Examining the complex web of USD stable coins
In late 2014, Tether made a new innovation in the Fintech space: A USD stable coin. The idea is to use Blockchain tech (OmniLayer using the Bitcoin network) to move USD as a token. The collateral USD is held at USD-denominated bank accounts. The person who owns the token has claim to the USD, and should be able to reclaim it back as regular dollars.
Tether has since made staggering growth. It claims a colossal $9bn market cap (or the amount they should be holding in US dollars) and is used by several Bitcoin exchanges. The company has drawn lots of criticism: Its relation to Bitfinex is not fully transparent, it has failed at particular moments to hold the 1:1 peg, been the subject of subpeonas and lawsuits; and countless conspiracy theories. Its last account audits dates from June 2018; so it’s safe to say that Tether has failed to produce reliable audits.
Arguably, this prompted the...
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