Recently yesterday around in the evening, Tether [USDT],the corporatebehind the dollar-linked stablecoin ofsimilar name, announced via its official tweet that it had destroyed aroundfive hundredmillion USDT tokens.
Earlier, these USDT tokens were held in anaccountcalledthe ‘Tether Treasury.’ The past few weeks have seenlargeinfluxes of USDT to the Treasury,significantlywhenthe cryptocurrency lost parity with the USD last week amidquestions onTether’s access to banking services.
From 14th Oct.,after Tether[USDT]began toslip below $1.00 USD, to 23rd Oct., 680 Mln USDT were transferred to the company-controlled Treasury digital wallet. Allof thosetransfers came from an associatedaddress controlled by cryptocurrency Bitfinex, that overlaps with Tether in terms ofpossessionand management.
Bitfinex’s cold wallet’s balance has fallen by arounda hundred thousand Bitcoin [BTC] since earlySept., leading some to speculate that the exchange has beensellingbitcoinsso asto moveUSDT off the market –maybeto push therateback towards the $1.00 USD mark, oreven perhapsto exit the stablecoin business entirely.
As aresults ofthese transfers,the Tether [USDT] supply in circulation hasfellby around1/4 thin aweek and half, close to$2 Bln.Currentlyseveralof thesetokens,additionallyto having been taken out of circulation,are“burned” or destroyed bythe corporate.
KasperRasmussen, Bitfinex’s director of communications, said the action “don’t have anything withdefendingUSDparity,” sinceeachthe exchange and Tether guarantee 1-for-1 redemptions. He denied that Tether ispurposelyscaling backthe supply.
USDT tokensareransomed“whenthe numberin circulationexceedsthe numberneededfor e.g. Bitfinex or Tetherto work,” Rasmussen further added,and therefore thereason most of the destroyed tokens came from Bitfinex’swalletis that “Bitfinex isone ofthe major customers of Tether.”
In its recent announcement on yesterday, USDT announcedthat it had not burned all of the USDT tokenswithin theTreasury account,whilearound 466 Mln USDTstaywithin theaccount “as apreparative assurancefor the future USDT issuances.”
The announcementcharacterisedtransfers of Tether [USDT] to the Treasury as “redemption,” amethodthat Tetheroutlinedin its original white paper.
The 2016white paperoutlines that USDT holderswould be able toredeem their tokens for USD directly withthe corporate. Tether maintainsthat eachUSDT token is backed by a U.S. dollar deposit, but has not convincedseveral questioner that the cryptocurrency isreallytotallycollateralized.
The anonymous anti-Tetherpolitico“Bitfinex’ed,” however,controversialTether’s characterization of transfers to the Treasury as a “redemption,” writing: “Not one personcancome outand say that theyregenerateTethers toUSDand got wiredcashfrom Tether.”
Rasmussen, the Bitfinexrepresentative, claimed otherwise, stating that: “Yes, direct customers of Tetherareable toredeem USDT through Tether Ltd.”
But many othersstill disagreethatit’snot possible to redeem USDT tokens forU.S. dollarswith USDT.