Crypto Around The World: May 7 Review
Weekly News 1.21 – Tether Ponzi Scheme? Yellen Crypto Face Off to Come?
Tether Ponzi Scheme as branded by Critics; Fearing It Could Damage Bitcoin
The cryptocurrency world is still abuzz with the latest news regarding Tether (USDT), which has been at the heart of controversy in the crypto world for a few years. Recently, the New York General Attorney’s office filed charges against iFinex, the parent company of Tether and crypto exchange Bitfinex. Investigating claims of fraud, deception, and market manipulation, the NYGA is currently in the processes of reviewing the financial statements of iFinex (parent company of the trading platform Bitfinex and Tether) and Tether Holdings.
Concurrently, a social watch group on Twitter, has announced that $100MM of Tether was moved to an unknown wallet on January 19th. This movement that was subsequently followed by a jump in Bitcoin price, which has caused quite a stir amongst experts, creating questions in the market as to a Tether Ponzi Scheme exists:
With the association of potentially manipulating the price of Bitcoin by printing more Tether, which may or may not have an equal backing in reserve currencies, many investors are questioning whether we could see popular crypto exchanges decide to de-list Tether. Given that Ripple (XRP) suffered a similar fate this month, it would not be surprising to find crypto exchanges – who are fighting to win US and EU regulatory favor – wanting to distance themselves from this situation with Tether.
Both the investigation and rumors have cast a spotlight on Tether and its adjacent exchanges, creating what is referred to as FUD (fear, uncertainty, and doubt) in the market amongst USDT holders and skeptics who have long had doubts about the stable coin. Tether also happens to be the third most widely held coin by value, and its trading volume exceeds that of Bitcoin some days.
If it is seen as a largely manipulable coin, the effects it could have on Bitcoin and the crypto market as a whole could be significant. While some people believe that Tether FUD could lead investors to dump USDT and purchase Bitcoin driving the price of BTC higher, others have suggested that investigations, lawsuits, and doubts could lead to market-wide crashes across several coins.
The DeFi (Decentralized Finance) industry is one that has ballooned to a value of more than $10 billion in less than a year. Since its inception on the blockchain, Tether has long been a source of comfort for those who crave the gains of crypto with a significantly lowered amount of risk (since it was perceived to have been backed up by actual USD and pegged at a 1-to-1ratio). Should this investigation reveal that Tether’s real value was largely inflated by inter-market trades, it could prove to be detrimental to the stable coin.
SECONDARY STORY: Janet Yellen Suggests “Curtailing” Crypto
In parallel, Bitcoin is currently slumping after experiencing record highs in the beginning of the year. In a seeming sea of red indicators, continued sell offs managed to wipe nearly $100 billion from the world’s largest cryptocurrency in just one week. And Bitcoin did not go down alone, Ether, Ripple’s XRP, and Litecoin all took nose dives varying between 5% and 10%.
This slump comes at a time when President Joe Biden’s nominee for treasury secretary Janet Yellen was quoted suggesting that lawmakers “curtail” the use of cryptocurrencies over concerns that they may be used for illegal activities. Yellen’s comments suggest that Biden’s administration could prove to be more hostile towards the crypto market than it was previously thought, possibly choosing to ramp up regulation. Yellen’s direct quote read, “Cryptocurrencies are a particular concern. I think many are used – at least in a transaction sense – mainly for illicit financing”.
At press time, Bitcoin was trading at $32,211.
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