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Analysts' Insights

Analysts' Insights

Rumors Swirl: Tether Stablecoin Faces Impending Implosion

👇 1) Yesterday, Tether’s USDT stablecoin was briefly unpegged. What is going on? Why does it matter? Tether has become one of the biggest fee generators in crypto, currently making $3bn in net yearly profits.

👇 2) USDT is the most crucial stablecoin with a market capitalization of $83.5bn. While initially, most USDT minting occurred on Ethereum, over the last few months, most of USDT has been minted on Tron, which has questioned the source of fiat used for the rise in USDT’s market cap. Any "leak" around the Tron relationship could be explosive...

👇 3) Tether is also the last building block of the crypto universe that the US authorities might try to dismantle after they recently filed charges against Binance.

👇 4) Importantly, Tether is working offshore, and its banking partners appear diverse across seven different entities – according to their accounts – but mainly in the Bahamas. They could be out of reach for US authorities.

👇 5) While Chokepoint 2.0 eliminated Silvergate Bank, Silicon Valley Bank and Signature Bank, the authorities could not limit Tether’s influence yet.

👇 6) The CFTC subpoenaed heads of Tether in December 2017, and the U.S. Department of Justice (DoJ) was investigating possible price manipulations using Tether. In 2021, the Tether settled with the CFTC and paid $41m over claims that US Dollars fully backed the stablecoin.

👇 7) It appears that crypto news site Coindesk has received details about Tether’s financials and the market had tried to price in an implosion of USDT through a depeg as traders were reminded of October 2022 when Coindesk published the financials of Alameda – Sam Bankman-Fried trading firm – which led to the implosion of the FTX exchange 10 days later.

👇 8) But it appears that these Tether documents that Coindesk received are outdated documents from the previous settlement that were blocked for some time – instead of “bombshell revealing … smoking gun” leaks.

👇 9) Tether felt compelled to front-run any story that Coindesk might publish on the back of those documents. “we cannot count on fair coverage from Coindesk, which often misrepresented Tether’s position…” - Again, if something around Tether + Tron might be revealed by Coindesk, that could turn out explosive.

👇 10) I am very sure that most of what might be “revealed” has already been covered in my book ‘Crypto Titans’ and for everybody who wants to understand where the stablecoin idea came from, who is behind Tether, and why Tether is one of the essential pillars of the crypto industry … please read the book…

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