Tether, A Crypto Supposedly Pegged To The US Dollar, Moves Into Crypto 4th Spot

Tether is extremely controversial. Many doubt if the money is really there. It hasn't been audited, but it's now #4.

Tether is a controversial cryptocurrency with tokens issued by Tether Limited, which claims that each token issued is backed by one United States dollar though they may not necessarily be redeemed through the Tether platform. Tether is called a stablecoin because it is designed to always be worth $1.00.

Tether Price

Tether is supposedly pegged to the US dollar. In practice, it seldom trades there.

Is the Money There?

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Ticking Time Bomb

Consider a few snips from the March CoinDesk article Tether Might Still Be Crypto’s Ticking Time Bomb.

Trading data shows tether has generally hovered around $1, occasionally dipping as low as $0.80 or jumping as high as $1.10.

But the company’s online critics have long alleged that Tether, which has close ties to the crypto exchange Bitfinex, has been issuing more USDT than it has dollars in the bank, in order to drive up the price of bitcoin.

That’s a problem for investors because tether is rare among cryptocurrencies in that it carries counterparty risk – in other words, the possibility one party to a contract may not fulfill its end of the bargain. In Tether’s case, the “obligation” is redeeming USDT tokens for dollars.

An audit by the firm Friedman LLP was supposed to prove that USDT was fully backed. But recently Tether abruptly announced that its its relationship with Friedman had ended. It remains unclear who dumped whom and why.

Now, with no audit forthcoming, the doubts are as pervasive as ever. When contacted for this column, a spokesperson for Tether would say only, “Regarding the audit, we have no further comment.”

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