Tether is back in the spotlight today, as the public analyzes subtle changes to the stablecoin’s characterization of its controversial backing system.
The very value proposition of Tether from the beginning was that this stablecoin was backed entirely by the U.S. dollar. Dollar-to-dollar token reserves were part of the deal.
However, legal challenges and other issues created rumors of Tether’s insolvency and larger than usual sales of the token boosted more questions. The linking (or “tethering – pun intended) of Tether to Bitfinex, the exchange served by the now-defunct Puerto Rican Noble bank, added fuel to the fire.
Now, an addition to the Tether website is raising all sorts of other questions and concerns about how the token is supported.
In a story today entitled: “Cryptocurrency Community Eyes Tether After Website Dilutes USD Backing Claims,” Cointelegraph’s William Suberg cites a cryptic and cryptically timed change to the Tether site including this language:
“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…”
The news around Tether is, in a word, disquieting.
“Tether is currently the ninth-largest cryptocurrency by market cap, and runs on the Omni layer on top of the bitcoin blockchain,” reports David Z. Morris today at BreakerMag. “The token has been issued by Tether Limited since 2014. Tether Limited claimed for more than four years that every Tether in circulation was backed by a dollar in the company’s bank accounts. But the company has repeatedly failed to provide a formal audit of those holdings, leading many to speculate that its claims of backing were fraudulent.”
This led to an eruption in the peanut gallery of comments about third parties and their general trustworthiness.
In a way, all of this furor makes sense – just imagine if the holders of Fort Knox gold in the time of precious metals backing US currency were to hedge their assurances by saying that most of the dollars were backed by gold!
In other words, close only counts in horseshoes and hand grenades.
However, despite the news, some Redditors are staying the course.
“Tether still hasn’t imploded.” writes Adeus_Ayrton about an hour ago.
“You can rely on 100 theorys if you want,” adds Brammerr. “Tether, golden cross, we are not 87% down yet like bear market before, 200 dma coming really close, more and more addoption… “
Indeed, Tether’s ticker continues to hold – but don’t expect that to keep holding if the veracity of its proponents keeps coming under fire.