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Tether

1 USDT to 1 US Dollar May Actually Be Accurate

According to Bloomberg, cryptocurrency stablecoin Tether (USDT) has enough fiat dollars to back its tokens in circulation. No doubt, many readers will scorn that this is just another rumor as Tether is synonymous with controversy.

What’s going on?

Tether has Fiat Dollars

The original stablecoin has faced a myriad of controversy since the middle of this year when investors began questioning the validity of its purported 1 for 1 token value.

A stablecoin works by having enough fiat reserves to equal the number of tokens issued. This means that 1 Tether would be equal to 1 dollar. The idea is that it offers a safer form of crypto trading for investors who could cash in their Tether tokens at any given time and be assured that they would receive the exact same amount back in dollars. Stablecoins also act as a safety for trading with other crypto coins.

But Tether faced controversy when investors didn’t believe it had the same dollar amount as it had in its USDT coin.

However, today’s reported suggests otherwise.

Bank Statements

Bloomberg cited “bank statements” it had “reviewed,” and concluded that Tether did, in fact, have a combined fiat bank balance equal to the USDT in circulation. The period in question is between September 2017 to July 2018.

>> Coinbase Improves and Adds Crypto-to-Crypto Trading

The report also claims that the company made $6.6 million in interest in the first half of 2018.

Despite its design of being pegged 1:1 with USD, USDT has in fact been fluctuating heavily in recent months. At the time of writing, each Tether is worth $1.01 USD. So its value is over par currently. This reflects the increasing popularity of stablecoins in recent weeks, specifically as Bitcoin and other altcoins have fallen dramatically in value.

The controversy over Tether has been such that the company, along with cryptocurrency exchange Bitfinex, received subpoenas from US authorities at the end of 2017. Last month they added a price manipulation probe.

What do you think about Tether?

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Did Tether (USDT) Really Manipulate the All-Time Price Highs of Bitcoin (BTC)? – Crypto Currency News

Tether (USDT) & Bitcoin (BTC) – A new study has surfaced this morning putting Tether in the negative spotlight once again. Last December, Tether was subpoenaed by the U.S Commodity Futures Trading Commission to provide proof that the digital currency was in fact back by a reserve of U.S. dollars. Bitfinex was also subpoenaed due to it losing banking relationships, but continued to remain operational.

CEO of Bitfinex, JL van der Velde, spoke out against the accusations last year in an emailed statement and said:

“Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex.”

Around this time, Bitcoin (BTC) reached its record high of $20,000 a coin, and these events are what prompted John M. Griffin and Amin Shams from the University of Texas Austin Department of Finance to investigate Tether’s movement.

>> Is Day-Trading Ruining Bitcoin (BTC)?

“Is Bitcoin Really Un-Tethered?”

The 66-page research paper suggests that shows that Tether was “used to provide price support and manipulate cryptocurrency prices.” The paper claims that half of Bitcoin’s price rise within December 2017 was due to Tether and its issuer Bitfinex.

The research paper says:

“Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies.”

Griffin said in an interview that he’s “looked at a lot of markets” and manipulation in a market leaves tracks in the data. The data tracks with Tether are “very consistent” with a manipulation hypothesis.

Griffin and Shams’s paper has been downloaded a total of 2,780 times today and currently has 7,645 abstract views. What will become of the research remains unknown at this time, but Tether (USDT) just passed DASH and Monero to become the 12th largest cryptocurrency by its market cap.

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