Earlier this week, Tether (USDT) hit the headlines because it outperformed XRP and ranked number three among the largest cryptocurrencies by market cap.
Confidence in the leading stable coin appears to have returned, although Tether and Bitfinex are still involved in two ongoing lawsuitsOne of these concerns a $ 850 million cash loan granted by Tether to Bitfinex and secured by Bitfinex shares.
Investors did not like the fact that Tether was no longer one-to-one hedged with the dollar. But with the banks of the United States, which are now authorized to grant unconditional loans, Were stocks really a better option?
Leash covered with money (and Bitfinex shares)
In April 2019, the New York City Attorney General announced an ongoing investigation into Tether and Bitfinex.
Tether was alleged to have granted Bitfinex a $ 850 million cash loan to cover a financial hole for which Bitfinex provided its own shares as security for the loan.
This case is still ongoing and Bitfinex has now repaid the loan in installments.
At this point, however, investors were upset after Tether’s long-announced lack of cash reserves was finally confirmed. who claimed to be one on one with the dollar.
Save money on nothing
Legislation agreed in March by the US Federal Reserve now allows banks to grant loans with a reserve ratio of zero.
This is perhaps the most extreme version of fractional reserve banking, where banks have to keep at least some money in reserve for the funds they lendThis means that not only the Fed itself prints an infinite amount of money, but also the banks are involved in this action.
So is it possible that Bitfinex stocks with an endless amount of dollars backed by nonexistent will really turn out to be the strongest capital?
With the case of the Attorney General and a Class action for market manipulation for Tether and Bitfinex is probably too early.
Do not stop reading:
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