Tether, the leading stablecoin, recently unpegged from the US Dollar after news that the New York State Attorney General is investigating iFinex Inc., which operates Bitfinex and owns Tether Ltd. USDT dropped as low as $0.975 against the US Dollar while the other top three stablecoins-USDC, TUSD, and PAX-enjoyed an approximately 6.5 percent premium.
A recent study conducted by CryptoCompare, a global cryptocurrency market data provider, determined that Tether dominates the stablecoin market.
Tether Ltd. used to claim that each USDT token was backed 1:1 ratio by US Dollars in reserve.
"Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USDT is always equivalent to 1 USD.".
"Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities. Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.".
Tether dropped 2.8 percent, from $1.003 to $0.975, and approximately $120 million worth of Bitcoin and Ethereum rushed out of the exchange.
The recent turmoil around tether has impacted the market valuation of the top three stablecoins-USD Coin, TrueUSD, and Paxos Standard Token-and subsequently the price of bitcoin across the top exchanges.
The current $200 spread in bitcoin between Bitfinex and other exchanges comes at a point where investors are trying to sell their tethers as they try to leave the platform.
Even though the outcome of the legal issues that iFinex Inc, the company behind Tether Ltd., is unknown, an implosion of the stablecoin could potentially destabilize the market.
If the situation with iFinex continues to deteriorate, then Tether holders will likely try to cash out into any other cryptocurrency to move their funds without having them trapped by the exchange.
Tether and Bitcoin prices diverge on exchanges following fraud investigation
gepubliceerd op Apr 29, 2019
by Cryptoslate | gepubliceerd op Coinage
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