TL; DR Breakdown
- Hindenburg has accused Tether of lacking transparency in disclosing its backing reserves. The firm says that this secrecy puts Tether’s investors at risk.
- It isn’t the first time that Tether is facing accusations of irregular dealings. It has also come under fire for alleged market manipulation.
Hindenburg Research announced a one million bounty on information disclosing Tether’s (USDT). backing reserves. The forensic financial researcher has expressed its doubts about the stablecoin’s backing.
According to Hindenburg, Tether’s secrecy on the matter exposes its investors to risk. This claim follows another by Alex Mashinsky that it was minting new USDT for cryptos. Such minting contravenes Tether’s terms. Mr. Mashinsky is Celsius’ CEO>
Today, Tether stands among the top 10 cryptocurrencies in the market. But, these claims might make it lose credibility within the crypto sector. The forensic financial firm says that it’s vital that Tether discloses its backing.
Now, its users can take advantage of this opportunity to earn a bounty. All they need to do is help the firm dig out the secrets surrounding the Tether stablecoin.
Hindenburg is a financial firm dedicated to the exploration of financial research. It seeks solutions for major stress points within the financial and crypto space. Its diversified functions enable it to look into different financial aspects include credits, derivatives.
How Hindenburg plays a role in this research
Hindenburg is well-versed in offering the best investment advice. Besides identifying financial irregularities, it tracks financial fraud and illegal monetary connections. Since its start, it has been producing reports on different projects. It also maintains their progression of its platform.
Tether has kept mum on its possible fraudulent activity. It insists that it holds $1 is to every 1USDT on the company’s US dollar traditional reserves. But, it also stated that a good amount of USDT has its backing from US commercial paper. This factor places it at the most-coveted position in the commercial paper market.
Not its first rodeo
In 2019, Tether found itself facing accusations of market manipulation. Additionally, it faced allegations of not disclosing all USDT risks to its users. It wasn’t alone in this as crypto exchange Bitfinex also found itself in the same scandal. Both companies were lucky after a court ruled against half of the plaintiffs’ claims.
But, New York’s district attorney general ordered an end of their activity in the state. Everyone is trying to understand why Tether finds itself in illegal claims.
It’s a viable hedge against the volatility connected to other cryptocurrencies. But it isn’t doing enough to bring trust back from its users.