The cryptocurrency Tether, which is linked to the US dollar, is represented by the symbol USDT. As a result, USDT is a stablecoin that is supported by Tether’s dollar reserves and varies in value in relation to the US dollar. The firm that issues USDT is Tether, which is owned by iFinex, a company registered in Hong Kong that also controls BitFinex, a cryptocurrency exchange.
With a market valuation of around $99 billion as of March 2024, USDT was the largest stablecoin and the third-largest cryptocurrency after Ethereum (ETH) and Bitcoin (BTC).
Out of all the cryptocurrencies, Tether’s USDT made up the majority of exchanges by volume in 2023 and the first part of 2024.
What you need to know about Tether (USDT)
Tether, or USDT, is a member of the rapidly expanding stablecoin class of cryptocurrencies, which, by anchoring their values to the value of a conventional currency like the US dollar, avoid the high volatility of untethered cryptocurrencies.
In July 2014, Tether debuted as RealCoin, then in November of that same year, it changed its name to Tether (USDT). Tether, which was first built on the Bitcoin blockchain, is now compatible with the Ethereum, Avalanche, Kava, Polka, TRON, EOS, Algorand, and Solana blockchains in addition to the Bitcoin Omni and Liquid protocols.
Tether’s Transparency
Every day, Tether updates its website with a breakdown of its reserves holdings. It declared $99.45 billion in assets for USDT as of March 3, 2024. The business declared that it had 84.58% of its reserves in short-term deposits, cash equivalents, commercial paper, and U.S. Treasury bills, accounting for 76.87% of the total.
In addition, it has 2.91% of bitcoin, 3.62% of precious metals, 0.05% of corporate bonds, 4.95% of secured loans to unaffiliated organisations, and 3.89% of miscellaneous investments among its reserves.
Major Events in Tether’s History
2017
Tether revealed the electronic theft of $31 million worth of USDT tokens in November 2017. A hard fork, which divides a blockchain into two streams for security purposes, was implemented by the corporation.
As further investigations would reveal, the corporation was already facing concerns regarding the sufficiency of its funds and was experiencing difficulties in obtaining banking services.
2019
A court order prohibiting Tether and BitFinex parent company iFinex from breaking New York law was obtained by Attorney General Letitia James of New York in April 2019. In order to offset BitFinex corporate and client funds that were frozen (and eventually seized) from its Panamanian banking partner Crypto Capital Corp. in a money-laundering investigation, it was discovered that BitFinex had borrowed at least $700 million from Tether’s reserves.
2021
Tether and BitFinex reached a settlement in February 2021 wherein they agreed to pay a fine of $18.5 million, stop dealing with any individuals or organisations in the state of New York, and provide the office of the New York Attorney General with information regarding their reserves for the following two years.
A $41 million fine against Tether was announced by the U.S. Commodity Futures Trading Commission (CFTC) in October 2021, “over claims that Tether stablecoin was fully backed by U.S. dollars.” Actually, “Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period from 2016 through 2018,” according to the CFTC. As part of the settlement, BitFinex consented to pay a $1.5 million fine in order to resolve various CFTC charges.
2022
After the TerraUSD (UST) peg loss in May 2022, Tether’s price dropped to as low as $0.96, despite the fact that BitFinex was not associated with Tether. After a brief dip, Tether token prices surged back above $0.99, and the company announced that it will still process redemption requests at a 1:1 ratio to US dollars.
In addition, Tether introduced MXNT, a stablecoin backed by the Mexican peso, after launching EURT and CNHT in Europe and China, respectively.
2023
Tether bought Northern Data Group in 2023 to further its presence in the artificial intelligence space. Paolo Ardoino, the company’s previous CTO and a fervent supporter of cryptocurrencies and blockchain financial solutions, was named as the new CEO.
The long-running legal battle between Tether and BitFinex came to an end that same year when Judge Laura Swain dismissed the accusations in November 2023.
Additionally, the business kept taking part in various initiatives to improve bitcoin security, inform lawmakers and users, and work with law enforcement.
What Makes USDT Different?
Because USDT is a pegged cryptocurrency, its value fluctuates only in tandem with the US dollar. Additional instances are Dai (DAI), Binance USD (BUSD), and USD Coin (USDC).
Tethering has the advantage of making it simple for investors to transfer funds between traditional financial institutions and cryptocurrency exchanges. They are spared from having to endure precipitous drops in market values.
Where Can You Buy USDT?
You are able to purchase USDT from most cryptocurrency exchanges such as AFRIDAX. Many exchanges have trading pairs specifically between various cryptocurrencies and USDT in order to make trading more convenient for their clients.
Key Takeaways
Tether is a cryptocurrency that makes an effort to keep its value fixed to a base currency, like the euro or dollar. It accomplishes this by maintaining reserves of enough real money or its counterparts so that the value of the cryptocurrency is equal to that of the fiat money.
The main purpose of Tether is to convert cryptocurrencies into fiat currency in order to avoid slippage, which is the decline in value that occurs when a transaction is implemented. It isn’t always precisely correlated with the fiat money it is meant to be tracking though. For example, Tether fell to about $0.995 following the collapse of the exchange FTX in November 2022, but it swiftly recovered, occasionally experiencing more than a 1-to-1 peg.
