Tether (USDT), the cryptocurrency price stable asset, has lost its peg to the U.S.Dollar, which has everyone asking: is Tether in trouble?
Tether, are you solvent?
Tether is a cryptocurrency project focused on providing price stable assets on the Bitcoin blockchain that are pegged to the value of and backed by national currencies. However, their peg seems to have become ineffective as market forces are now pushing the price down.
While this may seem like a great arbitrage opportunity at first, allowing users to purchase BTC with USD and sell it for USDT at a profit, some users are beginning to question Tether Limited’s business model and their capabilities to cover the 1:1 USD peg.
One Reddit user and cryptocurrency trader since 2013 has expressed his concerns regarding Tether and the current price discrepancies:
The problem here is that this is creating a very large price spread between exchanges that quote ACTUAL dollars and those that quote tether. This distinction is not being made clear, which I think is having an unhealthy influence on price rallies in cryptocurrencies. Furthermore, I have doubts that this tether is backed by dollars at all and in all likelihood is a fractional reserve.
Meanwhile, others have also pointed to Tether’s legal page noting one particular sentence that has aroused some suspicion:
There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers.
So What’s Going