Tether says it has “redeemed a significant amount” of tokens from the circulating supply, and will now “destroy” 500 million USDT from its treasury wallet.
Tether, issuer of stablecoin USDT, says it has “redeemed a significant amount” of tokens from the circulating supply and will now “destroy” 500 million USDT from the Tether treasury wallet, in an official post published Oct. 24.
According to the firm, this will leave 446 million USDT remaining in its treasury in preparation for future USDT issuances — meaning that those tokens redeemed and “burned” account for 52.8 percent of the total former supply.
The redemption is visible on the OMNI blockchain explorer, which shows a confirmed transaction dated today of 500 million USDT in block 547155. Tether’s announcement directs the public to consult the “conceptual” outlines of the token issuance and redemption process as described in its white paper, where the firm states that:
“every tether issued or redeemed, as publicly recorded by the Bitcoin blockchain will correspond to a deposit or withdrawal of funds from the [company’s] bank account.”
As the white paper notes, for the crypto side of its accounting processes, the public and transparent nature of the public Bitcoin (BTC) blockchain — onto which tethers are issued via Omni Layer’s protocol — ensures that the token transaction can be verified and tracked.
Omni Explorer further indicates that Tether’s token reserves are now 466,678,763.48, congruous with the company’s statement.
When it comes to its fiat accounting, the white paper states that, as part of “the ‘Solvency Equation’ for the Tether System […] the provability of [U.S. dollar reserves] will rely on several processes,” including the firm’s publication of bank account balances on its Transparency page (“Proof of Funds”), and professional audits.
Tether has a notably contentious history in regard to its transparency conduct, as crypto investor and entrepreneur Michael Novogratz recently underlined. Casting doubt on the firm’s claims that USDT is backed one-to-one by the U.S. dollar, some have gone so far as to accuse the firm of covering up an alleged fiat reserve deficit in complicity with Bitfinex.
After the firm is alleged to have dissolved its relationship with a third-party auditor this January, its “Proof of Funds” released in June claimed that Tether did have sufficient dollar reserves for circulating tokens, held in an undisclosed bank.
Today’s large-scale token redemption and destruction has provoked heated speculation on crypto Twitter, notably as tether had just recently — if briefly — lost its U.S. dollar peg to trade as low as $0.91, leading some to accuse the firm of manipulating the market by redeeming at low cost and liquidating after the market rebound.
Crypto personality WhalePanda quipped in this vein, “$USDT scarcity incoming! $1.01 soon.”
Others have suggested that the company is unable to back the tokens with adequate reserves, alluding both to Tether’s troubled transparency history, the protracted crypto bear market, and the fact that associated crypto Bitfinex has recently been plagued by rumored insolvency and alleged banking difficulties, which it has since been prompted to officially deny.
Just today, Bitfinex responded to a recent media report that had accused the exchange of publishing trading volume data for “a market that doesn’t exist,” by feeding data regarding a “USDT-USD trading pair” — which is not supported on the platform — from its in-house API to popular crypto data site CoinMarketCap.