Tether’s (USDT) Website Dilutes USD Backing Claims, Community Is Alert

The developers behind the stablecoin and dollar-pegged altcoin Tether (USDT) have drawn a lot of scrutiny today after many social media users noticed that Tether has removed previous claims that the altcoin was fully backed by the USD currency. This topic has emerged in the crypto news today.

However…

This is not the first time for people to point their fingers towards Tether (USDT). The cryptocurrency has had some hurdles over the transparency of its holdings and had guaranteed that each of the USDT tokens had an equivalent of 1 USD in the bank.

USDT was even labeled as “the opposite to fractional reserve banking” with documents further confirming the validity of Tether’s backing claims. However, a new update (unknown date) to its website suggests that USD holdings no longer cover the full supply of USDT.

“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”

One of the such affiliated entities is the cryptocurrency exchange Bitfinex which shares leadership with the Tether stablecoin.

The Reddit field is also full of comments when it comes to Tether (USDT). One commentator there took issue with backing by anything other than USD, which they suggested compromises the entire coin’s legitimacy.

As one user with a handle u/Toyake (who also uploaded the topic) summarized:

“I guess we’re back to trusting 3rd parties, running fractional reserves, to run the market.”

A popular response even drew multiple parallels between Tether and the defunct alleged ponzi scheme BitConnect. Tether had not issued any official comments on the allegations at press time. Earlier this month, however, officials reached an agreement with the blockchain network TRON to use USDT as the platform’s native token on the end of Q2 of 2019.