Bitfinex Redeems 1.28 Billion Tether (USDT) While Tether Retires $500 Million

Cryptocurrency exchange Bitfinex which shares management with Tether has taken out 1.28 billion USDT tokens from circulation following the drop of the stablecoin below the $1 mark.

0

Cryptocurrency exchange Bitfinex which shares management with Tether has taken out 1.28 billion USDT tokens from circulation following the drop of the stablecoin below the $1 mark.

1.28 billion USDT tokens taken out in 9 transactions

Crypto exchange Bitfinex sent 1.28 billion USDT tokens to an address known as the Tether treasury between October 9 and October 24 over nine transactions.

  • 10/09/2018: 100,000,000
  • 10/14/2018: 200,000,000
  • 10/16/2018: 200,000,000
  • 10/16/2018: 50,000,000
  • 10/17/2018: 50,000,000
  • 10/18/2018: 80,000,000
  • 10/19/2018: 50,000,000
  • 10/23/2018: 50,000,000
  • 10/24/2018: 500,000,000

Bitfinex Redeems 1.28 Billion Tether (USDT) While Tether Retires 0 Million

Bitfinex Redeems 1.28 Billion Tether (USDT) While Tether Retires 0 Million

This coincides with the sharp drop in Tether’s price to $0.86 on some exchanges. There are a few theories that Bitfinex or Tether have been taking advantage of the arbitrage opportunity, which would appear to be extremely lucrative in this case.

Tether (USDT) market cap drops to $1.9 billion

Tether, which is the eight largest crypto in terms of market capitalization, saw its market cap dropped to $1.9 billion.

Bitfinex Redeems 1.28 Billion Tether (USDT) While Tether Retires 0 Million

Abnormal activity on October 24, 2018

Earlier today, it appears the Tether issued and later retired $500 million worth of Tether in what appears to be a strange series of transactions in under an hour.

Bitfinex Redeems 1.28 Billion Tether (USDT) While Tether Retires 0 Million

CMC also recorded a sharp increase and later decrease in USDT’s market cap for the corresponding amount.

Bitfinex Redeems 1.28 Billion Tether (USDT) While Tether Retires 0 MillionLeaving the stablecoin market

There is no explanation from Tether or Bitfinex regarding these latest transactions totaling $1.28 billion but there are some theories.

One popular theory put forward by Su Zhu, CEO of the Singapore-based fund manager Three Arrows Capital is that the controversial company is looking to exit the stablecoin market, thus purchasing its tokens as profit.

Controversy has affected Tether at every turn since it was established. According to the stablecoin’s whitepaper, all their tokens are backed by the US Dollars, and users can redeem the stablecoin for the greenback.

However, there is not much evidence to support that, with some token holders expressing frustration at the inability to get fiat currency from the USDT issuers.

Zhu argued that Bitfinex is now redeeming the USDT token themselves. The exchange is buying the tokens at a discount considering the drop in price and then changing the USD collateral from a liability to an asset.

Zhu is of the view that anyone can make extra cash by arbitraging the USDT spread and it would not be abnormal if Tether also took part in the arbitrage process.

Despite these allegations, there is no evidence that Tether has destroyed the tokens it redeemed, something it indicated it would do in its whitepaper.

Doubts spring up over buyback

Zhu isn’t the only one to raise questions over the whole process. Cas Piancey who is a known critic of Bitfinex and Tether stated that he wouldn’t be surprised if it is something that Tether is doing.

However, he doesn’t see anything wrong with the issuer buying back some of its tokens. If they are doing it, then that implies that the solvency of the company comes from fraud, Piancey added.

His point was supported by Matthew Green, a cryptography professor at Johns Hopkins University. Green stated that by this act, Tether continues to increase the customer doubt and they can make a profit at the expense of their users.

Leave A Reply

Your email address will not be published.