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Tether debacle continues; requires proof of USDT backing

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Despite holding the designation of “largest stablecoin in the world,” Tether [USDT] keeps sinking in rough waters. A lawsuit was filed against the network for issuing USDT to boost the price of Bitcoin [BTC]. This market manipulation litigation, which has been ongoing for a while, has changed course. It wasn’t in the stablecoin’s favor this time.

It was revealed that a U.S. Judge in New York had denied Tether’s request to halt the disclosure of its financial documents. As a result, the network is now required to present a variety of documentation relating to USDT’s financial support. General ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements are all included in this list. Additionally, the stablecoin company must provide documentation of all cryptocurrency and stablecoin transfers. There were other requests for minor information like the transaction’s timing.

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Katherine Polk Failla, Judge presiding over Tether case

The Plaintiffs “plainly explain why they need this information: to assess the backing of USDT with US money,” according to the judge who presided over the case, Katherine Polk Failla. She went on to say,

“The documents sought in the transactions RFPs appear to go to one of the Plaintiffs’ core allegations: that the … Defendants engaged in crypto commodities transactions using unbacked USDT, and that those transactions “were strategically timed to inflate the market.”

It should also be mentioned that Tether was asked to provide information regarding the Bitfinex, Bittrex, and Poloniex accounts that are associated with it.

Tether in troubled waters

It appears that Tether simply doesn’t belong in New York. Following a legal battle between the platform and the New York Attorney General, Bitfinex and Tether agreed to a somewhat pricey $18.5 million settlement. The 22-month-long case, which began in April 2019, was eventually resolved.

The company further confirmed that it would stop providing trading services to New York citizens.

The platform will undoubtedly suffer from the most recent news. As was already mentioned, Tether’s lawyers claimed that providing financial documents was “very excessive” and “unduly burdensome.” However, the judge firmly refuted these claims and emphasized that these records were material to the dispute.

Binance to Halt USDC Trading, Announces That USDT Won’t Have the Same Fate

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The world’s largest cryptocurrency exchange, Binance, has acknowledged that it does not currently have any plans to “auto-convert” Tether (USDT) to Binance USD (BUSD), but that this “may change.”

A spokesperson for Binance confirmed to Cointelegraph that there are no plans at the moment to do the same for USDT, but added that this may change in the future:

“We do not have plans to auto-convert USDT to BUSD as of now, but may change.”

The spokesperson added that the decision to stop providing most trading services for USDC and the auto-conversion is “not temporary measures” and “will continue.”

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Binance to Halt USDC Trading, Announces That USDT Won't Have the Same Fate 3

Binance to discontinue USDC trading

The cryptocurrency exchange shocked the market on September 6 by announcing it would stop supporting USD Coin (USDC), a stablecoin pegged to the US dollar, along with USDP Stablecoin (USDP), and TrueUSD on its platform (TUSD).

On September 29, users who are still holding any of the three stablecoins will start to automatically convert those holdings to BUSD at a 1:1 ratio over a 24-hour period.

While Tether USDT, the largest stablecoin by market cap, was not mentioned, Binance claimed that the decision was made to improve liquidity and capital efficiency for users.

According to a Sept. 6 tweet from Binance CEO Changpeng Zhao (CZ), the company is “just merging all liquidity into one pair” and will provide users with the “best price, lowest slippage” rather than delisting the three stablecoins.

Additionally, the exchange will switch most of the pairings over to BUSD and remove the extensive list of spot trading asset pairs paired to these stablecoins.

Users should also be cautious about using USDC in the exchange’s staking, savings, liquid swaps, or loans because those services will also be discontinued for that asset.

Binance’s action coincides with a brief suspension of Ether (ETH) and Wrapped ETH (wETH) withdrawals and deposits on particular networks from September 6 until the end of the month.

Tether: Will Roche Freedman be terminated from class-action lawsuit?

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Following a demand from Kyle Roche to be removed as counsel in the case, Tether (USDT)-issuing company Tether wants law firm Roche Freedman “terminated” as counsel from the Bitfinex and Tether class-action lawsuit.

Tether and Bitfinex’s legal team asked for Roche’s legal team to be completely removed from the case and certified that they had returned or destroyed all defendant-issued documents and had not shared them with any third party, including Ava Labs, in a court order request submitted by Elliot Greenfield of Debevoise & Plimpton LLP on Wednesday.

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The request was made soon after Roche filed a notice of motion to withdraw from the Tether class action lawsuit due to continued fallout from a recent CryptoLeaks exposé that claimed the American attorney had a covert agreement to “damage” Ava Labs rivals in exchange for AVAX tokens and Ava Labs ownership.

