Tether Increases Liquidity with $19 Billion in USDT and Market Warns of Transparency Risks
- Tether issues $19 billion in USDT in one month.
- Market questions transparency of Tether reserves.
- Paolo Ardoino affirms USDT’s backing with safe assets.
Tether, the issuer of the USDT stablecoin, recently minted $19 billion worth of new tokens over the course of a month, raising concerns in the crypto market about the sustainability and transparency of such moves. On December 6, the company minted an additional $2 billion worth of USDT, adding to significant issuances on the 3rd and 5th of the same month.
Tether minted 2B $ USDT again 6 hours ago! #Teth is has minted 19B $ USDT on #Ethereum and #Tron since Nov 6! https://t.co/mRlyzWmCSj pic.twitter.com/D3OmnyXVxc
— Lookonchain (@lookonchain) December 7, 2024
These issuances occurred on the Ethereum and Tron networks, according to data from blockchain analytics platforms. The crypto community is questioning whether Tether’s reserves are sufficient to back the growing amount of USDT in circulation. Critics warn that issuing large volumes without clear proof of backing could undermine market confidence.
The surge in USDT issuance coincides with a bullish period in the cryptocurrency market, where assets like Bitcoin have surpassed $99.000. During these periods, demand for stablecoins grows, prompting issuers like Tether to increase supply to meet liquidity needs. Market observers point out that the additional liquidity facilitates transactions and can stabilize prices. However, there are divisions on the impact of this strategy, with some arguing for market efficiency and others concerned about the lack of transparency.
In response to the concerns, Tether’s chief technology officer Paolo Ardoino stated that the company is committed to backing USDT with safe assets such as U.S. Treasuries. Ardoino emphasized the importance of stablecoins holding reserves primarily in Treasuries to avoid exposure to bank failures. He also highlighted Tether’s collaboration with authorities to combat illicit activities using blockchain tracking tools.
Just to correct the statement: we're still discussing with the regulator about our concerns that I expressed in our interview, that would pose severe risks to stablecoins regulated in EU.
Uninsured cash deposits are not a good idea.
We should learn from what happened with…
— Paolo Ardoino 🤖🍐 (@paoloardoino) April 11, 2024
Meanwhile, court records have revealed Tether’s alleged ties to drug trafficking operations in the United States, Mexico, and Colombia. Federal authorities are seeking to seize more than $5 million in USDT stored in crypto accounts linked to money laundering. Investigations indicate that more than $15 million in cryptocurrency passed through a Binance account linked to suspected drug trafficking between 2020 and 2023. Tether clarified that the aforementioned transactions occurred on the “secondary market” without the company’s direct involvement, and reaffirmed its commitment to working with law enforcement to combat illegal activities.
Tether’s recent series of USDT issuances highlights the complex relationship between the need for liquidity in the cryptocurrency market and the importance of transparency and investor trust. As the market evolves, the balance between these factors will continue to be crucial to the stability and growth of the crypto ecosystem.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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