Introduction
Tether, the leading stablecoin in the cryptocurrency market, has faced criticism over the lack of transparency in its reserves. In 2021, CoinDesk, a media outlet, submitted a request for information on Tether’s reserves. Tether attempted to block the request, but a US judge has ruled that the attempt was unfounded.
The Information Request by CoinDesk
In 2021, CoinDesk submitted a request for information on Tether’s reserves based on the American Freedom of Information Law. Tether refused to share the requested documents with the journalists at CoinDesk and attempted to block the request. However, the US judge has ruled that the attempt to block the request was unjustified, which means that CoinDesk will receive the information on Tether’s reserves.
Implications for Tether
Although Tether still has the option to appeal the ruling, doing so could suggest that the company has something to hide. Tether is the largest stablecoin in the market, with a market cap of approximately $68 billion. The company reported a profit of $700 million in the last quarter of 2022, which was entirely added to the reserves that back the stablecoin. The company has been able to generate this profit by investing in high-yielding credit markets and US government bonds.
FAQs on Tether
What is Tether?
Tether is a stablecoin, which is a type of cryptocurrency designed to maintain a stable value relative to a specific asset, such as the US dollar.
Why has Tether faced criticism over its reserves?
Tether has been criticized for lack of transparency regarding the reserves that back its stablecoin. There have been concerns about whether Tether has sufficient reserves to support the stablecoin’s market capitalization.
What was CoinDesk’s information request about?
In 2021, CoinDesk submitted a request for information on Tether’s reserves based on the American Freedom of Information Law. Tether refused to share the requested documents with the journalists at CoinDesk and attempted to block the request.
Why did Tether attempt to block CoinDesk’s information request?
Tether had clear reservations about sharing information about its reserves with CoinDesk. The company did not want to release the documents requested by CoinDesk, possibly due to concerns about market perception of the level of its reserves.
What was the US judge’s ruling?
The US judge ruled that Tether’s attempt to block CoinDesk’s information request was unfounded. The ruling requires Tether to provide the requested information to CoinDesk, which could promote transparency in the cryptocurrency industry.
What are the implications of this ruling for Tether?
Tether still has the option to appeal the ruling, but doing so could harm the company’s reputation for transparency. The ruling also increases the pressure on Tether to provide more information about the reserves that back its stablecoin.