Greenfield expressed “great worry” that Kyle Roche “may be abusing the discovery process” and “misusing material” he obtains through litigation after Roche’s words appeared on the CryptoLeaks website:

“He states that he is Ava Lab’s ‘crypto expert’ because he ‘sue[s] half the companies in the space’ and ’know[s] where this market is going’ because he has ‘seen the insides of every single crypto company.’”

Tether’s legal representative’s high claims

Greenfield emphasized that Roche Freedman LLP has issued a number of document requests seeking information that has no obvious link to the claims and defenses in this complaint and said that the issues are very pertinent to the case.

The attorney also emphasised the need for the documents to be suppressed, saying that they contain information that, if made public, would endanger the privacy and security of the defendants and their clients as well as confidential and competitively sensitive information about the defendants’ businesses.

The removal of Kyle Roche does little if anything to resolve the serious issues about the possible misuse of discovery, according to Greenfield, despite the fact that Roche has filed motions to withdraw himself from the case and others.

He further added,

“Even if he is no longer counsel of record, he would still have access to discovery materials, would retain the ability to direct the conduct of other lawyers at his firm, and would profit from any potential recovery in this lawsuit.”

Greenfield continued, saying the “removal would not prejudice Plaintiffs” because they would still be represented by “two other large and experienced firms,” including Schneider Wallace Cottrell Konecky LLP and Selendy Gay Elsberg PLLC.

Tether and Bitfinex were accused of manipulating the cryptocurrency market by releasing unbacked USDT “in an effort to communicate to the market that there was enormous, organic demand for crypto commodities,” according to the class-action lawsuit filed in 2019.

Roche has also recently dropped out of the litigation against Binance, Solana, Tron, BitMEX, Nexo, and Dfinity.

Tether Teams Up With Bitfinex To Unveil ‘Keet’, A P2P Video App

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Leading stablecoin issuer Tether and crypto exchange Bifinex in collaboration with Hypercore, a peer-to-peer data network has announced the launch of a fully encrypted video-calling application dubbed Keet [https://keet.io]. 

Per the announcement blog, the free video calling app employs peer-to-peer connections to facilitate real-time audio/video calls, text chat, and file sharing.

The new feature is powered by an innovative technology called Distributed Holepunching that allows users to find and connect to each other using only cryptographic key pairs upon authorization. 

This, according to the blog, empowers users with the ability to be in control of their own data and communication channels, without the prying eyes of any third party.

Compared to traditional video chat apps that typically use cloud-based software or outside servers as intermediaries to connect two or more people, Keet users would directly initiate a call to another individual’s computer, without the need of a central server or firms operating the network.

Speaking on the launch, Paolo Ardoino CTO of Tether and Bitfinex & CSO of Holepunch stated,

Web1 was the original form of the internet. It was designed to distribute information and knowledge on a global scale but it didn’t come without issues. Web2 improved upon many of the user experience roadblocks of Web1 but not without one major flaw- it requires users to give up control of their data, which has led to the rise of monopolies and growing privacy concerns.

Tether CTO- ” Freedom Is Lifeblood Of The Future”

Hence, the firms decided to work on the development of Holepunch and Keet without depending on any server. “It believes that freedom of choice, communication, and finances are the lifeblood of the future, and anything that will enhance those freedoms is worth amplifying,” Ardoino added.

Besides that, the project is being funded by both Tether and Bitfinex, and CTO Paolo Ardoino has been appointed as Chief Strategy Officer. 

As stated in the post, the Holepunch protocol will be closed-source until it completes alpha testing. It will then move to open source code in the fourth quarter of 2022.

Further, Keet’s built-in payments API will run, operate, and be powered by the Lightning Network with Tether tokens being the default micropayments system

Tether Is Planning To Offer GBPT, a Stablecoin Pegged To Sterling

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With the addition of a new cryptocurrency tied to the British pound sterling, GBPT, leading stablecoin provider Tether is extending its stablecoin offering (GBP). The new GBP-pegged stablecoin, GBPT, will go live in early July and will originally support the Ethereum blockchain, according to a formal announcement made by Tether on June 22.

In order to offer a quicker and more affordable option for asset transactions, GBPT will be a reliable digital currency linked in a 1:1 ratio to the GBPT.

USDT and USDC On Bitgert Chain Is Going To Have Zero Transaction Cost 1
Tether

GBPT joins the Tether family

The biggest stablecoin by market capitalization, USDT, and the other four fiat currency-pegged Tether tokens are now joined by GBPT. Other stablecoins include the offshore Chinese yuan-egged CNHT, the euro-pegged EURT, and the recently announced MXNT, which is pegged to the peso of Mexico.

The designers that created Tether USDT will create the new stablecoin, and it will function under Tether.to, the company’s primary website.

