{"id":4650,"date":"2018-02-14T01:59:40","date_gmt":"2018-02-14T01:59:40","guid":{"rendered":"https:\/\/www.legitgambling.com\/news\/?p=4650"},"modified":"2018-02-14T01:59:40","modified_gmt":"2018-02-14T01:59:40","slug":"weiss-issues-alert-report-on-us-dollar-pegged-crypto-currency-tether","status":"publish","type":"post","link":"https:\/\/www.legitgambling.com\/news\/weiss-issues-alert-report-on-us-dollar-pegged-crypto-currency-tether\/","title":{"rendered":"Weiss Issues Alert Report On US Dollar Pegged Crypto Currency Tether"},"content":{"rendered":"

\"\"We had recently reported the letter grade rating<\/a>s provided by the independent global rating agency Weiss and the disappointed it created among investors. Furthermore, we had also informed the issues related to Tether (a token pegged to US dollar on a 1:1 ration) and Bitfinex exchange. Weiss Ratings has issued an alert report on Tether<\/a>, while directing to the twitter handle of Bitfinex\u2019ed, a critic of Tether and Bitfinex exchange. We would like to remind that we had indeed reported about Bitfinex\u2019ed<\/a> in a detailed manner<\/a> (twitter restored the account after a temporary suspension) a few days before.<\/p>\n

Weiss Ratings begin the report by explaining the importance of Tether. As there are exchanges like Binance or OKex, which accepts only crypto currencies and not US dollars, investors buy Tether and then invest in the crypto currencies trade in such exchanges, circumventing the US laws. Due to this, Tether is the third-largest crypto currency in terms of trading volume, behind Bitcoin and Ethereum.<\/p>\n

Weiss considers that the big issue with Tether is<\/p>\n

\u201cThere\u2019s never been an audit, and the folks behind Tether has been quite shady when asked. They have continuously claimed their tokens are backed 100% by actual dollars, yet they have failed to present any evidence to support this claim.\u201d<\/p><\/blockquote>\n

Weiss also states that there is a consensus among crypto currency investors that Tether is running a fractional reserve system. Weiss further states \u201cIn other words, most observers claim they DO NOT have the dollars to back up all those Tether coins.\u201d<\/p>\n

The rating agency has also pointed people who are not aware of the developments to look at the twitter handle of whistleblower Bitfinex\u2019ed about whom we had reported in detail a few days back.<\/p>\n

Weiss has raised a red flag on Tether due to the following facts:<\/h2>\n

Fact #1. Tether is the only \u201ccryptocurrency\u201d with trading volume that regularly exceeds that of its market cap.
\nFact #2. This means the entire Tether supply changes hands regularly, sometimes more than once a day. In economics, we call this the \u201cvelocity of money.\u201d
\nFact #3. This is important to know because it tells us that Tether is used for trading A LOT. It\u2019s one of the main sources of liquidity in the cryptomarkets.
\nFact #4. Liquidity is the lifeblood of a market. It\u2019s what makes prices stable and seamless trading possible.
\nFact #5. The consequences of hanky-panky could be far-reaching. What happens if Tether does turn out to be fraudulent? Or what happens in a major government determines that crypto currencies like Tether are being used by exchanges to avoid regulations? What if this large source of liquidity suddenly evaporates?
\nWeiss also warns investors this isn\u2019t FUD.<\/p>\n

Will Tether become a target of US regulators?<\/h2>\n

A detailed article was published in this regard by Nicholas Weaver, a computer security researcher<\/a> at the International Computer Science Institute in Berkeley. The blog calls for a detailed investigation on those behind Tether for possible violations of Patriot Act provisions on money laundering and other financial fraud laws.<\/p>\n

Weaver has underlined the fact that the volume of Tethers has rocketed from $300 million in September to about $2.2 billion as of Feb. 1. Further, the blog points out that the growth was created almost entirely in increments of $100 million, which were transferred to the Bitfinex exchange to purchase other crypto currencies.
\nWeaver says<\/p>\n

\u201cAccordingly, Tether has become the reserve currency of sorts for unbanked exchanges. Numerous cryptocurrency exchanges hold Tethers since they can\u2019t access other banking resources. Without Tether, huge swaths of the speculative environment would be undermined: Speculators would be unable to move from unstable assets to stable, valued ones. If forced to shift only between different unstable assets, some exchanges might cease to exist.\u201d<\/p><\/blockquote>\n

Weaver argues<\/p>\n

\u201cTether appears likely to be a scheme that facilitates money laundering or to be a \u201cwildcat bank,\u201d one that prints banknotes that aren\u2019t actually backed. In both cases the U.S. government can, and should, intervene.\u201d<\/p><\/blockquote>\n

Weaver has mentioned how Liberty Reserve – once a popular digital currency \u2013 was taken out of business by the US regulators three years before the arrival of Bitcoin.<\/p>\n

Weaver says<\/p>\n

\u201cWhile Liberty Reserve used a private ledger to track balances, Tether uses a public pseudonymous ledger. This sort of ledger means that intermediary holders are not known to Tether, only to those who redeem Tethers. If anything, such willful ignorance suggests more, not less, criminal culpability.\u201d<\/p><\/blockquote>\n

Weiss\u2019 Suggestions:<\/h2>\n

Weiss has also suggested the following precautionary measures:
\n\u2022 Do NOT keep your crypto on the exchanges<\/a>, especially those that use Tether.
\n\u2022 No matter which cryptos you buy and no matter where you trade, do not use USDT-based pairs.
\n\u2022 Always bear in mind that these kinds of dislocations occurred before and will occur again.
\nWeiss, however, believes that it will not affect the crypto currency market in the long run. It has also advised to use the dips to invest in valuable crypto currencies.<\/p>\n","protected":false},"excerpt":{"rendered":"

We had recently reported the letter grade ratings provided by the independent global rating agency Weiss and the disappointed it created among investors. Furthermore, we had also informed the issues related to Tether (a token pegged to US dollar on a 1:1 ration) and Bitfinex exchange. Weiss Ratings has issued an alert report on Tether, […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[68,1],"tags":[],"class_list":["post-4650","post","type-post","status-publish","format-standard","hentry","category-cryptocurrency","category-usa"],"yoast_head":"\nWeiss Issues Alert Report On US Dollar Pegged Crypto Currency Tether<\/title>\n<meta name=\"description\" content=\"Weiss Ratings has issued an alert report on Tether, while presenting the facts that may cause high volatility in the crypto currency market. 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