As a seasoned researcher with a keen eye for financial intrigue, I find myself constantly captivated by the ever-evolving world of cryptocurrencies and their key players. The recent spree of Tether minting, injecting over $5 billion into the market within 72 hours, has once again thrust this stablecoin giant into the limelight.
once more, the spotlight shone on Tether, a significant player in stablecoins, due to an impressive run of creating digital coins worth over $5 billion over a period of just 3 days. This massive injection boosted the market.
This sudden rise sparked interest among cryptocurrency fans as well as causing a few surprised glances within financial communities, especially since Tether has traditionally played a crucial role in maintaining market fluidity.
central to these advancements is Howard Lutnick, the CEO of the prominent U.S. financial services company Cantor Fitzgerald, who played a significant role during Donald Trump’s presidential transition period.
Over the past few months, Lutnick has been actively advocating for Tether’s financial soundness. This positioning aligns with Trump’s selection of Lutnick as his pick for the role of Secretary of Commerce.
These advancements occurred amidst continuous inquiries, particularly those led by the U.S. Attorney’s Office for the Southern District of New York, who have been examining possible illegal actions linked to Tether, such as suspicions regarding money laundering and terrorism funding.
Currently, Cantor Fitzgerald is playing a significant role as a banking ally for Tether, with several other global banks choosing to step back from their association with the stablecoin issuer.
Tether’s impact on the market
According to data analyzed on the blockchain analytics platform SpotOnChain, it appears that Tether has strategically timed its issuances. Specifically, on November 6th, they issued $1 billion, which coincided with Bitcoin reaching an all-time high of $76,200.
On November 9 and 10, they added an additional $2 billion, contributing to Bitcoin surpassing the $80,000 milestone. In the end, a total of $5 billion was injected over a five-day period.
As an analyst, I can express it this way: My analysis reveals that the recent minting event significantly boosted Tether’s market capitalization to approximately $124 billion (now standing at $132 billion at publication). This growth has further cemented its status as the leading stablecoin in the cryptocurrency landscape.
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Tether (USDT), which is linked to the U.S. dollar, consistently supplies significant liquidity to various centralized and distributed trading platforms. Lately, its 24-hour trading volume has nearly reached an impressive $289 billion.
It appears that the increase in supply coincides with a more positive outlook across the market, as an uptick in USDT circulation has often been linked to growth in major cryptocurrencies such as Bitcoin. In fact, Bitcoin is currently nearing its all-time high of $100,000, fueled by optimism surrounding Trump’s potential return to office.
Lutnick’s double standards
Over the past few months, Lutnick’s involvement in Tether’s day-to-day activities has grown more intricate and contentious.
Despite openly supporting Tether’s reserves and suggesting that he has scrutinized portions of their financial records, he has conspicuously omitted offering tangible, publicly available evidence to back up his claims about the company’s assets.
Further adding an element of suspense, it’s been reported that Cantor Fitzgerald has acquired a 5% share in Tether, estimated at approximately $600 million. This ownership could potentially strengthen their influence and gain them increased political backing from the upcoming Trump administration.
In his latest discussions, Lutnick hinted at considering potential candidates for government roles related to Tether oversight. Additionally, he mentioned that if approved by the Senate, he intends to relinquish his position as CEO at Cantor Fitzgerald, though he may take on a new role within the company.
In light of Gary Lutnick’s persistent critiques of the Federal Reserve’s monetary policies, his lack of commentary on Tether’s unclear business dealings is particularly striking.
Observers divided on Lutnick’s Tether link
Harshit Gangwar, who leads both marketing and investor relations at Transak, the on-ramp services provider, shared with CryptoMoon that Lutnick’s connection to Tether highlights Tether’s deliberate strategy when it comes to handling its reserves with well-known financial partners.
In a somewhat controversial manner, Tether’s assignments serve to underscore their dedication towards partnering with established financial advisors to safeguard their reserve funds. By emphasizing transparency and offering clear explanations, Tether can maintain credibility among influential investors, thereby bolstering faith in the robustness of USDT as it faces intensifying regulatory examination, according to Gangwar’s statement.
Lutnick’s defense of Tether’s finances has made it difficult for regulators to remain neutral.
“Enhanced transparency on the part of the issuer is essential not only for compliance with regulatory requirements but also for fostering and maintaining trust within the ecosystem.”
Tether’s backing woes
Last September, Justin Bons, founder of Cyber Capital, expressed worry that the company Tether might be involved in an even larger scale deception compared to FTX.
Last year, in 2021, the U.S. Commodities and Futures Trading Commission (CFTC) fined Tether a hefty sum of $41 million. This fine was due to repeated false claims about the reserves backing their digital currency USDT.
In the same year, another significant legal progress occurred as Bitfinex reached an $18.5 million settlement with the New York Attorney General’s office. This agreement aimed to resolve severe accusations of financial irregularities, including misleading claims about Tether’s reserves and questionable transactions between Bitfinex and iFinex, which were intended to conceal substantial operational losses.
Despite the investigations that took place, Tether’s impact on the market persisted in the subsequent months, with its market dominance growing even further. By the end of this period, it held control over approximately 75% of the entire stablecoin market – a significant jump of around 20% over a two-year span.
As a researcher, I find myself at odds with those who believe that the routine assurance reports issued by BDO Italia are satisfactory without additional checks or verification.
Ivo Georgiev, the CEO of Ambire (a company that offers crypto wallets), shared with CryptoMoon that Tether has demonstrated its reliability over time and has provided various types of evidence to back up its reserves. This includes regular reports from BDO Italia, a well-known third-party auditor.
Additional scrutiny required?
On September 8th, Tether made an unexpected strategic decision to invest $100 million in Adecoagro, a prominent agricultural company based in Latin America. As a result, they now own a 9.8% share of the business. This move signified the first major public disclosure about Tether’s management and investment approach.
The disclosure immediately drew sharp criticism from industry observers. Bons quickly highlighted a critical governance concern on X:
In a similar vein, Sean Lee, one of the founders at IDA Finance, shared similar worries about Tether’s openness. He stated, “Tether operates as a business, and their refusal to disclose comprehensive transparency that builds genuine trust from the community and major investors is indeed troubling.
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2024-11-26 18:01