Main liquidity provider for cryptocurrency markets.
What is tether?
Tether is a stablecoin pegged to the US dollar. It is the first stablecoin to be launched by Tether Limited and its partner company Bitfinex. Tether has a dollar-backed stablecoin (USDT) and a gold-backed stablecoin (XAUT).
What is Tether USD (USDT)?
Tether USD (USDT) is a dollar-pegged stablecoin minted by Tether Limited. These stablecoins should have a ratio of 1: 1 to the dollar reserves. However, they tend to break this ratio depending on market demand. Still, tether generally skews the 1: 1 reserve ratio.
What is Tether Gold (XAUT)?
Tether Gold (XAUT) is a gold-linked stablecoin minted by Tether Limited. Its value was underpinned by the gold bars in London’s Good Delivery Bar. Its value depends on the price of one troy ounce of gold per token.
Tether USD can be accessed from Binance Smart Chain, Tron, Algorand, EOS, Liquid Network, Omni, Bitcoin Cash Standard Ledger Protocol, Solana and Ethereum. Hence, you can use different networks to issue Tether USD tokens on different platforms.
Tied to USD
Since Tether USD is a stablecoin pegged to the dollar, its value is linked to the value of the USD. Therefore, USDT is not affected by price fluctuations.
Although Tether Limited has been under scrutiny for a while for failing to meet reserve requirements, Tether Limited provides an overview of its assets in multiple currencies.
Tether Gold can be purchased from Tron and Ethereum networks. Therefore, you can keep these tokens on separate wallets to be traded on exchanges.
Each XAUT shows investors that they own a physical Troy gold on a specific gold bar. Since these tokens represent property rights to gold, they can be redeemed on sale. In addition, XAUT owners can check their gold status for every detail related to precious metals. To redeem the token, users must pass the gold storage company’s verification process.
Tether Limited case with the New York Attorney General
Tether and other stablecoin companies claim they have all the reserves to repay all token holders. However, when Tether Limited found that they did not support their claims, according to independent review, the New York attorney general opened a case against Tether Limited. In the case of Tether and Bitfinex, both companies found they were hiding losses worth $ 850 million. When the case was resolved, it turned out that the stablecoin reserves were insufficient to cover all of Tether’s supply. As a result, Tether and Bitfinex had to pay a fine of $ 18.5 million and cease all trading activities in New York. Additionally, these companies are required to report any reports to the Office of Attorney General of New York in order to comply with the prohibitions.
So is Tether legit or a scam?
Although Tether provides plenty of liquidity to the cryptocurrency markets, it does not have adequate reserves when investors have to return their currency units in dollars. If investors become suspicious of Tether and ask Tether to repay all of their money, Tether would likely go bankrupt as it does not have enough reserves to meet all of the investors’ needs. Hence, Tether and Bitfinex could go out of business and the cryptocurrency market would be in a dire situation as Tether provides most of the liquidity in the market. Although Tether’s crash would cause a liquidity problem, various stablecoins would fill the void, but it would take a considerable amount of time. Although Tether and Bitfinex have found themselves in a difficult position, it is too early to call Tether a scam.