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Tether Dusts Its Hands Off The Sinking Ship Silvergate

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Tether’s CTO has stated that his organization has no exposure to Silvergate, as businesses in the cryptocurrency sector unite to remove themselves from the embattled bank.

A U.S. bank called Silvergate serves the crypto business, which has previously had difficulty getting banking services but has recently been shaken by financial difficulties.

The San Francisco bank disclosed a $1 billion net loss last month in addition to a $14 billion fall in customer deposits during the final quarter of 2022.

It postponed yesterday’s submission of its yearly 10-K report to the Securities and Exchange Commission of the United States because it required “extra time” to allow an outside accounting firm to finish some audit procedures.

Today, the company’s stock is rapidly falling, and cryptocurrency businesses are cutting relations with it. The biggest cryptocurrency exchange in America, Coinbase, said earlier today that it was stopping transfers to and from banks. Paolo Ardoino, CTO of Tether, stated on Twitter on Thursday, that Tether had no exposure to SIlvergate.

Tether In Troubled Waters?

Despite the terrible bear market currently affecting the cryptocurrency sector, Tether, the business behind the biggest stablecoin and most traded cryptocurrency, appears to be doing well.

It announced this month that despite handling $21 billion in redemptions the year before, it still made $700 million in earnings in Q4 2022.

With a $71 billion market cap, its stablecoin, USDT, is the third-largest cryptocurrency after Bitcoin and Ethereum.

Moreover, it is the digital asset that is traded the most: according to CoinGecko, its 24-hour trading volume is above $34 billion.

This is so that traders may swiftly make and exit deals without having to deal with U.S. dollars, Japanese yen, or other fiat currencies in a traditional bank because USDT is tied one-to-one with fiat currencies.

However, Tether as a firm is contentious because it has so far declined to provide evidence that its stablecoin is backed by dollars and also because the company is not independently audited.

During a two-year investigation by the New York Attorney General, it was claimed that Tether “made false statements about the backing” of its stablecoin. The company in 2021 agreed to stop operating in New York.

Tether Under Mass DDoS Siege; More Details

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Tether, the world’s largest stablecoin had a major scare when CTO Paolo Ardoino confirmed that its website Tether_to was under a massive DDoS attack. “They tried already once. On a normal day, we have around 2k reqs/5min The attack brought us to 8M reqs/5min”, he wrote.

Ardoino further informed that the attack has been mitigated by Cloudflare but it still left ‘I’m under attack mode’ enabled” as a preventive measure.

According to the top exec, the additional security move “won’t affect the ability to redeeming”.

Recently the blockchain-enabled platform released a blog dispelling gossip over its commercial paper holdings. Rumors were doing the rounds that 85% of Tether’s reserves are commercial papers and that are being traded at a 30 percent discount in China and Asia.

The firm then alleged that those were “coordinated” conspiracies trying to profit at a testing time.

“These rumors are completely false and likely spread to induce further panic in order to generate additional profits from an already stressed market,” the blog states. “Tether condemns such attempts which oftentimes see simple users take the biggest hit, while few coordinated funds increase their profits.”

“Tether Always Maintained Adequate Reserves”

In 2021, Tether was fined $41 million by the U.S. Commodity Futures Trading Commission for making “untrue or misleading statements and omissions of material fact” about its reserves.

In its response, the team stated that “it has always maintained adequate reserves and has never failed to satisfy a redemption request” and that the CFTC had only found that “the reserves were not all in cash and all in a bank account titled in Tether’s name, at all times.”

Apart from that, the firm through its latest blog sought to allay additional concerns with a report dated March 31, which reaffirms that “over 47% of total USDT reserves are now US Treasuries and that commercial paper makes up less than 25% of USDT’s backing”.

On a final note, the Tether chose to dissociate itself after reports emerged that it might be the next to go down in the market bloodbath after lending platform Celsius’ and crypto hedge fund Three Arrows Capitals’ near insolvency crisis.

Will EU’s potential ban on PoW lead to centralization? netizens ask

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European Union or EU’s latest draft proposal that is seeking to regulate virtual currencies known as Markets in Crypto Assets (MiCA), is back with a provision calling for reducing the usage of proof-of-work cryptocurrencies.

The early version of the MiCA draft took a conservative approach advocating an absolute ban of crypto services that depend on environmentally unsustainable consensus mechanisms beginning in January 2025. But the provision was later removed after receiving industry backlash.

With regards to the modified draft, the EU parliamentarian, currently overseeing the MiCA legislative framework, Dr. Stefan Berger, said at the time that the paragraph in question had been scrapped, but that a final decision had not yet been made.

According to the provision, if a proof-of-work consensus mechanism is operating on a small scale, it is exempted from having to meet sustainability standards. But the question remains as to what qualifies a small-scale operation.

