Tag Archives: tether

Investors claim Tether’s $118B reserves may face audit and liquidity risks

Investors claim Tether’s $118B reserves may face audit and liquidity risks

Tether’s lack of third-party audits is raising investor concerns about a potential FTX-like liquidity crisis from the $118 billion stablecoin giant.

Investor concerns are mounting around Tether, the issuer of the world’s largest stablecoin USD₮.

Cyber Capital founder Justin Bons, who shared his concerns about Tether being a potentially bigger scam than FTX, catalyzed the latest wave of concerns.

Bons wrote in a Sept. 14 X post:

“[Tether is] one of the biggest existential threats to crypto as a whole. As we have to trust they hold $118B in collateral without proof! Even after the CFTC fined Tether for lying about their reserves in 2021.”

In 2021, the United States Commodities and Futures Trading Commission (CFTC) fined Tether a $41 million civil monetary penalty for lying about USDT being fully backed by reserves.

Concerns over the stablecoin giant’s influence over the crypto space grew louder recently after data revealed that Tether’s market share surpassed 75% of the entire stablecoin market after a 20% increase over the past two years.

A hypothetical Tether implosion would be banking-driven, unlike the FTX collapse

Part of the concerns are fueled by one of the industry’s most notorious black swan events, the collapse of the FTX exchange, which led to $8.9 billion in lost user funds.

While FTX’s collapse was due to its inability to honor mass customer withdrawals of $6 billion within three days, a hypothetical Tether implosion would be related to its banking partners, according to Sean Lee, the co-founder of IDA Finance.

Lee told Cointelegraph:

“Bear market or not, the possibility of Tether imploding is more about its structural connectivity to its underlying assets and banking rails, not so much market movement.  Otherwise, USDT would’ve suffered during the last bear market, but instead, it was actually [USD Coin] USDC that depegged due to their reliance on Silicon Valley Bank and Signature Bank.”

In May 2022, Tether honored over $16.7 billion worth of USDT customer withdrawals within 10 days without any issues.

In contrast, Washington Mutual Bank could not honor $16.5 billion worth of withdrawals within 10 days, which led to what became known as the biggest banking failure in the US in September 2008.

Others believe that Tether is too big to fail. Notably, Anndy Lian, author and intergovernmental blockchain expert, doesn’t expect Tether to face issues but warned that generally, large centralized entities could pose a risk for the cryptocurrency space:

“Cryptocurrencies were originally designed to operate without central control, promoting transparency, security, and user autonomy. However, Tether, as a centralized stablecoin issuer, holds significant influence over the crypto market due to its widespread use for trading and liquidity.”

Cointelegraph has approached Tether for comment.

Tether’s business structure and transparency raise concerns

On Sept. 8, Tether invested $100 million in Adecoagro, acquiring a 9.8% stake in the Latin American agricultural giant.

This latest investment gave us the first disclosure into Tether’s governance structure, according to Cyber Capital’s Bons, who wrote:

“The board of Tether Holdings only has 2 members; Giancarlo & Ludovicos. This implies that the USDT reserves are still not segregated in 2024 & these two have absolute control!”

IDA Finance’s co-founder, Lee, was also concerned about Tether’s lack of transparency. He wrote:

“Tether is structured as a business and their insistence on not providing the level of detailed transparency that ensures real trust from the community and institutional players is indeed concerning.”

Despite Tether boasting over $118 billion worth of reserves in its second quarter “independent attestations conducted by BDO,” Cyber Capital’s Bons claims that Tether has yet to submit its reserves for a third-party audit:

“However, an ‘Auditor’s Report’ or an ‘Accountant Report’ is not a formal audit at all! Despite the claims, Tether has never submitted its alleged reserves to a real unrestricted, third-party audit!”

 

Source: https://cointelegraph.com/news/tether-transparency-business-structure-118b-ftx-concern

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

USDT Hits $100 Billion Milestone as Tether Plans Stablecoin Recovery Tools

USDT Hits $100 Billion Milestone as Tether Plans Stablecoin Recovery Tools

On the day USDT reached a milestone $100 billion market cap, the company behind the stablecoin, Tether, announced recovery plans for holders if a blockchain was ever disrupted.

The $100bn market cap is a testament to the value of stablecoins in both the cryptocurrency realm and across TradFi, but it, at times, has been a rocky road to reach such widespread adoption.

