Tether, the controversial stable coin that has been pegged to the price of the US dollar, has released a new batch of tokens worth $50 mln. This follows on from March where they released $300 mln tokens priced at $1 each.
However, despite being a stable coin tied to an asset like the dollar, Tether has lost over $300 mln in the past 30 days as its market capitalization has gone from $2.7 bln to $2.4 bln.
Tether has had a rocky road since its inception as, being based on the US dollar, the understanding is for every coin that is issued, the company must hold in its reserves equal value in US dollars.
The issue is, despite its controversy, and the fact that there has not been any sort of strong and independent audit on their claims, Tether has become a pivotal source of liquidity for the crypto markets.
Tether is now in second place after Bitcoin in terms of highest daily trading volumes, seeing $4.2 bln in trades a day or 28.58 percent of all crypto trades, while Bitcoin’s average 24-hour trading volume is $5.7 bln or 39.22 percent.
But the allegations are that exchanges have been issuing more tokens than there are US dollars in the bank which could lead to a massive collapse seeing as these Tether tokens are being used to buy other cryptocurrencies which are being turned into fiat.
Requiring an audit
One of the reasons that the coin has lost value in terms of its market cap has to do with the coverage in the media that Tether was receiving. Tether said it couldn't get enough of media reporting because of suspicious and controversial nature.
However, after being accused of "lack of transparency" by the public, a law firm said in an unofficial statement in June that USDT is backed with legitimate US dollars.