The UK is a key site for the upcoming wave of industrial transformation, said Paolo Ardoino, chief technical officer of Tether, adding:

“We hope to help lead this innovation by providing cryptocurrency users worldwide with access to a GBP-denominated stablecoin issued by the largest stablecoin issuer. Tether is ready and willing to work with U.K. regulators to make this goal a reality and looks forward to the continued adoption of Tether stablecoins”

The release also notes that in April 2022, HM Treasury revealed ambitions to turn the nation into a center for cryptocurrencies worldwide and include stablecoins within its regulatory framework. In order to accept stablecoins as a form of payment, the Economic and Finance Ministry of the United Kingdom intended to modify its regulatory framework.

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.

Here’s why US policymakers are at odds with regards to Stablecoins

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US legislators in the Biden administration and on Capitol Hill have unanimously voiced their support for tighter regulation towards stablecoins as Washington wraps its head around the rapidly growing cryptocurrency industry.

Stablecoins, whose values are tied to those real-world assets like the dollar has grown roughly 500% in the 12 months ending in October, a report from the Biden administration says. As policymakers push for regulating the sector, they seemed quite wary of stablecoin’s meteoric rise.

This is evident from the Tether case which has come under attack from the Commodity Futures Trading Commission last year for alleged misrepresentation of its dollar reserves. The case settled with Tether Ltd. agreeing to pay $41 million without admitting any malpractice.

Despite their conservative outlook, both Democrats and Republicans have agreed on the need for new federal action on stablecoins, but are at loggerheads about how and when to proceed.

On one hand, the Biden administration wants to treat stablecoin issuers like banks, a move criticized by some Republicans and Democrats who favor a lighter statutory touch. Some lawmakers on Capitol Hill, as well as representatives of the cryptocurrency industry, are opposed to the idea of regulating stablecoin issuers like banks.

Rep. Josh Gottheimer, Co-Chair, Problem Solvers Caucus (D- NJ).

Rep. Josh Gottheimer who has overseen legislation that would provide additional oversight of issuers’ reserve assets deviated Biden administration’s request saying, “What we heard is clearly some are willing to become a bank or go that route and others are not and they want a little bit more flexibility,” he said.

US regulatory lingo on stablecoin to persist until next year

The Blockchain Association, an industry group led by Circle, the issuer of one of the most popular stablecoins wants to allow nonbanks to compete with banks in issuing stablecoins. It’s helpful to have that competition, to have that innovation,” said Ron Hammond, the association’s director of government affairs.

In its executive order last month, the Biden administration tasked agencies to improve the government’s handle on digital assets, including the possibility of creating a digital version of the dollar.

As those reviews are likely to take months, lawmakers anticipate that Congress won’t take major action on cryptocurrency until next year.

Circle’s USDC hits $50B in market cap as it looks to dethrone Tether

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USDC, the world’s second-biggest stablecoin by market capitalization recently hit a new milestone as it crossed the $50 billion mark of the dollar-pegged asset circulating supply, looking to topple the dominance of the current leader, Tether [USDT] in the stablecoin landscape.

In fact, just two weeks ago, the cumulative supply for USDC on Ethereum has overtaken that of Tether, putting USDT in second place on Ethereum for the first time.

At present, Tether supply is mostly split between Ethereum and Tron, with nearly 39 billion and 36 billion USDT on each network, respectively, and the rest on others such as Solana [SOL], Omni [OMNI], and Algorand [ALGO], according to its transparency report.

Sharing the latest news via Twitter, the USDC creator Circle published a blog detailing the exponential trajectory of the stablecoin which has grown 10x over the course of 2021. In addition to that a recent tweet by company co-founder and CEO, Jeremy Allaire said while this is a huge number,

‘It’s the massive growth and ecosystem around it that tells the broader story.’ Adding that USDC has seen 10,000% growth over the past two years.

USDC catching on as Tether dominance diminishes

Crypto research firm Delphi Digital observed even though USDT is still the market cap leader, its growth has however slowed down compared to USDC since May 2021.

The total stablecoin supply currently stands at $177 billion, which captures 9.7% of the total crypto market capitalization. Of that, Tether commands around 45%, whereas Circle now takes a 29% share, rapidly closing the gap.

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Circle's USDC hits $50B in market cap as it looks to dethrone Tether 8

Interestingly at this time, last year Tether controlled around 74% with Circle taking a mere 16% of the stablecoin pie. According to CoinGecko, Circle’s stablecoin market capitalization rose by 987% in 2021 whereas, over the same period, Tether’s supply saw less than a third of that growth with 275%.

As per Circle’s CEO, the stablecoin network recorded $2.5 trillion in on-chain transactions and 4.6 million active wallet addresses in 2021 alone. To top that, USDC runs on eight different blockchains, is supported by 200 protocols, and can be traded in 180 countries on 34 exchanges around the world.