On March 4, Tether released a recovery process to protect users’ funds if a blockchain is disrupted, as it attempts to allay concerns about the risk of using USDT.

USDT is now the third largest cryptocurrency by market cap, behind Bitcoin and Ethereum — with BTC itself narrowing in on its own ATH.

 

 

Key Takeaways

  • Tether, the stablecoin behind USDT, has hit a $100 billion market cap milestone.
  • With its widespread adoption on 14 blockchains, especially on the Tron network, Tether has become the third-largest cryptocurrency, trailing only Bitcoin and Ethereum.
  • In response to concerns about blockchain disruptions, Tether has introduced a recovery plan to safeguard users’ funds.
  • Users will be able to validate a transaction to another chain if disruption occurs.
  • Concerns about Tether’s backing have persisted since its inception, but the company seems to be shaking the reputation off through closer scrutiny of its reserves.

Tether tokens are available on 14 blockchains and have become especially popular on the Tron network, where low transaction fees are encouraging users in certain countries to buy and sell USDT as an alternative to devalued local currencies.

Tron has overtaken the Ethereum chain for the largest share of USDT in circulation, accounting for $50.4 billion compared with $40.6 billion on Ethereum, according to DeFi Llama data.

USDT Protection if a Blockchain Goes Offline

The new recovery tool aims to enable users to maintain access to their Tether stablecoins if the blockchain they are hosted on goes down.

The company said:

“In the event that any blockchain on which USDT is available becomes disrupted, Tether has developed and will implement its proactive measures to ensure uninterrupted accessibility for our holders, and safeguarding users’ accessibility to their USDT.”

Users would be able to migrate their USDT tokens to another blockchain through a web interface or command-line tools by cryptographically signing a migration request to verify ownership.

The web-based option supports popular browser extension wallets and hardware wallets, while the command-line interface allows users to enter their private key directly, enabling them to sign the request using an open-source script on their local machine.

Why USDT is Surging

Interest in crypto has surged since the approval of several bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission in January, in turn increasing demand for USDT as an on-ramp and off-ramp to convert funds to and from cryptocurrencies such as bitcoin.

Trading volumes in investment products reached a record of over $30 billion last week, driven by ETF demand, according to digital asset manager CoinShares, at times representing 50% of global Bitcoin daily trading volumes on trusted exchanges.

Total assets under management (AUM) reached $82.6 billion, approaching the all-time high of $86 billion at the peak of the market in early November 2021.

Fiat currency-pegged stablecoins such as Tether typically mint (or create) new tokens when users submit a transaction to convert their fiat at a value of 1:1.

So if a user requests to buy $100 worth of a stablecoin, 100 tokens are minted.

But Tether recently authorized a mint of $1 billion in USDT on the Ethereum blockchain to replenish inventory in preparation for an increase in issuance requests and swaps between blockchains, according to a post on X, formerly Twitter, by Tether’s chief executive officer, Paolo Ardoino.

 

Ardoino expects crypto demand to increase as more funds and companies invest in Bitcoin now that the ETFs give them the legitimacy that they need to convince accountants and auditors they should hold some on their balance sheets.

Ardoino said in a panel discussion last week:

“We are going to see a wide range of hedge funds and pension funds that will start to add Bitcoin to their portfolio now that the Bitcoin ETF is out there.

“More and more fund managers are interested in starting to add up to 5% of their portfolio into Bitcoin.

“But ultimately one of the most interesting things is companies more and more will start keeping part of their unused balance sheet in Bitcoin… and that will grow over time.”

Stablecoins are also at the forefront of retail interest in crypto.

Intergovernmental blockchain expert Anndy Lian, speaking to Techopedia about Tether, said:

“Tether is a remarkable achievement in the cryptocurrency space, as it provides a stable and convenient way to use fiat currencies on the blockchain.

“USDT as stablecoins that are pegged 1-to-1 with a matching fiat currency are widely adopted across major exchanges, OTC desks, and wallets, and have surpassed Bitcoin in terms of trading volume.

“USDT is a sign of how useful stablecoins are in the world, as they bridge the gap between the traditional and the digital financial systems.

“They offer the benefits of both worlds: the stability and familiarity of fiat currencies, and the speed and transparency of the blockchain. It also reduces the volatility and complexity that are often associated with cryptocurrencies, making them more accessible and appealing to a wider audience.

