The developers behind the stablecoin and dollar-pegged altcoin Tether (USDT) have drawn a lot of scrutiny today after many social media users noticed that Tether has removed previous claims that the altcoin was fully backed by the USD currency. This topic has emerged in the crypto news today.
This is not the first time for people to point their fingers towards Tether (USDT). The cryptocurrency has had some hurdles over the transparency of its holdings and had guaranteed that each of the USDT tokens had an equivalent of 1 USD in the bank.
USDT was even labeled as “the opposite to fractional reserve banking” with documents further confirming the validity of Tether’s backing claims. However, a new update (unknown date) to its website suggests that 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.”
One of the such affiliated entities is the cryptocurrency exchange Bitfinex which shares leadership with the Tether stablecoin.
The Reddit field is also full of comments when it comes to Tether (USDT). One commentator there took issue with backing by anything other than USD, which they suggested compromises the entire coin’s legitimacy.
As one user with a handle u/Toyake (who also uploaded the topic) summarized:
“I guess we’re back to trusting 3rd parties, running fractional reserves, to run the market.”
A popular response even drew multiple parallels between Tether and the defunct alleged ponzi scheme BitConnect. Tether had not issued any official comments on the allegations at press time. Earlier this month, however, officials reached an agreement with the blockchain network TRON to use USDT as the platform’s native token on the end of Q2 of 2019.
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Tether Seems To Be Okay With The Merged Lawsuits Against It
“We did not oppose the plaintiffs’ requests to combine these frivolous claims, originally filed, respectively, in October in New York, in November in Washington and in January in New York,” is what a recent Tether statement from Jan. 17, 2020 shows.For those of you who don't know, there are many parties which suspected Tether (USDT) alongside its related exchange Bitfinex, of foul play numerous times over their existence. Tether seems to be okay with it - even with one of the most recent ordeals on the subject that Tether and Bitfinex allegedly caused the Bitcoin bull run of 2017 by carrying out illegal activities.The legal counsel for the lawsuits from Leibowitz, Young and Faubus filed a letter with the judge on January 16 requesting a merger of the three disputes. The letter also included that the mentioned lawsuits overlap in multiple areas and have similarities which is why the case allows for consolidation.As a result of this, even three lawsuits against the stablecoin surfaced but Tether seems to be okay with them - even though they might be combined in a single prosecution now. Despite the fact that the combination may give the lawsuits more strength, Tether will probably defend itself at best in court.Tether seems to be good with this and in the latest crypto news, the team gave a statement which read:
“A fourth class action was also filed in New York yesterday, which we expect will be consolidated with the previous three actions. None of these cases present meritorious claims.”Additionally, Tether claimed that the research by the prosecutors is incorrect, adding that it "deploys preselected data to retrofit a desired narrative and demonstrates a patent misunderstanding of the cryptocurrency market."
Hotel Booking Platform Travala Now Accepts Payments In USDT
“Part of our mission is to provide our users with a wide choice of the most well known and used cryptocurrencies so it made perfect sense for us to integrate USDT as a payment option on Travala.com.”Furthermore, Travala now also accepts payments of Bitcoin, Litecoin, Ethereum, XRP, Binance Coin, Stellar, Cardano, Bitcoin Cash as well as their own coin AVA. Tether joined the crypto market in 2017 and the stablecoin promised to avoid the price fluctuations with the help of the one-to-one ratio with fiat currency while the merchants showed that they are eager for the Hong Kong-based coin. According to the announcement, the addition of Cardano appeared to catch the foundation by surprise.The booking site which started on the NEO platform initially before switching to Binance’s chain at the start of September didn’t shy away from the ambition to boost the mainstream use of cryptocurrency just when it moved to BinanceSean Mackay, the lead operations at PaymentsSource which is a financial services resource stated:
“Merchants used to accept Bitcoin, Ethereum, Ripple and convert it into Tether in order to hedge against the volatility. Now we are seeing the payments just being done directly in Tether.”In April 2019, the New York Attorney General Letitia James charged the parent company of Tether, Tether Limited, of colluding with the parent company iFinex for using Tether’s reserve funds to cover the loss of more than $850 million in client and the corporate funds from the BitFinex crypto exchange which eventually undermined the claims USDT to stability based on the USD reserves. Despite the legal disputes with iFinex and having the fifth-highest market cap, Tether continues to see the highest daily and monthly trading volume and it now holds a 24-hour trading volume of nearly $26.5 billion surpassing that of Bitcoin’s $22.5 billion.
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