Altcoin News

Tether Ltd admits its stablecoin is not 100% backed by fiat amidst heated $850 million loss claims

Tether Ltd, the issuer of the tether stablecoin, has admitted that the coin does not have a 100 percent backing against the U.S dollar.

Through its general counsel, Stuart Hoegner, Tether Ltd said that the stablecoin has a 74 percent backing against the U.S dollar and other cash equivalents. This comes at a time when Tether and BitFinex are accused by the New York Attorney General for covering up the loss of client funds to a tune of 850 million U.S dollars.

In an affidavit, Hoegner said:

As of the date [April 30] I am signing this affidavit, Tether has cash and cash equivalents on hand totaling approximately $2.1 billion, representing approximately 74 percent of the current outstanding tethers.

Zoe Philips, an attorney helping Tether in its case regarding the AG’s allegations, conquered with Hoegner but this time indicated that tether does not need a 1:1 USD backing. According to Phillips, “The Attorney General appears to believe that Tether must hold $1 in cash fiat for every dollar of tether. These allegations are wrong on multiple levels.”

While BitFinex and Tether are different entities from the outside, an internal view portrays a different picture. For example, they share the same general counsel plus the agreement terms between the two have the same signature even though Phillips and Hoegner maintain that the terms were discussed independently.

As per the AG claims, BitFinex transferred 850 million U.S dollars to Crypto Capital, a Panamanian payment processor, so as to facilitate withdrawal requests. However, a few months into the deal, Crypto Capital pulled out but never returned the funds. To bury the loss, the crypto exchange used tether’s reserve but never reported this to investors. The operator of both BitFinex and Tether Ltd, iFinex, was ordered by the court to cease all payouts including dividends.

Do you think tether will lose its appeal among crypto traders, which other stablecoin is the next best fit?

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coinmag

Philip is an experienced blogger keen on staying updated with trends and news surrounding the blockchain and Bitcoin space. With several years of freelance experience in various industries, Philip brings his knowledge and experience into the crypto space.

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