According to a recent report, Tether, which is currently, the largest stablecoin by market capitalization has issued over $300 million worth of USDT in the past week. This has reignited the claims that the stablecoin never actually stopped its market manipulation practices and that its stablecoin is still not supported by dollar reserves.
Tether Increases Overall Supply Suspiciously
On the 8th of April, Tether started to increase the overall supply of USDT and this has since then increased by 417 million dollars. However, this decision has led to criticism from watchdog of both Tether and Bitfinex called Bitfinexed.
Bitfinexed wrote in a recent tweet that:
Tether is once again injecting the cryptocurrency markets with nearly $400M of fake money. They’ve recently admitted it’s not backed by dollars, but so-called ‘reserves’.
Last time they injected this much fake money, we found out about CFTC subpoenas and the market crashed.
Tether and Bitfinex
Tether alongside another top crypto exchange— Bitfinex has been embroiled in several of controversies relating to market manipulation practices and falsifying documents. The USDT stablecoin developed by Tether is worth billions of dollars when valued in the virtual currency markets, therefore, the loss of trust in the stablecoin could drastically affect the price of Bitcoin.
These claims have led to the Department of Justice (DOJ) of the United States being interested in the matter as the agency has started investigating the company. The investigation is based on the potential alteration of the price of Bitcoin through the use of USDT on Bitfinex. If the accusations turn out to be the truth, the price of Bitcoin and its trading volume could become excessively inflated.
To aggravate problems, Tether has disagreed for audits to be taken and has refused to make its banking details public. This refusal to disclose any detail by the company as well as some other observations has caused many people in the crypto community to start having doubts concerning the company’s claims that USDT is supported by US dollars one-to-one.