Another observer for the controversial cryptocurrency tether warns of the dangers for the smooth operation of exchanges dealing with the trading USDT. The Weiss Ratings company informs investors about the systematic risk of the tether to the ecosystem.
The risks inherent in a blind trust
Independent American Agency, Weiss Ratings, recently published letter grades cryptocurrency, has released a warning about the dangers of tether (USDT). It highlights common concerns about stable coins, which, as stated, fully backed by dollar reserves.
«The main problem is that there was no audit, and the men behind the Tether, quite dark, when they were asked about it. They constantly claim that their tokens are backed by a 100% dollars, but has provided no evidence to support this statement. In social networks, there seems to be consensus that the Tether actually has fractional reserve system. In other words, most observers claim that they have NO dollars to support all these coins Tether. I’m inclined to agree. It’s too suspicious“—says the analyst of Weiss Juan M. Villaverde (Juan M. Villaverde).
What happens when you stop printing USDT?
Weiss explains the importance USDT for the entire ecosystem — the cryptocurrency used by many not Fiat exchange (for example, Binance or Okex) as a replacement for the real dollar. Therefore, it is the third most traded cryptocurrency and the only trading volumes which regularly exceed market capitalization. Thus, from the tether depends on the liquidity of these exchanges, and this threatens investors, if any government decides to turn it off printers. Some believe that this scenario is likely to happen in accordance with the laws of the United States.
«Deception can be fraught with serious consequences. What happens if the Tether will be a Scam? Or what happens if some large government determines that the exchange’s use of cryptocurrency such as Tether to avoid regulation? What if this large source of liquidity will suddenly evaporate? — asks Villaverde. — Apparently, this may lead to violations of the operation of stock exchanges. Investors will liquidate their positions, which will lead to a sharp decline in prices“.