EXPLORER: What is Tether and USDT?

Posted on 6/28/2021

Stablecoins are cryptocurrencies whose price is linked to a cryptocurrency, fiat money or commodities traded on the stock exchange.

Examples:
Tether (USDT) Tether – Tether Limited
True USD (TUSD) TrueUSD – TrustToken, Inc.
Paxos Standard (PAX) PAX Gold – Paxos Trust Company, LLC
USD Coin (USDC) USD Coin – Circle Internet Financial Limited
Binance USD (BUSD) Binance Coin.

Tether is a cryptocurrency with tokens issued by Tether Limited that was launched in July 2014 as “Realcoin”. Tether is known as stablecoin because it was originally designed to be valued at $ 1.

Hong Kong-based Tether Limited is controlled by the owners of Bitfinex. According to Tether’s website, Tether Limited is a wholly owned subsidiary of Tether Holdings Limited.

In May 2021, Tether released a report showing that only 2.9% of Tether was covered by cash and over 65% by commercial paper. On June 25, 2021, Tether (USDT) had an offer of $ 64.25 billion. For example, as of May 31, 2021, the Vanguard Federal Money Market Fund has total net assets of $ 193.8 billion and invests at least 99.5% of its total assets in cash, US Treasuries, and / or only US Treasury or US Treasury Secured Repurchase agreements Cash (collectively government bonds).

The first tokens were issued on the Bitcoin blockchain on October 6, 2014 and were made using the Omni Layer Protocol. On November 20, 2014, Tether CEO Reeve Collins announced that the project would be renamed “Tether”. In January 2015, the cryptocurrency exchange Bitfinex made it possible to trade with Tether on its platform.

In a slide presentation on June 25, 2021, Eric Rosengren, president of the Federal Reserve Bank of Boston, listed Tether as one of the “financial stability challenges” the Federal Reserve is watching.

What is Bitfinex?
Bitfinex is a Hong Kong-based cryptocurrency exchange owned by iFinex Inc., headquartered in Hong Kong and registered in the British Virgin Islands. Bitfinex is one of the largest Bitcoin exchanges in the world by volume.

Case New York AG AG

Bitfinex has been accused of sending the $ 850 million to Crypto Capital Corp, a payment processor believed to be in Panama, without notifying customers, and after the funds were lost, at least $ 700 million was run off deducted from Tether’s reserves. The U.S. Department of Justice claims Crypto Capital has offered shadow banking services to several cryptocurrency exchanges, including Bitfinex, Binance, Cex.io, Coinapult, and QuadrigaCX.

According to the 2021 settlement, the New York Attorney General claims that Bitfinex and Tether held part of Tether’s reserves in trust for several months in 2017 and resolved their issues with Crypto Capital Corp. have not disclosed in their factual findings in a timely manner. The New York attorney general also charged the defendants with a blog post by Bitfinex published after the investigation’s initial announcement in which the exchange said the funds held by Crypto Capital have been “seized and secured”.

However, the comparison states: “As of November 2, 2018, Tethers were no longer secured 1-to-1 by US dollars on a Tether bank account, as a significant part of the backup in the Deltec account was transferred to Bitfinex to offset the funds raised by Crypto Capital while the corresponding funds transferred from Bitfinex’s Crypto Capital account to Tether’s Crypto Capital account have been affected by the actions of Crypto Capital.

In June 2013, Crypto Capital (then trading under the name Crypto Financial) was founded and in August 2013 an “exchange offer” was carried out to procure 30,000 BTC through Havelock Investments, based in Panama. By 2015, Crypto Capital had attracted several notable exchanges with clients offering Bitfinex and Coinapult services, among others.

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