Tether, which is the company behind the controversial USDT stablecoin, recently quietly updated its website to dilute its claims that every USDT token has been backed by the US dollar in its reserves, to now actually include “cash equivalents,” together with third-party loans.
Tether no longer claims USDT is backed by USD in reserves
As it was first spotted by one user of Reddit, the website of Tether is now no longer claiming that every USDT token is actually backed by a dollar in reserves, even though it maintains that its value is actually pegged to one of the U.S. dollars.
The website stated that every tether is always 100% backed by their reserves, which actually include traditional currency, as well as cash equivalents and, from time to time, it may also include some other assets and receivables from loans, made by the Tether to third parties, which can also include affiliated entities. Every tether is also 1-to-1 pegged to the dollar, so 1USD is always valued by Tether at 1USD.
The stablecoin was a target for the critics in the crypto community, who actually believe that the company, the one which shares management with the crypto exchange Bitfinex, does not have the $2 billion for covering the over 2 billion USDT tokens in circulation.
Evidence pointing the contrary
In 2018, evidence started pointing to the contrary, as one report suggested that the firm did really have $1 in its reserves to cover every USDT in circulation. Despite the reserves which were seemingly there, the investors have also shown caution with the stablecoin.
In October of last year, Bitfinex has halted fiat deposits for several customers in the face of the processing complications, which actually led to a substantial Bitcoin-Tether premium. In one statement, Bitfinex has noted that the deposits have only been temporarily suspended and that it has been working to put in place some new, and increasingly robust fiat deposit system.
Reddit users claim USDT is officially not backed 100% by USD
Commenting on the recent move of Tether to alert its USD backing claims, the users of Reddit claimed that USDT is now officially not backed 100% by USD, and also that this may mean that the company now has cryptos in its reserves too.
The change from recent times may also be related to investigations which were conducted by the US Department of Justice or DOJ and the Commodity Futures Trading Commission or CFTC on the operations of Tether and Bitfinex.
Despite the doubts a lot of crypto enthusiasts have had on the USDT token of Tether, it was dominating the stablecoin sector, although cryptos such as TUSD, USDC, and PAX, were gaining influence too.