TL;DR
- Tether’s $1 Billion USDT Minting: Tether recently minted an additional $1 billion in USDT amidst a downturn in the cryptocurrency market, raising doubts about the credibility of issuing such a substantial quantity of USDT.
- CEO’s Explanation: Paolo Ardoino, the CEO of Tether, referred to the activity as an “inventory replenish,” explaining it was an “authorized but not issued transaction,” indicating that the company’s reserves have not yet covered this amount.
- Concerns and Debates: The minting activities and lack of transparent information on burns and issuance have sparked debates and raised concerns about the cryptocurrency market’s heavy reliance on USDT.
Tether recently created an additional $1 billion in USDT on April 16th, amidst a period of notable downturn in the cryptocurrency market. This action has drawn scrutiny and raised doubts about the credibility of issuing such a substantial quantity of USDT, a stablecoin tied to the value of the US dollar.
The news was first reported by WhaleWire, a cryptocurrency news outlet, on X (formerly Twitter), just minutes after the mint occurred. WhaleWire’s post read, “JUST IN: Another $1,000,000,000 worth of unbacked Tether USDT has been printed out of thin air.”
The $1 billion USDT was minted through a smart contract on the Tron Network (TRX), and the tokens were sent to the Tether Treasury account. At the time of writing, the account holds $1.19 billion in its stablecoin. Nonetheless, Paolo Ardoino, the CEO of Tether, issued a public service announcement on X immediately following the mint.
The Future of Tether Amidst Market Scrutiny
In his announcement, Ardoino referred to the activity as “inventory replenish,” explaining it was an “authorized but not issued transaction”. According to the information on Tether’s website, it indicates that the reserves of the company have not yet covered this amount.
Tether has sparked debates due to its capacity to generate substantial amounts of unbacked tokens using just a few lines of code. Concerns have been raised by BlackRock about the considerable risks associated with the cryptocurrency market’s heavy reliance on USDT, as mentioned in its ETF documents. Additionally, Circle, the issuer of USDC, joined forces with Coinbase to urge the U.S. Congress to investigate Tether.
The uncertainties surrounding the company and its stablecoin, Tether, arise from the minting activities and lack of transparent information on burns and issuance. Tether’s USDT stablecoin plays a significant role in providing liquidity for the majority of cryptocurrencies on exchanges, leading to intense debates about its impact as the crypto market evolves.
