Tether (USDT)

Good morning everyone!

We have recently seen an important concern rising within the crypto community that is also being used by contrarians to discourage and disincentives Cryptocurriencies’ success. We will dig deeper to see what is really happening and what we can expect from the Tether case.


Tether Ltd. is currently object of investigation bt the SEC due to possible misuse of funds from clients to cover some company losses where the main accused is IFinex Inc. (Bitfinex). As you may have seen Tether is being investigated by the SEC linked to this case with Bitfinex but it is not in any way linked to USDT/BTC price manipulation as some people argue, this would need to be investigated in a different case that, as of now, is not open.


In 2019 the Tether Ltd. lawyers declared to the NewYork justice authorities that 74% of their coins were actually backed by fiat. Here we can see that at least two years ago 26% of all the funds were not backed by USD. The USDT company is registered in the Bahamas and it is unknown where they store their funds since they claim it is in the Bahamas and US and this is something not proven.


The claim that USDT has no regulation looks to be false. The CEO of Tether made public that every single direct client of the company had to go through KYC. This “Know Your Customer” process forces the company to verify the identity of their clients. Note that, many of the Tether Ltd. direct clients are exchanges who, as has already been said, need to go through KYC but then those exchanges re-sell those USDT (if it passes again through KYC is the responsibility of the exchange and out of Tether’s hands).


Now let’s go to Bitcoin. If we check the volume in CoinMarketCap we can see that the last 24h the volume transacted in USDT is not that big of a deal. We can see that out of the first 17 pairs, 4 of them are traded in USDT:

We have to keep in mind that back in the day USDT was the most important coin and nearly all BTC bought was through it but nowadays we have a lot of other stablecoins such as USDC, DAI, TUSD, PAX, BUSD and so and so forth. While USDT is still the biggest one by far, the rest of the coins are gaining more strength through time.


At first we know that more real demand for BTC is happening, we know that a lot of new people are coming into the space, strong-hands keep accumulating and a wave of new businesses is making BTC part of their cash reserves(Micro Strategy, Galaxy Digital Holdings, Square…). All of this is real money coming into BTC and this should push up the price as we have seen lately.

Is USDT a scam?

We do not know if USDT is actually pushing BTC’s price higher, if they have any backing of their funds and if they plan to exit-scam at any time. But what we do know is that BTC price should be moving higher due to an increase in demand. Maybe USDT is manipulating the market and BTC should not be that high? Maybe, but anyway, it should be high and keep increasing over time (check fundamentals). If it is proven that USDT manipulates the market, we will see a big correction. First of all, a dip of about 30% (approx.) due to fake funds injected by USDT and some more due to FUD, but if we look at the long run this would now make the market 100% healthy and this would be a good discount to buy for the long run.

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