The cryptocurrency community is looking for answers. It wants to know what’s going on between Bitfinex and Tether after the cryptocurrency exchange “borrowed” millions from the stablecoin project. It also wants to know why Tether is no longer pegged one-to-one to the U.S. dollar as it has stated since its inception. The community also now wants to know why the stablecoin company just moved $5 million from its treasury to an unknown wallet and how it could invest its reserves in other crypto projects, if those reserves are tied to investors’ funds.
According to the Twitter account “Whale Alert,” Tether moved 4,994,990 USDT from “Tether Treasury to unknown wallet” yesterday. That amount is worth approximately $5.04 million and seems out of place. The market cap of USDT has climbed, as well, increasing $300 million in a month. The circulating supply has increased from $2.6 billion to $2.9 billion, leading some crypto fans to once again call out Bitfinex and Tether. One of these is Giancarlo Potter, who tweeted, “Tether just keeps pumping ’em out – ten million more ETH [Tethers], too. Bitfinex gets a 10 for attitude and a 0 for logic.”
According to a court filing related to the Bitfinex/Tether saga, Tether has invested a “small amount” of its reserves into Bitcoin Core (BTC). The filing, from May 16, quoted Bitfinex lawyer David Miller as stating, “[P]rior to the April 24th [New York Attorney General] order … Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin, they bought bitcoin.” He added that Tether made “other investments, including purchasing other assets.”
Tether recently came out and said, in certain terms, that the USDT is no longer pegged exactly to the U.S. dollar. Instead, it holds reserves that help shore up the value. Those reserves are, partly, investments made from crypto fans. In other words, Tether, in theory, could be taking investor money and using it for its own purposes.
Even the judge hearing the New York case recognizes the issues at hand. New York Supreme Court Judge Joel M. Cohen stated, “Tether sounded to me like sort of the calm in the storm of cryptocurrency trading. And so if Tether is backed by bitcoin, how is that consistent? If some of your assets are in a volatile currency that Tether is supposed to somehow modulate, that seems like it’s playing into what they are saying.”
The only sound heard after that came from the crickets in the room.
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