In addition to this, Circle on 31st January 2022 announced that the firm is expanding its USDC multichain on the Flow Network to enable users to pay on Web3.

US Financial Regulators Raise Concerns About Growing Stablecoin Dominance

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The cryptocurrency market has grown by an exponential rate over the past year with the pandemic forcing people to move towards quick, contactless payment methods. Even though the industry was growing in size pre-corona, the last 12 months have really opened up the eyes of the regulators to what cryptocurrencies can actually do.

One of the recent concerns raised by regulators was related to the burgeoning size of the stablecoin market, specifically cryptocurrencies such as Tether [USDT]. They claimed that the size of the market allowed several billions of dollars to be transacted without ever coming under the purview of the country’s financial watchdogs.

During a recent Senate Banking subcommittee, members discussed the various ways cryptocurrencies could hamper financial overwatch. Officials added that a majority of stablecoin holders were unaware of the fact that their funds do not come under the jurisdiction of the Federal Deposit Insurance Corporation. The FDIC is responsible for protecting the claims made during financial transactions in the United States. Josh Lipsky, the director of the Atlantic Council’s GeoEconomics Center stated:

The most immediate way that some stablecoins might come under attack is from enforcers, such as what happened with the New York attorney general, who could pursue issuers for lying to consumers. Stablecoin issuers could eventually work in tandem with international governments’ projects to issue their own digital currencies but that the U.S. and others will have to develop regulations to ensure consumers aren’t hurt.

The Senate Banking members are not the first to speak against stablecoins as the industry has also been attacked by government officials such as Senator Elizabeth Warren and Federal Governor Lael Brainard. These comments came in the wake of Tether’s growing dominance on the cryptocurrency charts, currently sitting pretty at number 3. The world’s largest stablecoins holds a market of roughly $63 billion with a daily trading volume of $58 billion. Tether’s growth also allowed it to surpass major cryptos like XRP and Bitcoin Cash on the charts.

Banking officials stacked on their arguments by reminding everyone of Tether’s trading ban a few years back. Tether General Counsel Stuart Hoegner assured everyone that Tether and all its resources were maintained at the highest levels of safety and security. Hoegner promised:

We continue to look for avenues of regulation globally and are pursuing regimes in several countries

While regulators are trying to bring stablecoins under their thumb, the US government has revealed tentative plans to create a state backed digital asset. A CBDC will be controlled by the state while using blockchain technology and all the core fundamentals of a stablecoin. Although the US is not the first country to initiate or even begin working on such plans, its statements may play a huge role in how the groundwork is laid out.

XRP, Tether [USDT] fall back as Dogecoin [DOGE] lands the 4th position

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Dogecoin [DOGE] seemed to be overhauling prominent currencies like XRP as well as the largest stablecoin, Tether [USDT]. The altcoin’s latest move added to the series of surprises the coin had been giving the community over the last year.

The asset had garnered a place below the crypto spotlight, right from the beginning as it caught people’s eye for being associated with a meme. DOGE continued to attain traction after Elon Musk, the founder of SpaceX began endorsing the altcoin as his favorite crypto. GenZ’s interest in the altcoin on the social media platform, TikTok further added to this. The fervor around the coin continues as DOGE was seen climbing up the crypto ladder while pushing prominent cryptocurrencies down.

Just yesterday, DOGE made news after it rose above the USDT. Earlier today, DOGE once again pushed XRP down below to the fifth position.

XRP Bids Adieu To The Fourth Spot

XRP’s tiff with the SEC almost destroyed the cryptocurrency. However, the asset managed to make its way back to the top both in terms of price as well as market cap. The altcoin had regained a place in the top five, while its price soared above $1. XRP’s stay in the fourth position seemed to be temporary as the market cap of DOGE was seen recording new highs.

At the time of writing, the market cap of DOGE was at a high of $89.52 billion while XRP’s was noted at $65 billion. Additionally, Tether’s market cap was at $52 billion. The rise in Dogecoin’s market cap not only helped the asset land the fourth position but also aided in the surge of the overall market cap, which was at $2.25, during press time.

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XRP, Tether [USDT] fall back as Dogecoin [DOGE] lands the 4th position 10

Furthermore, the price DOGE was also on a roll as it was seemingly aiming for $1. The altcoin was trading for $0.68 with a whopping 56% in the last 24-hours. Over the previous seven days, DOGE reportedly bagged gains of up to 165%. This pump further helped the altcoin garner an array of fans. Several took to Twitter to point out DOGE’s potentials of going to the moon.

https://twitter.com/22loops/status/1389670523488149510?s=20