Untethered: The History of Stablecoin Tether and How It Has Lost Its $1 Peg

Published on by Cointele | Published on

On October 15, the cryptocurrency dipped below the $1 mark amid a wave of negative sentiment that has led to an apparent sell-off of Tether tokens.

Another factor that may have influenced the drop in value of Tether was a report at the beginning of the month which stated that both Tether and Bitfinex, the exchange responsible for issuing the tokens, had parted ways with Noble Bank in Puerto Rico.

Tether is still trading below $1 according to data from Coinmarketcap.

Thus, every time new Tether tokens were issued, these could be tracked on the platform, allowing the wider cryptocurrency community to keep tabs on how many new Tethers were released.

There have been claims that not all Tether tokens which are issued, have the necessary fiat currency reserve to back it up.

While Tether's balance sheet on its website claims to provide a transparent reflection of its accounts, Tether has failed to complete an audit of its accounts by a third-party - which was promised in 2017.

The crypto community began to put pressure on the company to conduct a full audit to allay fears of inadequate cash reserves to the number of Tether tokens.

Following the dissolved relationship between Tether and Friedman LLP, Bitmex released a report that speculated that Tether had the necessary cash reserves in a bank account in Puerto Rico.

In the same month, a law firm in the US released a report stating the Tether did actually have the adequate reserve of fiat currency to back tokens in circulation.

While Tether has long been hailed as the original stablecoin pegged to the US Dollar, its duopoly with TrueUSD, has been disrupted by the approval of two new stablecoins linked to the Dollar.

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