CRYPTO NEWS – Tether Lawsuit and Banks Fight Bitcoin
- Tether Launches Billions of Dummy Stablecoins
- Tether’s machinations prompted increased control over stablecoins
Tether will report to the prosecutor’s office for financial transactions
Tether is required to report to the New York prosecutor’s office for financial transactions
Tether Lawsuit May Increase Market Volatility
Countries begin to tighten up stablecoin turnover
On Friday, January 15, the deadline for reporting financial transactions of Tether and the Bitfinex cryptocurrency exchange, which are accused of fraud, money laundering and market manipulation, will expire.
Tether launches billions of dummy stablecoins on the market
The New York Attorney General’s Office (NYOAG) has accused the creators of the most popular stablecoin Tether, whose market capitalization has exceeded $ 18 billion, as well as the BitFinex cryptocurrency exchange of fraud, money laundering and market manipulation. According to law enforcement officials, Tether has released billions of stablecoins to the market that have not been backed by real US dollars at a 1: 1 ratio. However, companies do not deny this..
Tether’s website states that “every USDT is backed by the company’s reserves. The latter may include fiat currencies, debentures and other assets. ” It is noteworthy that this clarification was made after the claims from the authorities. Initially, USDT was assumed to be backed by US dollars at a 1: 1 ratio.
In addition, Tether, together with BitFinex, could have been involved in pumping the bitcoin rate in 2017. In the summer of 2018, researchers at the University of Texas at Austin, John M. Griffin and Amin Shams, came to the conclusion that Tether was being used to pressure the bitcoin price. In their opinion, the release of new batches of stablecoins and large transfers of USDT can be used to pump cryptocurrencies..
Despite the broad evidence base, representatives of Tether and Bitfinex completely deny their guilt. The New York prosecutor’s office requested a report on all financial transactions that were made between 2017 and 2019. The deadline for submitting information expires on January 15, 2021. If a company is found to be indeed involved in market manipulation and fraudulent issuance of fiat-fiat stablecoins, this could lead to further litigation involving other regulatory and supervisory authorities..
“The Tether lawsuit is a legal matter and cannot be predicted. However, in the current environment where overall digital asset prices are rising rapidly, the market is likely to be more responsive to bad news or uncertainty than to good news. The company’s influence will increase significantly, and if legal risks become a reality, the impact on the industry will be significant, which is also expected to increase price volatility in the next few days “- experts at Xangle commented exclusively for BeInCrypto.
The increased volatility of the market, which has already emerged in the cryptocurrency market after the rapid rise in the value of bitcoin, may lead to the fact that cryptocurrency rates from the top 20 will collapse, pulling other digital assets along with them. For example, investor Tom Lee has already predicted a 50% correction in Bitcoin..
Tether’s machinations prompted increased control over stablecoins
The accusations against Tether were another pretext for tougher policy on stablecoin regulation. At the end of 2020, the Financial Regulation Working Group under the US Treasury Department proposed to tighten control over the circulation of stablecoins, citing the fact that these coins could pose a threat to monetary stability.
Special attention is paid to protecting the rights of stablecoin holders. As stated in the document, issuers of stablecoins must have a reserve of fiat currency in order to exchange stablecoins for US dollars or another currency in case of an unforeseen situation, at a rate of 1: 1 minus commissions and fees. At the same time, reserve assets must be held remotely and be protected from bankruptcy and from other creditors of the company..
A similar initiative was created from the UK. According to the advisory document, the country’s government will establish strict oversight of both stablecoin issuers and firms providing related services. Unsecured stablecoins in fiat currency will be prohibited.
Earlier, the European Central Bank also focused on the fact that stablecoins pose a real threat to the banking system.
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