Back in 2014, we saw the unveiling of a cryptocurrency with an ambitious aim of tackling the problem of price volatility head-on. Upon its release, the current tether controversy was about as far from the minds of the stablecoins developers as could be.
How times change.
Manipulation of crypto prices
Initially, it all seemed to be working fine. We saw some pretty major crypto exchanges, such as Bitfinex, adopt tether, and we also saw a number of banks in Taiwan use the stablecoin to process international transactions.
In early June of this year, the tether controversy really seemed to gather some momentum, as we saw the publication of a paper titled “Is Bitcoin Really Un-Tethered?” by a research team from the University of Texas that suggested “incomplete tether backing,” which supposedly assisted in the manipulation of crypto prices.
Obviously, those behind tether vehemently denied such claims and even went as far as publishing their own report which suggested that US Dollar reserves backed all tethers in current circulation entirely.
Speaking at the time of the paper, tether CEO, Jan Ludovicus Van Der Velde, commented that “Despite speculation, we have consistently stated that tether is backed by USD reserves at or exceeding the tethers in circulation at a given moment, and we’re glad to have independent verification of this so as to answer some of the questions posed by the public.”
Dropping below the $1 threshold
Despite this, it would seem that concerns about tether’s validity as a stablecoin started to really take a toll this month, as on the 15th, we saw the cryptocurrency drop below the $1 threshold (at the time of writing tether was trading at $0.97 according to CoinMarketCap) amid an apparent sell-off of tether tokens.
With this tether controversy raging throughout the crypto industry, Emilie Raffo of Crypto Disrupt got the chance to speak with both Robert Auxt of Liechtenstein-based crypto exchange, ETERBASE, and Ryan Rodenbaugh of exchange-independent stablecoin, TrueUSD.
Lover of all things crypto, blockchain and AI, professional tech scribe & part of the editorial team at Crypto Disrupt.