Tether pushing crypto price up, but is really backed by USD ?

[CryptoGirl]

Cryptocurrency Tether dubbed the “stablecoin”, which was created to maintain a value of US$1 per tether, has been termed the “ticking time bomb” of the crypto world which could prompt the next “bloodbath” similar to the 2014 collapse of the Mt. Gox exchange.

David Gerard, author of Attack of the 50 Foot Blockchain, said that “everyone in crypto is very worried about the tether situation, and if these really count as dollars.”

A blogger going by the handle “Bitfinex’d” had been a major critic of tether and its owner Bitfinex, a cryptocurrency exchange registered in the British Virgin Islands. Bitfinex’d has published a series of detailed blog posts, tweets and YouTube videos outlining the scheme.

Also read: What You Need To Know About The $530 Million Coincheck Exchange Hack

To this effect, Bitfinex has been accused of creating tether out of thin air, without corresponding US dollar deposits, in order to pump up the price of bitcoin. While Bitfinex insists that all new “USD Tether” are backed by real dollar deposits, new cryptocurrency tether issuances have coincided with dips in the price of bitcoin.

Just last week, an anonymous analyst released a report titled “Quantifying the Effect of Tether” that backed those claims, the report concluded that it was “highly unlikely that tether is growing through any organic business process, rather that they are printing in response to market conditions”.

The report concluded: “Tether printing moves the market appreciably,” and compared bitcoin price movements before and after new tether issuance, as well as analyzing publicly available tether transaction statistics using forensic accounting techniques.

The report stated that “48.8% of Bitcoin price rise in the period studied occurred within the two-hour periods following the arrival of 91 different tether grants to the Bitfinex wallet.”

Bitfinex is constantly promising investors it would produce a full audit of its books to prove it has US dollars on deposit to calm fears, however, no audit has taken place. More so, Bitfinex has severed ties with its auditor, Friedman LLP. This makes it clear that an audit would be unattainable in a reasonable time frame.

Mr Gerard, who declared that the crypto market was worried that tether didn’t complete its audit. He said: “They say they’re fully backed, but they haven’t done a full in-depth audit.

“People don’t seem to be able to redeem tethers for US dollars at all. The tether web page says they’re ‘subject to frequent professional audits’ — so they need to release those audits, and calm the market.”

Julian Hosp, co-founder of cryptocurrency payment service TenX, has listed tether as one of four big risks, with a 10% likelihood of a crash this year.


“According to some reports, however, there isn’t actually $US1.6 billion backing up the token. Since many exchanges and other cryptocurrencies are connected to tether, any finding that its stated value is untrue would send the market into a significant decline.”

What is your suggestion about the cryptocurrency tether and claims by Bitfinex?

https://cryptona.co/cryptocurrency-tether-responsible-bitcoin-soaring-price/