Crypto Community Eyes Tether After Website Dilutes USD Backing Claims

[cybersofts]

Developers behind stablecoin Tether (USDT) have drawn scrutiny today, March 14, after social media users noticed they had removed previous claims that the altcoin was fully backed by United States dollars.

Tether, which has faced various publicity hurdles over the transparency of its holdings, had de facto guaranteed that each of its USDT tokens had an equivalent 1 USD in the bank.

Intended as the opposite to fractional reserve banking, as Cointelegraph reported in December last year, documents had further confirmed the validity of Tether’s backing claims.

Now, however, a new update, date unknown, to its website suggests USD holdings no longer cover the full supply of USDT.

“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,” it now reads (emphasis added by Cointelegraph).

One such affiliated entity is cryptocurrency exchange Bitfinex, which shares leadership with the stablecoin.

On Reddit, commentators immediately took issue with backing by anything other than USD, which they suggested compromises the entire coin’s legitimacy.

“I guess we're back to trusting 3rd parties, running fractional reserves, to run the market,” user u/Toyake, who uploaded the topic, summarized.

A popular response even drew parallels between Tether and defunct alleged ponzi scheme BitConnect.

Tether had not issued official comment on the allegations at press time.

Earlier this month, officials reached an agreement with blockchain network TRON to use USDT as a native token on the platform by the end of Q2 2019.


Reference: https://cointelegraph.com/news/cryptocurrency-community-eyes-tether-after-website-dilutes-usd-backing-claims

[X-ray]

Developers behind stablecoin Tether (USDT) have drawn scrutiny today, March 14, after social media users noticed they had removed previous claims that the altcoin was fully backed by United States dollars.

Tether, which has faced various publicity hurdles over the transparency of its holdings, had de facto guaranteed that each of its USDT tokens had an equivalent 1 USD in the bank.

Intended as the opposite to fractional reserve banking, as Cointelegraph reported in December last year, documents had further confirmed the validity of Tether’s backing claims.

Now, however, a new update, date unknown, to its website suggests USD holdings no longer cover the full supply of USDT.

“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,” it now reads (emphasis added by Cointelegraph).

One such affiliated entity is cryptocurrency exchange Bitfinex, which shares leadership with the stablecoin.

On Reddit, commentators immediately took issue with backing by anything other than USD, which they suggested compromises the entire coin’s legitimacy.

“I guess we're back to trusting 3rd parties, running fractional reserves, to run the market,” user u/Toyake, who uploaded the topic, summarized.

A popular response even drew parallels between Tether and defunct alleged ponzi scheme BitConnect.

Tether had not issued official comment on the allegations at press time.

Earlier this month, officials reached an agreement with blockchain network TRON to use USDT as a native token on the platform by the end of Q2 2019.


Reference: https://cointelegraph.com/news/cryptocurrency-community-eyes-tether-after-website-dilutes-usd-backing-claims

That's such a big liar, i have so many doubts about this company, they have been avoiding audit to the reserved funds and it looks like they are not having the real money to backed whole of supply that issued by tether and this is a big scam.

[Cosbycoin]

I was never a fan of tether because I knew from the onset that it was just a lie and it's not possible that they have US dollars kept in reserve to maintain the price at $1. They just told us and never gave us access to the reserve to see if they actually have funds there to back up their currency.

Tether is very much a centralized coin and it is only helpful to me when I am trading on the exchange because I use it to make more profit because it's a stable coin.

[Red-Apple]

That's such a big liar, i have so many doubts about this company, they have been avoiding audit to the reserved funds and it looks like they are not having the real money to backed whole of supply that issued by tether and this is a big scam.

you are not alone in this, people don't trust this company anymore. they have been shady enough in the past years that they truly deserve that. which is why people are always warning others about relying so much on Tether since it is fully centralized and can go under just as fast.

[South Park]

I was never a fan of tether because I knew from the onset that it was just a lie and it's not possible that they have US dollars kept in reserve to maintain the price at $1. They just told us and never gave us access to the reserve to see if they actually have funds there to back up their currency.

Tether is very much a centralized coin and it is only helpful to me when I am trading on the exchange because I use it to make more profit because it's a stable coin.

Despite this it seems the market does not care that much since the price of tether seems to be unaffected by this and it is still trading at one dollar for each tether, while I understand why people may find tether an attractive option instead of converting their money to fiat which will carry important fees and a slower speed of conversion, sometimes it is better to pay for those inconveniences instead of holding a coin that does not seem that is fulfilling its stated mission.