Recently, the tether bomb was on news for driving up the price of Bitcoin, Bitfinex was allegedly accused of driving up the price of Bitcoin by issuing more tether which was not pegged by USD.
The allegations were that Bitfinex, the cryptocurrency exchange that shares common owners and managers with Tether, has used Tether (USDT) to artificially drive up the price of Bitcoin. The Commodity Futures Trading Commission reportedly subpoenaed Bitfinex and Tether in December for the same.
The USDT, which acts as a substitute to the USD, has a function of quickly moving the funds and tokens between the cryptocurrency exchanges rather than using a wire transfer for transferring it to a fiat currency, which is expensive, slow and not the best way of conversion.
Tether plays a vital role in the crypto-market, tether is the only that has an intrinsic value and is pegged by a global fiat currency, which makes it the most important factor. A law firm Freeh Sporkin & Sullivan, LLP (FSS) gave a report where the report claimed that the tether is legitimately collateralized, FSS confirmed that the bank balances of Tether amount to $2,545,067,236.82. On the same date, the amount of Tethers in circulation was worth $2,538,090,823.52.
Tether’s CEO, Jan Ludovicus van der Velde, would comment the following with respect to the new report:
Despite speculation, we have consistently stated that Tether is backed by USD reserves at or exceeding the Tethers in circulation at a given moment, and we’re glad to have independent verification of this to answer some of the questions posed by the public.
Further clarifying the matter he added:
We are by no means done with our efforts to promote increased transparency at Tether. We are planning to build on this report moving forward and, despite the challenges of applying current accounting and assurance standards to cryptocurrency clients, we continue discuss these issues with potential audit partners
Professor John M. Griffin, who was part of the research team, commented on the issue:
I’ve looked at a lot of markets. If there’s fraud or manipulation in a market it can leave tracks in the data. The tracks in the data here are very consistent with a manipulation hypothesis.
The transparency matter is a crucial one, remember that this was a report that was published by a law firm, it is not even an accounting firm, besides that this was not an audit and if there is any flaw in the information, the firm won’t be liable for the damage as it is just a report and not a public document upon which public can trust in order to carry on with their investments sentiments.
Image Source for featured image: medium.com
Disclaimer: The opinions presented here are of the Authors’. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. CoinScenario.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.