A lot of the cryptocurrency community has been making a lot of noise these days due to the recent news that Tether, a decentralized cryptocurrency pegged to the U.S. dollar, is not held in cold storage. This has led to a lot of questions about what is going on behind the scenes of some major cryptocurrency exchanges.
Cardano has been around for quite some time now, and it has been making steady progress. In recent weeks, however, Charles Hoskinson, Co-founder of Cardano, has publicly voiced his opinion about Tether. He says that Tether is “faith based”, which makes it inconsistent with the ideals that crypto is founded upon.
Crypto markets have been highly volatile recently, upending established trading strategies and even rattling the foundations of some crypto-faithful investors. Charles Hoskinson, the CEO of IOHK, a block chain research and development firm that is the founder of Cardano, has been a member of the Cardano Foundation as well as a Cardano wallet contributor. In an interview with the IOHK blog, he was asked about Tether. Hoskinson replied that he believes Tether is a “faith based” stable coin and should not be held as part of a portfolio — not a surprising opinion given that Tether is almost entirely dependent on the faith of its users. The article also mentions that Hoskinson is a member of the Cardano Foundation,. Read more about tether news and let us know what you think.Input Output Global CEO Charles Hoskinson said in a recent question and answer session (AMA) that Tether relies on faith rather than unbiased systems, which goes against the ideals of crypto-currencies.
He added that while the ordinance has a bad reputation, without it there would be no oversight of companies making certain statements.
Is the Tether controversy a time bomb about to explode as USDT’s liquidity supports a significant portion of the cryptocurrency market?
Tethering controversy continues despite agreement with New York attorney general
Earlier this year, Bitfinex’s parent company reached an $18.5 million settlement with the New York Attorney General (NYAG).
The deal allowed Bitfinex to sidestep accusations that it hid the loss of $850 million in customer funds held by the payment processor. He also suspended any further examination of the attachment reserves.
Some argue that Tether does not have enough reserves to match USDT in circulation. Bitfinex CTO Paolo Ardoyno said that USDT is 100% supported and that the company is working on more transparency.
Under the terms of the agreement, Bitfinex and Tether will not admit to any violations. However, it will submit quarterly reports describing the composition of the ether reserves for the next two years.
However, there is no mention of auditing these reports.
Despite the fact that Tether is now banned in New York State, USDT has seen its market capitalization skyrocket since the decision. The 23rd. In February, the market value was $34.7 billion. But in the four months since the settlement with the NYAG, the company has grown by 80% and is now valued at $62.5 billion.
Hoskinson participates in lawsuit
In light of the controversy surrounding Tether shares, Hoskinson questioned whether a player as large as Tether can/should operate in the gray area it currently finds itself in.
You have to understand that the only reason Tether has value is because the centralized company claims that each unit of these issued Tether assets is somehow associated with an equivalent amount of value, a dollar value, sitting in a bank account, he said.
As part of the NYAG settlement, Tether recently released data on its reserves. He testified:
- 75.9% in cash and cash equivalents, other short-term deposits and commercial paper.
- 12,6 % for guaranteed loans.
- 10.0% in corporate bonds, funds and precious metals,
- 1.5% in other assets (including digital tokens).
A further breakdown of cash and cash equivalents, other short-term deposits and commercial paper shows that only 3.9% is made up of cash. At the same time, commercial paper is the most important component at 65%.
Martin Walker, director of banking and finance at the Centre for Evidence-Based Management, said cash is only a small part of reserves. On this basis, Walker accused Tether of operating like a bank, but without proper supervision.
Add to that an unverified distribution, and Hoskinson is right that Tether is a faith-based organization.
When it comes to asset-backed tokens like Tether, the question is how to know if the asset really exists and if the promises, pledges and commitments are really true.
In a situation where Tether fails, many will feel that the NYAG did not do enough to prevent such a scenario.
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Cardano’s Charles Hoskinson has described stablecoin Tether as “faith based,” a stance that’s out of step with the cryptocurrency ethos. Hoskinson, who has been spearheading Cardano’s marketing and strategy, is a former Ethereum co-founder and also a cryptocurrency entrepreneur. In a recent interview with Business Insider, Hoskinson said that “tether is a sham,” citing Tether’s vulnerability to cryptocurrency exchange hackings. He went on to suggest that any cryptocurrency purporting to act as a store of value is “not scalable,” adding: “I think all of the stablecoins have some fundamental flaw in their model.”. Read more about what is usdt and let us know what you think.
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