The controversial Tether-owned company earned 6.6 million dollars in bank interest in just six months, according to a report released by Bloomberg. USDT is one of the most controversial crypto on the market due to Tether's opacity of its funds.
Basically, the Tether currency is a stable crypto, which means that the number of tokens issued should correspond to the dollar amounts in the company's accounts. Currently, these funds are held at Noble Bank in Puterto Rico.
This year, talks over the Tether coin expanded and affected the crypto evolution. The community began to suspect that Tether did not have enough dollars in the accounts. At the same time, stable crypto was accused of being used to manipulate Bitcoin prices.
In January 2018, the Tether coin had $ 2.2 billion
Bloomberg received an account statement from Noble Bank. It shows that on 31 January 2018, Tether had $ 2.2 billion in accounts. This amount corresponded to the number of tokens in circulation at that time.
Between October and November 2018, the company had some problems with the bank, and the USDT started to fluctuate as a price. During the same period, the CFTC opened an investigation into the funds Tether claimed to hold.
The controversy was advantageous for the market as it supported the development of other stable crypto. The crypto community is a great supporter of decentralization. The fact that the USDT had almost monopoly was not looked up. As a result, many exchanges opted to list alternatives like Gemini USD (GUSD), USD Coin (USDC), Paxos Standard (PAX) and TrueUSD (TUSD).
Tether still refused to conduct an official audit. Instead, they hired a law firm that more or less officially confirmed that dollar reserves corresponded to the number of tokens.
Mandatory reservations
The Bloomberg analysis concluded that the Tether currency may be based on the principle of binding reserves. Basically, this means that the deposits themselves are smaller than the number of tokens in circulation. It is the system on which all commercial banks operate - the amounts traded are much higher than the deposits that institutions have at the Central Bank.
The principle of mandatory reserves is based on the notion that not all customers will withdraw their deposited money at the same time. Similarly, the Tether currency redeems its tokens in installments, so it is not necessary to have an equivalent amount in dollars.
However, the interest earned on their deposits is significant.
Regardless of the analysts' conclusions, the Tether currency is currently a dominant dominant crypto. It has a market value of 1.87 billion dollars and is ranked 6th in the top CoinMarketCap. By comparison, the following two stable crypto, USD Coin and TrueUSD, have around 215 million tokens in circulation.