In an official announcement on Wednesday, October 24, Tether, the issues of controversial stablecoin USDT confirmed that it has “redeemed a significant amount” of tokens from circulation. Over the last few weeks, as CoinSpeaker reported, Bitfinex has been transferring millions of dollars worth USDT tokens back to the Tether treasury.
In the last month, the market cap of Tether (SDT) is on a continuous downfall, with now just over $2 billion. The latest official announcement coming from Tether notes that it will now destroy 500 million USDT tokens from its own treasury wallet. The complete statement from the company reads:
“Over the course of the past week, Tether has redeemed a significant amount of USDT from the circulating supply of tokens. In line with this, Tether will destroy 500m USDT from the Tether treasury wallet and will leave the remaining USDT (approx 466m) in the wallet as a preparatory measures for future USDT issuances.”
There is nothing much suspicious regarding the current process as “Tether issuance and redemption process is outlined in the Tether whitepaper. The firm states:
“Every tether issued or redeemed, as publicly recorded by the Bitcoin blockchain will correspond to a deposit or withdrawal of funds from the [company’s] bank account.”
One can check all the issuances and redemptions by checking the balance in the Tether Treasury wallet on the OMNI blockchain.
From the official announcement, it is clear that the 500 million worth USDT tokens which were redeemed and destroyed contributed 52% of the total supply. While talking about fiat accounting, the Tether whitepaper notes that part of “the ‘Solvency Equation’ for the Tether System […] the provability of [U.S. dollar reserves] will rely on several processes”. This includes different professional audits as well as the Tether’s publication of bank account balances on its Transparency page (“Proof of Funds”).
There have been several doubts cast on Tether’s transparency conduct in the crypto industry. Many experts believed Tether to be having a suspicious relationship with Bitfinex exchange. Several accusations say that Tether used to source additional USDT tokens to Bitfinex without actually backing them with physical USD. Furthermore, some accusations suggest that Bitfinex has been artificially inflating Bitcoin price using the USDT tokens.
Doubts about Tether’s suspicious behavior started getting steam after Tether dissolved its relationship with third-party auditor Friedman LLP, earlier this year in January. But later in June, Tether got its reserves audited from Freeh Sporkin & Sullivan who said that Tether had sufficient reserves for its circulating tokens held in an undisclosed bank.
In another turn of events, some reports also claim that Tether is moving out of the stablecoin business. These claims were put forward by Su Zhu, CEO of the Singapore-based fund manager Three Arrows Capital and a researcher under the name “Hasu”, in a recent post.