A recent report from the WSJ revealed that Tether USDT was largely controlled by four individuals in 2018. Notably, according to the WSJ, top individuals from Bitfinex and Tether controlled approximately 86% of USDT in 2018.
According to investigative documents from 2021 Tether investigations conducted by the New York Attorney General and the federal Commodity Futures Trading Commission, in 2018 four men held Tether hostage.
Giancarlo Devasini, Chief Financial Officer of Bitfinex, owned about 43% of Tether USDT in 2018. In addition, documents viewed by the WSJ revealed that Bitfinex CEO Jean-Louis van Der Velde and Chief Advisor Stuart Hoegner each owned about 15% of Tether USDT in 2018. The fourth whale of Tether USDT in 2018 was Christopher Harborne, a British and Thai citizen, who controlled about 13% of the stablecoin.
However, the report was criticized by Paolo Aordino, Chief Technology Officer (CTO) of Bitfinex and Tether, who called it a “clown article”.
Tether, the issuer of USDT, has been at loggerheads with regulators due to a lack of clarity about its reserves. In late 2021, Tether was fined $41 million by the US Commodity Futures Trading Commission for misrepresenting its reserves. Notably, the US CFTC found that only 27,6% of Tether's USDT was fully backed by fiat between 2016 and 2018.
This indicates that the four individuals were simply minting USDT out of thin air and putting it into circulation to be purchased with fiat currencies.
Notably, Tether USDT was closely associated with FTX before its crash last year. At one point, SBF reportedly asked Tether to print billions of USDT to save the company from collapse. Although the company rejected SBF's request, Tether lost half of its trading volume after the collapse of FTX and Alameda late last year.
The cryptocurrency market is heavily dependent on stablecoins, especially during bear and bull markets. While Tether USDT has long been the major player in the stablecoin market, other major players have emerged including Circle USDC and Binance BUSD. As a result, cryptocurrency traders on platforms like Bitcoin system they can choose from the best, most regulated and cheapest stablecoins on the market.
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