Why was USD 5.5 million frozen in Tether this year and what does that mean for Crypto?

Tether is as controversial as it gets when it comes to the crypto room. But the negative stigma of last year has started to dissipate.

However, there are some stablecoin facts that many crypto investors may not know and should be aware of.

Expansion of use case, increasing demand behind rapid USDT supply growth

While Bitcoin is the undisputed king of cryptocurrencies, Tether is by far the most dominant stablecoin in space.

It now ranks only behind Bitcoin and Ethereum, overtaking Ripple’s XRP by third place.

The way to the top 3 was strengthened by the steadily growing market capitalization and the range.

Related reading | It’s official: Tether Flippens XRP after the recent crypto crash

Almost as quickly as the Fed was printing new dollars, the stablecoin’s parent company flooded the market with new USDT.

Tether’s offering is now over $ 9 million. Due to the demand, the supply of other stable coins is also growing rapidly.

Stablecoins were originally primarily used as a safe haven crypto asset during drawdowns to avoid capital losses. But as the market grows, these coins will now be in DeFi, as a store of wealth, or to move a stable USD equivalent quickly and cheaply.

Tether Freezes Over $ 46M in Stable Coins Why Crypto Investors Should Care

But not everything is positive in Tether’s world for those who keep their money in the stablecoin.

According to Eric Wall, CIO of Arcane Assets, a total of $ 5.5 million USDT was frozen in 2020.

Correction: In fact, there were 4 of the 22 who had active USDT balances when they were frozen, not 3. This makes a grand total of $ 5.5M. This account here that I missed is actually the second largest USDT freeze in Tether history: https: //t.co/B0mfRYA1a2

– Eric Wall (@ercwl) July 9, 2020

The sum was distributed to 22 separate tether accounts at Ethereum. Four accounts kept most of the USDT frozen.

In a detailed Twitter thread, Wall explains how he used Etherscan to explore Ethereum’s blockchain and find the frozen USDT.

USDT exists on the Ethereum blockchain along with Omni-Layer Bitcoin, Tron, and more.

Tether apparently has the power to freeze the asset on many of these protocols.

Related reading | How Tether On Ethereum is fast becoming the cryptocurrency of choice

According to Wall, most of the frozen funds were used as a precaution, may have been linked to a Ponzi program, or to protect users from errors.

In total, over $ 46 million USDT has been frozen by Tether over the years.

Bitcoin was the first cryptocurrency and is both a beauty and a beast. It empowers users to be their own bank, but with that power comes a great responsibility.

Nobody can stop transactions, which is both a pro and a con. Imposing governments can’t do anything to meddle, but it also means you will be out of luck if you send your money to the wrong address.

With Tether, you might get the benefit of freezing transactions and getting your money back, but funds can be frozen in the wrong hands or for the wrong reasons, and then what?

The goal of Crypto was to bring control back to individuals. Tether remains a unique risk for crypto investors who park their capital in the stablecoin, although it may grow in the use case.

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