The stable Tether crypto coin has had more than its fair
share of unwanted attention over the past year. Those woes could deepen as
recent reports have revealed that a very small number of people control a very
large amount of USDT.
Crypto Whales or Crypto Mafia?
It has been well reported that Bitcoin whales collectively own a fifth of the world’s largest digital asset but new findings are revealing that Tether holdings may be even more concentrated. A recent Bloomberg report citing research by Coin Metrics claims that just over 300 crypto addresses own over 80% of the USDT supply.
has been embroiled in controversy since its launch four years ago yet the
printers keep rolling more off the digital presses. Many top crypto exchanges
have likened the coin and its few heavy bag holders to a digital mafia. Finance
professor at University of Texas, John Griffin, told Bloomberg;
“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.”
According to Massachusetts based analytics firm, Coin Metrics, just 318 addresses that hold $1 million or more of Tether. Research only included tokens on the OMNI and Ethereum blockchains. At an estimated 80% of the total supply this equates to around $3.2 billion in USDT. In comparison more than 19,000 Bitcoin addresses have balances of at least $1 million, according to BitInfoCharts.com.
This concentrated ownership of Tether raises the risk of market manipulation for Bitcoin prices since a large number of transactions are now conducted in USDT. According to Coinmarketcap.com around 46% of its total volume in BTC transactions is made with Tether.
Some of the largest exchanges on the planet are among the
top holders of Tether. Binance and Bitfinex, which issues USDT tokens have huge
stashes of it which can be used to manipulate markets if desired. Chinese
investors needing to exchange Yuan are also on the Tether whale list since
trade has increased there over the past year or so.
Co-founder of market tracker TokenAnalyst, Sid Shekhar,
“The extremely centralized holdings bring about extreme volatility when large swathes of Tether are released in the market,”
Just like the real USD, Tether can be seemingly minted at
will. Since the beginning of the year, USDT market cap has over doubled from
just under $2 billion on January 1st to a little over $4 billion