Tether stablecoin, the company that is in charge of issuing and redeeming the USDT stablecoin, has announced that they will be burning $500 million of USDT. While they did not announce the fact, they did not offer any explanation about the possible cause of this. Tether has been a pretty obscure company when we talk about operations, and this redemption is not the exception to the norm.
Tether Stablecoin Burns $500 Million USDT
Tether stablecoin, the most famous stable cryptocurrency has faced a rough time when it comes to its performance in the market. Last week, it went as low as $0,89, a disaster if we consider that it is, in fact, a stablecoin. Stablecoins are called like that by its “stable” trait. This means that they are anchored or pegged to a certain value. Tether is pegged to the value of the dollar.
This drop was believed to be caused by a fake announcement that was posted on the internet that declared Binance was delisting Tether. But it later was found to be a coordinated operation with trading bots and funding involved, according to Coinspeaker.
Tether price then fell to their lowest price ever, and people were selling off due to fears of a total collapse. This selloff was the most probable cause of the burn of this $500 millions in Tether treasury. In any case, they burned only this quantity but also left $420 million in reserve for future Tether issuance.
Some can see this token burning as an affirmation that Tether does not have the backing that it advertises on every one of their coins; so it should be acting like the FED, a fractional reserve.
But others see that this selloff was a big opportunity for traders and also for Tether, buying their own currency 10% lower than stipulated, and making big gains in the process. But what is true, is that Tether reputation as a stablecoin has fumbled immensely.
Heat From All Sides
Yesterday, Coinbase decided to list Circle’s stablecoin, backed by Goldman Sachs, a thing that surprised some due to the fame and market share that Tether has on the market. This could also be the result of the lack of transparency that Tether has shown.
This is the opinion of Michael Novogratz, that told CNBC that this whole Tether issue is the blame of the same company by not being clear enough of what are they doing and releasing the information to the public.