Tether’s reliance on a “trust me” status has raised doubts and suspicions among some investors and observers, who question the legitimacy and sustainability of Tether’s operations.

“Fast forward to today, Tether has refined its operations and is the widely used stablecoin in the world now. In my humble opinion, doubts about them have gone down a lot.”

“Stablecoins are becoming increasingly important,” according to Dina White, General Counsel at Zodia Markets, a digital asset brokerage and exchange platform.

“We are seeing this at Zodia Markets, particularly due to cross-border payment efficiencies and cost-savings. And they could become a widespread means of retail payment.”

Tether Strives for Legitimacy Amid Controversy

Tether’s growing popularity among crypto users extends to criminal groups, which are increasingly using USDT to transfer and launder money.

A recent United Nations Office on Drugs and Crime (UNODC) report on organized crime in East and Southeast Asia (PDF) found that “USDT on the TRON155 blockchain has become a preferred choice for regional cyberfraud operations and money launderers alike due to its stability and the ease, anonymity, and low fees of its transactions.”

The report added: “Between September 2022 and September 2023, a recent fund audit of USDT-based transactions by one independent blockchain data analysis company found transactions totaling 17.07 billion USDT connected to underground currency exchanges, illegal commodity trades, unlawful collection and payment processes, and various criminal activities.

“Law enforcement and financial intelligence authorities in East and Southeast Asia have also reported USDT among the most popular cryptocurrencies used by organized crime groups, demonstrated by a surging volume of cyber fraud, money laundering, and underground banking-related cases.”

Tether responded to the report with criticism that “the UN’s analysis ignores the traceability of Tether tokens and the proven record Tether has of collaborating with law enforcement.

“We are disappointed in the UN’s assessment that singles out USDT highlighting its involvement in illicit activity while ignoring its role in helping developing economies in emerging markets, completely neglected by the global financial world simply because servicing such communities would be unprofitable for them.

“Rather than focusing solely on risks, the UN should also discuss how centralized stablecoins can improve anti-financial crime efforts.”

Tether stated that it collaborates with the US Department of Justice (DoJ), the Federal Bureau of Investigations (FBI), and the US Secret Service (USSS) to monitor USDT tokens, ensuring that traceability surpasses “traditional banking systems that for decades have been the vessel for laundering substantial sums proven by the fines that have been levied on them.”

Tether has also developed a tool to monitor secondary markets with blockchain analysis firm Chainalysis.

“Tether tokens, using public blockchains, make it possible to meticulously track every transaction, making it an impractical choice for illicit activities. This is evident in our freezing of more than US$300 million within the last few months, showcasing our commitment to combating the criminal use of cryptocurrencies,” the statement added.

Is Growing Tether Usage Supported by Real Value?

Launched in 2014, Tether has long been controversial because of speculation about whether the full value of USDT in circulation is backed by real collateral.

In 2021, Tether paid fines of $41 million to the Commodity Futures Trading Commission (CFTC) and $18.5 million to the New York Attorney General’s Office for falsely claiming that USDT was backed by US dollars on a 1:1 basis between 2016 and 2019.

The company now publishes daily reserve data, monthly reports, and quarterly reviews breaking down its reserves, which it says are independently audited.

Its most recent report for December 2023 showed total cash holdings of $82.1 billion, $3.5 billion in precious metals, $2.8 billion in Bitcoin, $3.8 billion in other investments, and $4.8 billion in secured loans, along with $44 million in corporate bonds.

 

 

 

Source: https://www.techopedia.com/usdt-hits-100-billion-milestone-as-tether-plans-stablecoin-recovery-tools

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Tether under scrutiny: A deep dive into cryptocurrency crime allegations

Tether under scrutiny: A deep dive into cryptocurrency crime allegations

A recent report by the United Nations Office on Drugs and Crime (UNODC) has warned that Tether, one of the world’s most traded cryptocurrencies, has become a key tool for criminals, money launderers and scammers in East and Southeast Asia.

The report claims that Tether’s stability, ease of use, anonymity and low transaction fees have made it the preferred choice for fraudsters and money launderers alike and that its popularity is illustrated by the surging volume of cyber fraud, money laundering and underground banking cases involving the stablecoin.

