up, the day of implosion may not be very far off.
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