Weiss Ratings, has issued a warning about the dangers related with Tether (USDT). During the last months, Tether has been hacked and several individuals raised questions whether Tether is solvent or not. Weiss Ratings is trying to educate investors about cryptocurrencies by evaluating the different cryptocurrencies in the market.
Is Tether Risky?
The rating agency Weiss Ratings has recently published letter grades for several cryptocurrencies in the market. Now, this agency has decided to issue an alert about Tether and how dangerous it can be for investors.
Tether has been used as a stable cryptocurrency that can be used to send and receive money or to hedge. The team behind Tether explains that behind each Tether there is one US dollars backing it. But many individuals and enterprises do not believe in this. That’s why they have asked to the authorities to investigate whether Tether is solvent or not.
Weiss analyst Juan M. Villaverde commented about Tether and their funds:
“The big issue: there’s never been an audit, and the folks behind Tether has been quite shady when asked. They have continuously claimed their tokens are backed 100% by actual dollars, yet they have failed to present any evidence to support this claim. On social media, there appear to be consensus that what Tether is actually doing is running a fractional reserve system. In other words, most observers claim they DO NOT have the dollars to back up all those Tether coins, I tend to agree. It’s just too suspicious.”
Tether is being used in many different non-fiat cryptocurrency exchanges. It is very important for the cryptocurrency environment to know the truth about Tethers. This cryptocurrency is the third most traded around the world and its trading volume usually exceeds its market
The company behind Tether, has decided to issue not only USDTs but also EURTs backed by Euros. The cryptocurrency is supported on the Ethereum platform and is compatible with the ERC20 standard.
The company announced in a statement:
“Following the widespread success of our Bitcoin-based USD Tether, issued via Omni Layer Protocol, we have today launched and issued both US Dollars and Euros as Ethereum-based Tether, compatible with the ERC20 standard.”
The controversy will keep around this cryptocurrency and its team. If there will not be an audit and the funds will not be disclosed, then, Tether my harm the entire cryptocurrency ecosystem. Many individuals and investors own Tether in order to trade cryptocurrencies.
For investors, it is important to remark that Tether is not money, but an monetary instrument. Tether makes it clear on its webpage that they do not guarantee any right of redemption or exchange of Tether for money.
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