It also says that energy-intensive crypto assets that are already in use in the EU prior to the legislation, would be required to “set up and maintain a phased rollout plan to ensure compliance with such requirements” as specified in another part of the framework.

The latest news cooked up a storm in the crypto community.

EU’s draft raised so many questions

Paolo Ardoino who is the CTO of Bitfinex and Tether took to Twitter saying such a potential POW ban runs the risk of Centralization and this is why his firms are investing in companies that are focused on mining diversification.

One user in response to Arduino’s tweet questioned how a close circle of 30 people will decide the fate of millions of investors behind closed doors. “Are we kidding? this is a dictatorship,” he slammed. To which the exec replied, “Yup. That’s why I’m skeptical. But hysteria, lobbying, and interests can get us to unwanted results.”

Some even called on citizens in the EU to reach out to their parliamentarians to oppose the proposal. Pierre Person, a Paris-based legislator and member of the Law Commission, criticized the newly added note in a lengthy Twitter thread.

Through a series of tweets, Person warned that the prohibition of crypto-assets that rely on Proof-of-Work protocols would lead to exclusion of Bitcoin and Ether from Europe. “It would be more relevant to ban mining from fossil energies and promote players who turn to surplus renewable energy to improve the profitability of these means of production,” he added.

Tether [USDT] CTO Paolo Ardoino says “everyone takes from king” on competitor’s rising market cap

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Tether, the issuer of the stablecoin USDT, has been constantly under regulator’s scrutiny. Over the past couple of months, USDT appears to be shrinking while its competitor USDC advances at a rapid pace. But this exec is not worried.

Paolo Ardoino, who happens to be the CTO of both Bitfinex and Tether, iterated the famous adage “Let everyone grow so that the sum of all voices will be louder,” and asserted that the “stablecoin industry is much more solid [with competitions] around in the long run.”

Taking a jibe at the recent reports regarding USDC “eating away USDT’s market share,” Ardoino clarified that does not mind seeing growth and that he welcomes everyone provided there is a level playing field. His tweet read,

“Everyone at Tether is proud that the idea that they created in 2014 is now copied by many parties. Ain’t good if no one bothers. So we are flattered. Alone is harder to make history. With a bigger representation of stablecoins, we can aim for fairer regulations.”

USDT’s decline in dominance

The dwindling price of the cryptocurrency market has had no effect on the transaction volume of stablecoins. In fact, the figures have stayed widely unfazed. As per Messari’s latest report, stablecoins witnessed impressive growth in the second quarter of this year amidst market-wide sideways movement. In addition to that, stablecoins have reportedly facilitated a staggering $1.7 trillion in transaction volume, meaning a rise of 1,090% year-over-year and 59% since the previous quarter.

USDT, on the other hand, had failed to impress the charts, as the parabolic growth in the market cap of the world’s oldest and largest stablecoin giant came to an abrupt halt in May.

For almost two months, Tether has not issued a single USDT on the Ethereum network. This has been one of the major factors that have affected the asset losing its market dominance. Additionally, China’s renewed crypto crackdown on USDT is another contributor in addition to the mounting regulatory threats.

Tether Discloses Alleged Extortion Attempt; Calls Circulating Documents ‘Bogus’

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Just when Tether’s long-standing legal drama finally found a resolution, the company was hit by an alleged extortion attempt. In the latest development, the issuer of the world’s largest stablecoin USDT, claims to have received a ransom note asking for 500 BTC that currently worth about $22 million.

If the company fails to pay the amount, the entities said that they will leak documents to the public in an effort to “harm the bitcoin ecosystem.”

Tether claims that the documents circulating online purporting to be between the company personnel and reps of Deltec Bank & Trust and others bogus.

The documents in question revived the age-old debate of USDT’s backing. It alleged that the stablecoin is, in fact, backed by crypto and not US Dollar.

In a clarification thread, Tether stated that it is unclear whether the latest stunt is a basic extortion scheme like those aimed at other crypto-based firms or individuals seeking to “undermine” the stablecoin issuer and the community as a whole.

It added,

“Either way, those seeking to harm Tether are getting increasingly desperate.”

Calling it a “sad attempt at a shakedown”, Tether went on to say that the platform nevertheless takes these threats “seriously”. It also stated,

“We have reported the forged communications and the associated ransom demand to law enforcement. As always, we will fully support law enforcement in an investigation of this extortion scheme.”

Tether’s meteoric rise

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Tether Discloses Alleged Extortion Attempt; Calls Circulating Documents 'Bogus' 2

The stablecoin has been one of the controversial tokens to exist. Despite this, it serves a crucial role in the crypto market. It is no surprise that trading has become the major source of demand for USDT.

Over the past year, the stablecoin saw an astonishing rise in tandem to Bitcoin crossing several key hurdles and finally breaching $55K.

With over $35 billion in circulation, Tether is now the fifth-largest token by market cap on the cryptocurrency ladder.