However, some crypto enthusiasts and experts have challenged the validity and accuracy of the UN report, arguing that it is based on flawed assumptions, incomplete data and biased analysis. They contend that Tether is not the most preferred currency for illicit activities, that it is not as anonymous and untraceable as the report suggests, and that bad actors can use other cryptocurrencies and techniques to evade detection and regulation.

In this article, I will examine both sides of the debate and offer my own opinion on the matter.

What is Tether, and why is it popular?

Tether is a company that runs a blockchain platform and issues digital tokens pegged to real-world currencies with the backing of its own financial reserves, most notably USDT, or tether, which is tied to the US dollar one-for-one. Tether claims that its tokens are fully backed by fiat currency and other assets and that they provide a stable and transparent alternative to volatile and unpredictable cryptocurrencies.

Tether’s main appeal lies in its ability to bridge the gap between the traditional and the crypto worlds, offering users the benefits of both. Tether users can enjoy the speed, security, low cost and global reach of blockchain transactions while also maintaining the stability, liquidity and familiarity of fiat currencies.

Tether also enables users to access various crypto platforms and services, such as exchanges, wallets, lending, gaming and gambling, without having to deal with the complexities and risks of converting between different currencies and tokens.

According to CoinMarketCap, Tether is the world’s third-largest cryptocurrency by market capitalisation, behind only Bitcoin and Ethereum, with a market cap of over US$95 billion as of January 16, 2024.

Tether also has the highest daily trading volume of any cryptocurrency, surpassing even Bitcoin, with an average of over US$100 billion traded per day. Tether is widely accepted and supported by hundreds of crypto platforms and service providers, as well as some regulated entities, such as banks and payment processors.

What are the allegations against Tether?

Despite its popularity and success, Tether has also been plagued by controversies and criticisms, ranging from its lack of transparency and accountability to its involvement in market manipulation and fraud to its vulnerability to hacking and theft. Tether has faced several lawsuits, investigations and regulatory actions from various authorities and stakeholders, both in the US and abroad, over its business practices, operations and compliance.

The most recent and alarming accusation against Tether comes from the UNODC report, which alleges that Tether has quickly become the platform of choice for money laundering and fraud operations across East and Southeast Asia.

The report cites intelligence from law enforcement and financial authorities in the region, who report that Tether ranks among the most popular cryptocurrencies used by organised crime groups, especially those operating online casinos, which have emerged as among the most popular vehicles for cryptocurrency-based money launderers.

The report also details how Tether is used to facilitate various schemes, such as “sextortion”, a form of blackmail threatening to post sexual content or information about a person, and “pig butchering”, a socially engineered romance designed to “fatten up” targets before extracting money. It claims that Tether’s appeal to criminals lies in its speedy and irreversible transactions, its low detection and traceability, and its ability to bypass regulatory and legal barriers.

The same report also highlights the role of “motorcades”, which are sophisticated, high-speed money laundering teams that specialise in Tether transactions. These teams advertise their services on social media platforms, such as Facebook, TikTok and Telegram, and offer to exchange Tether for fiat currency or other cryptocurrencies for a percentage of the total laundered and transferred funds. It says that these teams have seen a rapid uptick in recent years and that they pose a serious challenge to law enforcement and financial authorities.

What are the counterarguments to the UN report?

In my humble opinion, the UN report has been met with scepticism and criticism, and some other experts also question its methodology, data, and conclusions. They argue that the report is based on anecdotal evidence, selective cases and biased sources and that it does not provide a comprehensive and accurate picture of the crypto landscape and the role of Tether in it. I want to also point out the flaws and limitations of the report and offer alternative explanations and perspectives on the issue.

One of the main counterarguments to the UN report is that Tether is not the most preferred currency for illicit activities and that other cryptocurrencies, such as Bitcoin, Ethereum, and BNB, are perhaps more widely used and more suitable for such purposes.

It is cited in various studies and reports that show that the majority of crypto transactions are legitimate and legal and that only a small fraction of them, around one per cent, is associated with criminal and illicit activities.

I would also argue that Tether is not as anonymous and untraceable as the report suggests and that it is possible to track and monitor Tether transactions using blockchain analysis tools and techniques. They point out that Tether transactions are recorded on public ledgers, such as the Bitcoin, Ethereum and Tron blockchains, and that they can be linked to real-world identities and entities using various methods, such as IP addresses, wallet addresses, exchange accounts, KYC information and network activity.

