Besides being arguably the most popular stablecoin in the crypto market, Tether has also been a very controversial token since its release. Initially, it was accused of being nothing but a manipulation tool for the price of bitcoin through several studies though Tether seemingly debunked the rumors by releasing statements from their bank showing that they had the equivalent of their total token supply backed up the US dollars.
However, the rumors persisted and in 2019 they reached fever pitch after an investigation was opened by the New York attorney general’s office in which it was revealed that not only did Tether only backup 73 percent of their tokens with US Dollars as opposed to the 100 percent they had previously claimed but they also colluded with Bitfinex to cover up hundreds of millions of dollars in losses by giving them access to Tether’s reserves.
Even though Tether has maintained its place in the market despite all of this, they are under more suspicion than ever before and a recent report from August 7, 2019, shows that there is a significant holding of tether by around 300 addresses.
A Monopoly on Tether
According to the report delivered by the crypto market research firm Coinmetrics, 318 address hold at least a million dollars worth of Tether which means they hold about 80 percent of the global Tether supply. It was also mentioned that many of the Tether whales include exchanges such as Binance and Bitfinex.
This is in stark contrast to other tokens such as Bitcoin for which only 20 percent of the total supply is held by whales and also over 20,000 bitcoin addresses hold at least a million dollars in assets compared to the 318 in the case of Tether.
It was also suggested by Professor John Griffin of the University of Texas at Austin that USDT whales could swing the Bitcoin price on their own despite bitcoin be more evenly distributed which again brings up the suspicion of tether acting as a bitcoin manipulation tool.
“The concentration of Tether suggests that control of Tether is in the hands of a few central players who can swing Bitcoin prices, and have a vested interest in doing so […] It also suggests that many exchange players have a vested interest in keeping the Tether game going,” he said.