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Tether’s [USDT] Market Cap Sets New Record Of Over $40 Billion

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After a steady rise, the total amount of the world’s largest stablecoin Tether [USDT] in circulation has soared all the way to $40 billion. With this, the token climbed back to the fourth spot on the cryptocurrency leaderboard.

Exactly a year ago, Tether’s dollar-linked stablecoin, USDT’s market cap stood at around $4 billion. Since then, the stablecoin saw an astonishing growth of 900% in only one year.

Historically, Tether has often inclined positively from US Dollars value. Hence, it is no surprise that the latest figures came right after the demand for cryptocurrency surged following hints of a long-anticipated recovery.

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At the time of writing, Bitcoin has regained some of the lost momentum as it climbed to the $57,000 level on Wednesday. This came after the manufacturing giant, Tesla chief Elon Musk announced that people can now start purchasing the firm’s electric vehicles using Bitcoin.

According to the exec, Tesla is using internal and open-source software and operates bitcoin nodes directly. He went on to add that Bitcoin paid to Tesla will be retained as Bitcoin and will not be converted to fiat currency.

Soon after this, the crypto-asset noted a minor uptick of 3% over the 24-hours.

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Growing Demand For Tether [USDT]

Over the years, USDT has become an important form of liquidity in the crypto industry that is transferred between different exchange platforms and wallet addresses to buy Bitcoin and other digital assets.

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The demand for USDT in the e-commerce and payments realm cannot be ignored. This has been on the rise for quite some time now. The main factor that driven the demand was the fact that the token essentially enabled relevant users to fend off volatility.

In addition, online retailers and payment gateways have also leveraged not just efficiency related to time but also cost of transactions which have been way cheaper as opposed to credit cards and traditional payment mechanisms.

Yet another milestone that played a crucial role in bolstering its USDT’s demand this bull season is the rising interest in decentralized finance [DeFi] as well as the over-trade counters [OTC] desks that leverage the token to process block trades.

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In fact, the whole stablecoin market is seeing rapid surges in terms of valuation especially in tandem with Bitcoin’s price action.

Other stablecoins have also noted a considerable increase in terms of market cap. Circle’s USD Coin [USDC] is the second-largest stablecoin which recently surpassed $10 billion in valuation. It is now the 12th-largest crypto-asset by market cap behind DeFi token Chainlink and Litecoin.

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Tether To Test Notabene’s Travel Rule System to Comply With AML Laws

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Tether Holdings Limited is set to combat cross-border crime and money laundering by integrating Notabene, an end-to-end solution for the FATF’s Crypto Travel Rule.

Tether Holdings Limited, the issuer of the largest stablecoin by market cap, USDT, recently announced integrating Notabene to manage regulatory and counterparty risk in crypto transactions.

Tether to Crack Down on Illegal Transfers

As per an announcement on Tuesday, Tether will be testing the Notabene platform to comply with the Crypto Travel Rule —a mandate established on June 20, 2021, by the Financial Action Task Force (FATF).

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Notabene’s end-to-end solution will allow Tether to crack down on illegal transfer by transmitting user data for large cryptocurrency transfers to VASPs.

The Travel Rule stipulates that Virtual Asset Service Providers (VASPs) must comply with the same laws as regulated financial institutions and mandatory organizations. VASPs must carry out KYC (Know Your Customer) processes and exchange related client information between counterparties when transferring a certain amount of digital assets.

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Tether is “Fully Committed To Transparency”

The move comes after Tether has been under scrutiny by regulatory agencies like the U.S. Commodity and Futures Trading Commission (CFTC), which fined Tether and its parent company Bitfinex to pay fines worth $42.5 million over misleading claims about the USDT token.

Tether claims to comply with global regulatory guidelines and to fully commit to transparency.

“It’s important that we work with other large VASPS to build this industry from the ground up. As pioneers of blockchain technology and leaders in transparency, we are dedicated to not only keeping up with new rules but helping shape them. Because the Travel Rule traditionally applies to financial institutions, we see this as an opportune moment to foster cooperation across traditional and digital channels in order to create better services for customers globally.” Said Leonardo Real, CCO of Tether.

However, Tether’s detractors don’t think the same. As CryptoPotato reported, Bloomberg published a controversial report titled “Anyone Seen Tether’s Billions?” — claiming that the stablecoin issuer is a fraud as it doesn’t have the assets to back the USDT token.

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Hindenburg research offers $1m for disclosing exclusive Tether information

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  • 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.

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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.

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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.

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Tether on the spotlight for minting new USDT used for crypto-loan collateral

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  • Tether faces more headwinds as one of its big customers, Celsius Network, confirms giving other cryptocurrencies as loan collaterals.
  • The loan agreement varies depending on crypto volatility, Celsius Network says, with higher crypto collaterals when crypto prices fall.