It also contends that bad actors can use other cryptocurrencies and techniques to evade detection and regulation and that Tether is not the only or the best option for them. They mention the use of privacy coins, such as Monero and Zcash, which offer enhanced anonymity and obfuscation features, such as stealth addresses, ring signatures, zero-knowledge proofs and confidential transactions.

They also mention the use of crypto mixers, such as Tornado Cash and Wasabi, which offer decentralised and trustless solutions for mixing and tumbling coins, making it harder to trace their origin and destination.

What is my opinion on the matter?

Based on my research and analysis, I think that the UN report has some merit and validity, but it also has some flaws and limitations. I think that Tether is indeed a popular and convenient tool for some criminals, money launderers and scammers, especially in East and Southeast Asia, where there is a high demand and supply for crypto services and products and where there is a lack of effective and consistent regulation and enforcement.

I think that Tether’s features and benefits, such as its stability, ease of use, low cost and global reach, also make it attractive and useful for such actors, who can exploit its loopholes and weaknesses to their advantage.

However, I also think that the UN report is not conclusive and definitive and that it does not capture the whole and true picture of the crypto landscape and the role of Tether in it. I think that Tether is not the only or the most preferred currency for illicit activities and that other cryptocurrencies and techniques are more widely used and more suitable for such purposes.

I think that Tether is not as anonymous and untraceable as the report suggests and that it is possible to track and monitor Tether transactions using blockchain analysis tools and techniques. I think that the UN report is based on anecdotal evidence, selective cases and biased sources and that it does not provide comprehensive and accurate data and analysis on the issue.

To stay within my argument, here is some food for thought — Tether has conducted the biggest-ever USDT freeze of US$225 million linked to a human trafficking syndicate. They worked hand in hand on this occasion with leading crypto exchanges, OKX and DOJ. This shows Tether’s willingness to help the industry and, to a certain extent, stay accountable and transparent.

Therefore, my opinion is that it is not fair or accurate to label it as the crypto of choice for criminals. I think that Tether has a legitimate and valuable role and function in the crypto ecosystem and that it provides a stable and transparent alternative to volatile and unpredictable cryptocurrencies.

I think that Tether also has a lot of room and potential for improvement and innovation and that it can address and resolve its controversies and criticisms by enhancing its transparency and accountability, complying with relevant laws and regulations, and cooperating with authorities and stakeholders.

 

Source: https://e27.co/tether-under-scrutiny-a-deep-dive-into-cryptocurrency-crime-allegations-20240123/

Insights

What is Tether, and why has it gained popularity in the cryptocurrency market?

Tether is a blockchain platform that issues digital tokens, such as USDT, pegged to real-world currencies, offering stability and transparency. Its popularity stems from bridging traditional and crypto worlds, combining the benefits of blockchain transactions with the stability and familiarity of fiat currencies.

What are the allegations against Tether regarding its involvement in illicit activities?

What counterarguments exist against the UNODC report's accusations towards Tether?

In the article, Anndy Lian argues that the UN report lacks comprehensive data and relies on anecdotal evidence. They contend that Tether is not the primary choice for illicit activities, pointing to other cryptocurrencies like Bitcoin and Ethereum. Moreover, they emphasize the traceability of Tether transactions through blockchain analysis tools and highlight alternative options, such as privacy coins and crypto mixers.

What is the Anndy Lian's opinion on the UNODC report and Tether's role in illicit activities?

Anndy Lian acknowledges the UN report's merit but criticizes its flaws and limitations. They argue that Tether serves as a tool for criminals in specific regions due to the demand for crypto services and lax regulation. However, the author contends that Tether is not the exclusive choice for illicit activities and suggests that the report is based on biased sources. They advocate for a more nuanced perspective on Tether's role in the crypto landscape.

How does Tether respond to accusations of involvement in criminal activities, and what is the author, Anndy Lian's overall opinion on Tether?

Tether has taken action against criminal activities, evidenced by a significant USDT freeze linked to a human trafficking syndicate, showcasing a commitment to industry integrity. The author concludes that labeling Tether as the go-to crypto for criminals is unfair, emphasizing its legitimate role in the crypto ecosystem. Anndy Lian believes Tether can improve by addressing controversies, enhancing transparency, complying with regulations, and collaborating with authorities.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j