Tether in the Spotlight After USD 9B Worth of Redemptions
Tether(USDT) is the famous Stablecoin is again in the spotlight of unwanted attention after approx USD 9bn has been redeemed for US dollars by users in the aftermath of the terraUSD(UST) collapse.
The redemptions have come despite USDT trading on exchanges within a rounding error of its USD 1 peg. The Stablecoin traded at USD 0.9989 according to CoinMarketCap and USD 0.99917 according to CoinGecko.
Still appears users have remained nervous since the collapse of the UST and Terra (LUNA) network's algorithmic Stablecoin. and given that tether for years has been the subject of rumors that the Stablecoin may not be fully backed the nervousness among users was quick to hit that particular Stablecoin in the days after UST troubles started on May 9.
Jim Bianco, president of the investment analysis firm Biano Research, pointed out that a tether liquidity pool on the Curve(CRV) decentralized finance (DeFi) platform remains unbalanced.
"Not enough for it to break the peg, but enough that Tether consistently stays in the southside of USD 1.00 and DAI/USDC consistently stay on the northside of USD 1.00"
3/3— Jim Bianco biancoresearch.eth (@biancoresearch) May 18, 2022
Curve's 3pool continues to stay unbalance at 74% Tether. Not enough for it to break the peg, but enough that Tether consistently stays in the southside of $1.00 (0.998 or so) and DAI/USDC consistently stay on the northside of $1.00 ($1.002 or so). Both round to $1.00 pic.twitter.com/pMUfuMErYc
Bianco added that redemptions at the scale tether are experiencing now have not been seen in DeFi since the so-called 'DeFi summer' around the spring of 2020, the large redemptions are an entirely new situation for many of the most popular DeFi protocols today, he stated:
John Reed Stark a consultant and senior lecturing Fellow at Duke University School of Law, was even more direct in their criticism of tether, saying that it resembles "the same ominous song was sung by Madoff, Theranos & Enron."
“For former [US Securities and Exchange Commission] enforcement lawyers like me, it’s deja vu. No one knows the true nature of Tether’s backing. Tether won’t disclose, saying ‘we don’t want to share our secret sauce,” Stark tweeted.
Best known veterans in the Bitcoin(BTC) and crypto space, including Adam Back, the CEO of Bitcoin development firm Blockstream called the accusation "incorrect"
"Tether never redeemed below par, and it redeemed USD 7 bill in a few days," back said, while referring to an earlier Twitter thread Where he pointed out that each USDT that has been redeemed, has been redeemed at 1:1 with the US dollar.
“Contrary to what news report USDt did NOT break its peg AT ALL,” the early Bitcoin user and computer scientist said.
Zhu Su, the co-founder of crypto hedge fund Three Arrows Capital and other analysts also argued that redemptions of USDT in no way prove that tether is unbacked instead, it "proves the opposite, which is that USDT is redeemable, in size for USD, the popular investor said:
This proves the opposite, which is that USDT is redeemable, in size, for USD https://t.co/FI9Vk0LjFP— Zhu Su (@zhusu) May 18, 2022
lol so first it was "Tether is unbacked, it can't process redemptions" then they process $9b worth of redemptions without incident and it's a sign of impending doom?— nic carter (@nic__carter) May 19, 2022