One of Tether’s major customers, Celsius Network quasi bank, says Tether lends out new stablecoins (USDT) in return for cryptocurrencies. This is contrary to the company’s current terms of service which state that “only money will be accepted upon issuance.” Alex Mashinsky, the CEO of Celsius Network, told the Financial Times;

If you give them enough collateral, liquid collateral, Bitcoin, Ethereum and so on . . . they will mint tether against it,

Additionally, he says “new USDT is issued for such loans,” then destroyed once the loan is closed. This strategy “does not permanently increase USDT in circulation,” he adds.

Launched in 2014, Tether’s USDT is the world’s leading stablecoin with a $70 billion market cap. The token’s utility mainly lies in providing easier ways to trade other crypto assets. As its name holds and as its white paper reads, Tether is backed to the US dollar at a ratio of 1:1.

In recent years, however, the stablecoin operator has been the subject of regulatory and media scrutiny. The Commodity Futures Trading Commission (CFTC) and the New York attorney-general’s office claimed misrepresentation of the firm’s reserves. Tether neither confirmed nor denied these claims, but was fined $41 million for the same. CNF also reported that Bloomberg Media had put forth similar claims which Tether threw out claiming a plot to defame it.

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Tether disputes claims of reserve Mmsrepresentation

In a primer published in May this year, the company says,

Newly issued [USDT] must be backed by collateral” and that “redeemed [USDT] tokens are not released back into circulation unless new collateral has been provided.

All through, however, the stablecoin issuer has declined to clarify its alleged crypto-lending feature or whether it was minting new tokens through it. Instead, it has issued the following statement:

We have a select, small group of customers that borrow USDTs in exchange for posting security. These loans are secured by collateral in Tether’s possession of well in excess of 100 percent of the loan proceeds and earn monthly interest. Our lending program was first disclosed long ago in our reserves breakdown and is not a secret.

But as Mashinsky notes, their USDT loans are typically 30 percent over collateralized, and amounts vary with volatility. Should Bitcoin, for instance drop, the company has to give Tether more of the crypto asset.

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Of note, Celsius, which US regulators are after for unregistered offerings, had borrowed $1B worth of USDT from Tether earlier this month.

Among its many troubles, Tether is now battling a US class-action lawsuit. Plaintiffs allege Tether issued unbacked USDTs to purchase Bitcoin and manipulate the market. The company has disengaged itself from such claims, calling the case “shambles” and a “clumsy attempt at a money grab.” The firm has also made a micro win as a federal judge dismissed half of these claims last month.

  • Tether faces more headwinds as one of its big customers, Celsius Network, confirms giving other cryptocurrencies as loan collaterals.
  • The loan agreement varies depending on crypto volatility, Celsius Network says, with higher crypto collaterals when crypto prices fall.

One of Tether’s major customers, Celsius Network quasi bank, says Tether lends out new stablecoins (USDT) in return for cryptocurrencies. This is contrary to the company’s current terms of service which state that “only money will be accepted upon issuance.” Alex Mashinsky, the CEO of Celsius Network, told the Financial Times;

If you give them enough collateral, liquid collateral, Bitcoin, Ethereum and so on . . . they will mint tether against it,

Additionally, he says “new USDT is issued for such loans,” then destroyed once the loan is closed. This strategy “does not permanently increase USDT in circulation,” he adds.

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Launched in 2014, Tether’s USDT is the world’s leading stablecoin with a $70 billion market cap. The token’s utility mainly lies in providing easier ways to trade other crypto assets. As its name holds and as its white paper reads, Tether is backed to the US dollar at a ratio of 1:1.

In recent years, however, the stablecoin operator has been the subject of regulatory and media scrutiny. The Commodity Futures Trading Commission (CFTC) and the New York attorney-general’s office claimed misrepresentation of the firm’s reserves. Tether neither confirmed nor denied these claims, but was fined $41 million for the same. CNF also reported that Bloomberg Media had put forth similar claims which Tether threw out claiming a plot to defame it.

Tether disputes claims of reserve Mmsrepresentation

In a primer published in May this year, the company says,

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Newly issued [USDT] must be backed by collateral” and that “redeemed [USDT] tokens are not released back into circulation unless new collateral has been provided.

All through, however, the stablecoin issuer has declined to clarify its alleged crypto-lending feature or whether it was minting new tokens through it. Instead, it has issued the following statement:

We have a select, small group of customers that borrow USDTs in exchange for posting security. These loans are secured by collateral in Tether’s possession of well in excess of 100 percent of the loan proceeds and earn monthly interest. Our lending program was first disclosed long ago in our reserves breakdown and is not a secret.

But as Mashinsky notes, their USDT loans are typically 30 percent over collateralized, and amounts vary with volatility. Should Bitcoin, for instance drop, the company has to give Tether more of the crypto asset.

Of note, Celsius, which US regulators are after for unregistered offerings, had borrowed $1B worth of USDT from Tether earlier this month.

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Among its many troubles, Tether is now battling a US class-action lawsuit. Plaintiffs allege Tether issued unbacked USDTs to purchase Bitcoin and manipulate the market. The company has disengaged itself from such claims, calling the case “shambles” and a “clumsy attempt at a money grab.” The firm has also made a micro win as a federal judge dismissed half of these claims last month.

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