Controversial “stablecoin” Tether is under the gun again, as Weiss Ratings recently released a report detailing the red flags associated with the project.
According to the alert, the largest issue facing Tether is the lack of a completed audit that accounts for the assets in circulation. During December and January, over one billion new Tethers were issued which coincided with the incredible increase in price that bitcoin experienced.
Tether has since placed a “proof of funds” button on their homepage, leading to an evaluation from Friedman LLP to address concerns, but the report itself is almost half a year old, and doesn’t account for the massive amount of assets created since then.
The big issue: There’s never been an audit, and the folks behind Tether has been quite shady when asked. They have continuously claimed their tokens are backed 100% by actual dollars, yet they have failed to present any evidence to support this claim.
Back in December, the US Commodity Futures Trading Commission (CFTC) sent subpoenas to both Bitfinex and Tether most likely in relation to the growing controversies surrounding the lack of an audit of their current holdings.
Weiss also points readers to “Bitfinex’ed” – a Twitter user who has been consistently posting about Tether and Bitfinex’s questionable operations practices. Bitfinex’ed argues that the project was artificially inflating the price of bitcoin by issuing increased numbers of Tether during bitcoin’s recent ascent over $19,000.
On social media, there appears to be consensus that what Tether is actually doing is running a fractional reserve system.
In other words, most observers claim they DO NOT have the dollars to back up all those Tether coins.
The article also informs users of ways in which they can protect themselves, including refraining from keeping digital assets on exchanges that handle Tether, and to not trade in pairs against Tether. It also mentions the catastrophic consequences of Tether potentially proving to be fraudulent, as it is a massive source of liquidity in the cryptocurrency markets.
Weiss just recently entered the cryptocurrency space with their ratings report issued back in January. Normally covering stocks, ETFs, mutual funds, and more, Weiss took the plunge into digital assets due to their increased media presence and interest from traditional investors.
However, some were a bit nervous due to the weight of their opinion potentially having drastic market effects.
Prior to the release of their digital asset ratings report, Weiss came under fire from a myriad of distributed denial of service attacks from Korea to prevent it from surfacing. The attacks managed to take the website offline for a few hours on January 24th, but it didn’t prevent the release of the report. Plenty of fake reports also surfaced, with individuals looking to capitalize on Weiss’ notoriety by granting fake ratings to lesser-known cryptocurrencies to increase their price action.
Since the release of the report, Weiss has been capitalizing on the cryptocurrency-craze by releasing weekly content, including an explanation for their C+ rating for bitcoin which initially stirred up the community.
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Last modified: May 20, 2020 9:05 PM