USDT and minting company Tether come into the spotlight this week for minting a further $1 billion on an Ethereum blockchain. Tether CTO clarified, “this amount will be used as inventory for next period issuance requests and chain swaps.” Crypto analyst draws worries that USDT might be next in the crosshairs of the US Securities and Exchange Commission.
He claimed, “Why not go straight for the jugular and starve crypto of its liquidity..”
This recent minting follows the previous mint, which was less than 2 months prior. Tether has minted $16 billion in 2023 alone, while its market capitalization is at $83 billion.
Understandably, the event caught the attention of many stakeholders, nudging company CTO, Paolo Ardoino to explain the move. “1B USDt inventory replenish on Ethereum Network. Note this is a[sic] authorized but not issued transaction, meaning that this amount will be used as inventory for next period issuance requests and chain swaps,” tweeted Ardoino.
Chain swaps explained the process of moving crypto tokens from one blockchain to another, enabling users to utilize their tokens on multiple blockchains simultaneously. Ardoino also explained that the $1 billion mint was to make sure there’s enough liquidity to enable such chain swaps.
Prior to Adoino’s tweet explaining the $1 billion mint, USDT price dipped due to market fears. However, it recovered almost immediately after the CTO explained the situation. Nevertheless, many fear that Tether/USDT might become the SEC’s next target as the tokens continue to gain popularity in 2023.
At this point, it’s no secret that the SEC is at a severe war with the crypto industry. Earlier this month, the commission filed thirteen lawsuits against the world’s biggest crypto exchange, Binance, for a number of alleged crimes.
The SEC also filed a lawsuit against Ripple, for allegedly trading in unregistered securities. They even sued Coinbase, the biggest US-based crypto exchange, for allegedly committing the same crime, yet refusing to put proper regulations in place for crypto trading when Coinbase officially requested they do.
More importantly, the SEC is not only going to war against the trade of decentralized tokens, such as Bitcoin and Ethereum, but they’re also attempting to remove the legitimacy of stablecoins, as they did with BUSD.
In the documentation for the Binance lawsuits, the SEC specifically said that the exchange violated laws by “Binance and BAM Trading with the unregistered offer and sale of Binance’s own crypto assets, including a so-called exchange token, BNB, a so-called stablecoin, Binance USD (BUSD).”
According to Miles Deutscher, a crypto analyst, Tether’s USD-tied token USDT makes up 76% of the entire stablecoin market. USDT, a coin that severs itself from the volatility of decentralized tokens, such as Bitcoin by basing its value on the USD – while providing digital-based transfer solutions and ease of movement – could potentially be the next target for the SEC’s rampage on crypto.
“If you’re the SEC and you really want to kill crypto, then your next target would be Tether. Why? 76% of all stablecoins on exchanges is USDT. Why not go straight for the jugular and starve crypto of its liquidity..” tweeted Deutscher
The SEC hasn’t just gone for Binance, Coinbase, and Ripple. Other exchanges, such as Kraken and Bittrex, as well as a crypto lending platform called Nexo, have been on the receiving end of the commission’s attack on the industry.
The irony is that the basis of many of the SEC’s allegations are based on the cryptocurrencies that they see as unregulated registers, while, as previously stated, it is the SEC that stands in the way of a proper regulatory reform on crypto.
Coin Metrics co-founder Nic Carter coined the term “Operation Chokepoint 2.0 ”, for which he details the issues created by regulators, alleging that they deliberately are destroying the crypto industry to create stricter control on the finance market.
Among the text within the legal petition sent to Washington DC are allegations such as “The federal bank regulators are also refusing to perform their non-discretionary duties when doing so will benefit the cryptocurrency industry,” as well as “Operation Choke Point 2.0 deprives business of their constitutional rights to due process in violation of the Fifth Amendment.
It is well-settled that when a federal agency attaches a derogatory label to an individual or business, and this stigmatizing label causes the business to lose a bank account or broadly precludes them from the pursuit of their chosen trade, the agency has violated the Due Process Clause of the Fifth Amendment, unless if first afforded the individual or business a right to be heard.”
Carter even tweeted “I don’t want to alarm, but since the turn of the year, a new Operation Choke Point type operation began targeting the crypto space in the US. it is a well-coordinated effort to marginalize the industry and cut of [sic] its connectivity to the banking system – and it’s working.”
Being the most popular stablecoin out there, USDT, created by Tether is considered the flagship of USD-based stablecoins. And, while many worry about the volatility of decentralized tokens such as Bitcoin, stablecoins provide a safe way to bridge the gap between crypto and fiat currencies.
Should the SEC go after Tether and USDT, a significant trade sum would be forced into a halt, potentially starving the market of fiat value, and consequently affecting the lives of many crypto-based businesses.