A probe by blockchain intelligence firm Intotheblock into the holding pattern of Tether revealed that just 104 Tether addresses hold 70% of stablecoin’s circulation. As each Tether is valued at $1. monetary value of the coins held by the 104 users is a staggering $2.8 billion.
Intotheblock has also revealed that in the last seven days alone, transactions over $100,000 in Tether amount to $2.4 billion, and the average period of holding a Tether token (USDT) was just 17.8 days, which is very less compared to other digital coins.
Such a large holding in the hands of such a small number of individuals creates chances for manipulation of the cryptocurrency. These individuals can act as a cartel to drive fluctuations in the cryptocurrency and dupe the smaller investors.
Moreover, Tether is a stablecoin. Stablecoins are suitable for small payments as they have a stable value at all times. These are not preferred for trading or investment purposes, where a user wants to take advantage of changes in the value of a cryptocurrency to make a quick buck. It makes the volume of large transactions even more surprising.
The short holding period also points to the same conclusion. Short holding periods may be a result of investors indulging in pump and dump, leaving with their profit with the small user left high and dry. In such a system, the small user has no say in the value of the cryptocurrency and is at the mercy of the large investors.
Doubts are being raised over whether each Tether was physically backed by $1. These increased after Tether’s Co-founder William Quigley said that it did not matter if each Tether was backed by $1 or not.
The revelations come even as the volume of transactions in Tether has now surpassed both bitcoin and Ethereum.
Thus we can see that not only is the foundation of the Tether as a stablecoin under question; its management is also now under a cloud even as the cryptocurrency Furthermore, just go through Tether news for more updates.
