Tether Mints $250 Mln of New USDT Tokens, Rekindles Controversy
Tether minted $250 million worth of new USDT tokens May 18, with both the markets and the community reacting strongly.
Tether is the company that issues the so-called stablecoins USDT, which it claims are backed at 1:1 ratio by US dollars. Tether has been criticized for its lack of transparency after it broke ties with auditing firm Friedman LLP before an official audit could be conducted.
With a near monopoly on stablecoins, the total supply of Tether tokens has now risen to 2.5 bln, and some critics find it hard to believe that all of those tokens are backed by US dollars.
One such critic is anonymous blogger Bitfinex’ed, who has pointed out the correlation of Tether coin generation with price increases of mainstream cryptocurrencies like Bitcoin and Ethereum. According to Cointelegraph’s BTC and ETH price indices, the price of Bitcoin increased approximately by $120 and Ethereum by $10 within an hour of the issuing of the $250 million worth of new Tether tokens.
Bitfinex, one of the largest exchanges for cryptocurrencies, is a sister company of Tether and has threatened legal action against critics such as Bitfinex’ed for questioning Tether’s 1:1 ratio with USD, a fact still unproven in the absence of an audit.