Let’s discuss the recent Tether’s FUD.
As every person involved with the cryptocurrency industry, I have been extremely happy for the bull run of the recent weeks and months. As of now, both BTC and more recently ETH have made new ATH, and as governments continue to destroy their own currency by overprinting it, it is to be expected for the price of cryptos and other assets to keep climbing higher and higher.
In this bull run, I have been constantly reading about the topic to try to keep myself on top of any major event that could influence the performance of these currencies. For example, 6 months ago I made a short post about a new writing from the Winklevoss brothers, who are the founders of the Gemini exchange, in which they explain why they think Bitcoin can eventually achieve a value of 500k USD.
The Winklevoss brothers aren’t the only ones having this type of thoughts, Raoul Pal from Real Vision, Anthony Pompliano, Michael Saylor (the CEO of MicroStrategy) among other well-known faces have all been extremely bullish regarding both Bitcoin and crypto in general. 100K per BTC, 200K, and even close to 1M per BTC are prices that are getting more and more popular in the mind of bullish people as everyone gets excited about this cool bull run. No one is saying these prices are achievable in the short term, but in the long term everything is possible right?
However, recently I found an article that provides insights about potential disturbances for the crypto ecosystem in the short and medium-term as a result of Tether’s lack of transparency. Most people involved with crypto will probably know that Tether is a shady project. They have never been properly audited and when a massive token with a current market cap of more than 24 billion USD that claims to have a stable value of 1USD doesn’t want to be audited, it will naturally raise questions about the legitimacy of the project. Shouldn’t it be worth the annoyance of having to subject themselves to a proper audit if it results in organically shutting down all criticism about their project? Isn’t it at least suspicious the fact they prefer to refuse an audit and allow their critics to keep bombarding them with FUD?
The article in question was posted 5 days ago and is titled The Bit Short: Inside Crypto’s Doomsday Machine. In this anonymous article, the author slowly peels the reasons why he thinks Tether can cause a new crypto winter, at least in the short term. The article includes information I wasn’t aware of, and since I think most people don’t know these things, I will share a small summary of the most important points, however, I recommend reading the complete article if you have the time.
Tether claimed their tokens were backed by 1 USD each and will be forever backed by 1 USD each, they refused to provide proof of this fact. Eventually, they changed their claim and the new claim is that they are partially backed by USD, they also use other confidential investments to back their tokens. Since the way they issue the tokens and back them isn’t clear, they are under investigation by US authorities and they managed to delay the date on which they are forced to provide documentation about their activities. During the year 2020, the total amount of tokens increased from 4 billion on January 1st to 20 billion on December 31.
That coincides with the bull run but since nobody knows how these tokens are issued and backed, one could raise the following question: did the bull run cause the spike in Tether’s number of tokens, or was it the other way? The obvious answer would be that more people participating in the crypto markets means more demand for Tether but since they aren’t transparent there is no way to know if they are acting in good faith. The price graph of Bitcoin matches the increase of the total amount of Tether tokens, which one is the cause and which one is the consequence? Dismissing the importance of potential fraud in Tether activities in the current crypto prices might be a common reaction for some people but the problem is that most money flowing into bitcoin comes from Tether token holders. More than half actually. You can check this information here https://coinlib.io/coin/BTC/Bitcoin and its ramifications are further explored in the article above.
I don’t want to make this summary any longer because it wouldn't make sense to write something as long as the article itself, but in short words, the combined suspicion caused by Tether doing everything possible to refuse being audited, the massive issuing of new tokens in the past year, and the importance of the Tether token in the crypto markets, among other facts, could surely make any crypto user a bit worried.
Of the well-known faces from the crypto community I mentioned above, no one has provided a point by point counter-argument disproving the article. It is even sometimes dismissed as typical FUD… Maybe they are right and the article is just a bunch of nonsense, or maybe some people are so deep in the game that they cannot afford to recognize bearish outlooks.
I am interested in knowing your opinion about this new FUD. It is just meaningless FUD? Can the article be disproved point by point? Why has Tether always refused to be audited? I would ask this again, shouldn’t it be worth the annoyance of having to subject themselves to a proper audit if it results in organically shutting down all criticism about their project? Isn’t it at least suspicious the fact they prefer to refuse an audit and allow their critics to keep bombarding them and the crypto industry with FUD?
The deadline to submit their documents to US authorities was 15 January of 2021, I have searched for more recent news but so far everything is quiet.
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