Tether (USDT) is a cryptocurrency that is backed by a reserve of fiat currency. It is designed to provide users with a stable store of value and an easy way to transfer value between exchanges and wallets. Tether also allows users to buy and sell cryptocurrency without having to worry about the volatility of the market. This article will explain how Tether works and how it can be used.
Since 2014, company management has maintained that all USDT tokens are fully backed by US dollars.
On February 27, 2019, Tether changed its USDT collateral policy. Since then, each coin has been backed by “reserves that include currency and cash equivalents, as well as, from time to time…other assets and forthcoming proceeds from loans that Tether has made available to third parties.”
In May 2019, Stuart Hogner, chief legal officer at Tether Limited, confirmed that USDT is only 74% backed by fiat reserves.
In April 2019, the New York State Attorney General’s Office charged the Bitfinex exchange with hiding an $880 million loss from users and using Tether’s reserves to cover the resulting hole. Bitfinex funds were frozen on Crypto Capital’s processing accounts in several countries.
In October 2019, investors filed a class action lawsuit against iFinex Inc., the parent company of Bitfinex, accusing them of creating billions of dollars worth of USDT tokens with no real collateral. According to the plaintiffs, this influenced the rise in the price of bitcoin to an all-time high in 2017.
The overall list of allegations includes violation of the US Commodity Exchange Act, the RICO Act, money laundering, Pump & Dump schemes, market manipulation by issuing USDT, and willfully defrauding investors.
On June 3, 2020, the plaintiffs filed a new version of the lawsuit, which also contains allegations against Bittrex and Poloniex. Both of these exchanges are said to have been directly involved in this scheme, creating the illusion of fresh liquidity flowing into the market through multiple BTC buy orders. Bitfinex and Tether declared the lawsuit groundless and intended to continue defending their reputation in court, Bittrex and Poloniex called the accusations against them “unconvincing”.
Issue of tokens
In September 2016, Tether announced the launch of the EURT (Eurocoin) token pegged to the euro.
In April 2019, Tether issued the first USDT tokens on the Tron blockchain, and in June of the same year, on the EOS blockchain.
In July 2019, Blockstream and Tether launched the USDT stablecoin on the Liquid Network. In the future, Blockstream and Tether plan to launch USDT tokens on the second layer of the Lightning Network.
In September 2019, Tether launched a stablecoin pegged to the offshore Chinese Yuan (CNH).
In January 2020, the company announced the launch of a new gold-backed token. Tether Gold (XAUT) “represents the ownership of one troy ounce of physical gold in a particular bar.” The stablecoin will be available on the Ethereum (ERC-20 protocol) and Tron (TRC-20) blockchains. The gold backing of the token will be held in a Swiss vault.
In February 2020, Tether launched a USD-pegged stablecoin on the Algorand 2.0 blockchain. Through the partnership, Tether will take advantage of Standardized Asset (ASA) technology. The latter opens up wide opportunities for tokenization and the release of “assets of any type” on the Algorand blockchain. Algorand developers are working on a blockchain based on the Proof-of-Stake consensus algorithm.
March 20, 2020 took place launch of Tether (USDT) based on the Bitcoin Cash blockchain. To this end, the developers have used the Simple Ledger Protocol, which allows issuing tokens over the BCH network.
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Tether (USDT) is a digital currency that is backed by real-world currency, allowing users to store and transact with a stable, secure digital asset. Tether works by issuing tokens that are pegged to a real-world currency, allowing users to store their money in a digital form and spend it like regular currency. In summary, Tether provides users with the security of a real-world currency while allowing them to take advantage of the convenience of digital currency.
What is Tether (USDT)?
Tether (USDT) is a cryptocurrency that is pegged to the US dollar and is used to provide stability and global liquidity to the crypto market. It is a stablecoin, which means that its value is tied to the US dollar and it is designed to stay as close to $1 as possible. USDT is used to facilitate trading between crypto-assets and traditional fiat currencies.
How Tether works?
USDT is an open-source, blockchain-based cryptocurrency. It is a USD-backed asset, which means that it is backed by the U.S. dollar held in reserve by the company. When a user deposits USD into the Tether platform, it creates new USDT tokens. These tokens can then be used to trade for other cryptocurrencies on any exchange that supports USDT. When the user wants to convert USDT back to USD, they simply send the tokens back to the Tether platform, and the USD is returned to their account.