As the price of Bitcoin reaches a new all-time high of $67,000, the market capitalization of the largest stablecoin, Tether (USDT), has surpassed $70 billion. The majority of Tether’s 70 billion supply, 51.42 percent, is issued on Tron’s (TRX) blockchain, which has nearly 36 billion USDT supply, followed by Ether, which has 33.85 billion USDT supply circulating on its blockchain. The remaining USDT supply is spread across multiple blockchains, including Omni, Solana, Algorand, EOS, Liquid, and SLP. Tether supply paused until early August after increasing 41.7 billion in the first half of this year to nearly 63 billion. Tether supply growth has been resting since early last month after adding 8 billion in the previous month, only to resume in October as traders and investors try to chase the bulls. The USDT’s dominance, on the other hand, has been declining since June of last year, when it was just above 86 percent. Tether’s stablecoin dominance has shrunk by 30 percent in the last 17 months, to 56.8 percent. Much of this has been lost to Circle’s USDC, whose market share has increased from 8% to 25.7 %. During this period of expansion, short-seller Hindenburg Research has launched a $1 million “bounty” program in exchange for information on the stablecoin company. “We believe Tether should fully and completely disclose its holdings to the public.” “In the absence of that disclosure, we are offering a $1 million reward to anyone who can provide us with exclusive information on Tether’s alleged reserves.” Hindenburg also stated that it has no long or short positions in Tether, Bitcoin, or any other cryptocurrency. “This stunt from Hindenburg Research is a pitiful attempt to gain attention,” Tether said in a statement.
“Tether abhors and denounces their actions and transparent motives.”
A few days before Hindenburg’s announcement, the US Commodity Futures Trading Commission fined Tether $41 million for falsely claiming that USDT was fully backed by fiat currency. Tether made no admissions or denials of wrongdoing. Recently, cryptocurrency lender Celsius Network stated that Tether issues new stablecoins in exchange for crypto collateral, such as bitcoin, as part of its lending program. “If you give them enough collateral, liquid collateral, Bitcoin, Ethereum, and so on… they’ll mint tether against it,” CEO Alex Mashinsky explained. “New USDT is issued for such loans,” and then destroyed when the loan is paid, “so that USDT in circulation is not permanently increased.” Bloomberg reported earlier this month that Celsius had borrowed $1 billion in USDT from Tether. Meanwhile, Mashinsky clarified that USDT loans are typically at least 30 percent overcollateralized. “We have a small group of customers who borrow USDTs in exchange for security.” These loans are secured by collateral worth well over 100 percent of the loan proceeds and earn monthly interest,” Tether told FT, adding:
“This practice is common to other stablecoin issuers. This lending is undertaken narrowly, efficiently, securely, and profitably.”