Changpeng Zhao (CZ) from Binance shared his views and concerns regarding Tether [USDT] at the Korea Blockchain week event. The event, through various activities also brought out views of leading names in the business on various subjects. One such interview definitely caught many eyes.
Tether holding and its impact on Binance
CZ’s cryptocurrency exchange Binance is one of the largest holders of Tether. On being asked by Ran NeuNer of CryptoTrader on his insights on the possible damage that downfall of Tether could cause to Binance, CZ stated that the situation was defiantly worrying and that the reason the exchange is listing other stable coins
“We have seen fiat currencies go down in history a lot. Probably more times than they have been in cryptocurrencies. So yes, the concern is always there and that’s also why we’re listing other stable coins as well, so we actively promote other stable coins including the TrueUSD, …and others.”
As the TrueUSD was listed, Binance paired it with Tether providing an option to holders who want to switch from dodgy tether to TUSD
While the concern looms and could collaterally damage Binance CZ also met the Bitfinex team. To understand the gravity of the situation. He also mentioned to Ran NeuNer that
“…I haven’t personally seen their bank accounts but, from a logical point of view… They have so many profits from their regular exchange business, they don’t need to do anything crazy about the Tethering. I think the reason they cannot release their bank account details is because if they release whichever bank they’re using, then the bank account gets shut down.”
Also, read: Binance New Partnership Allows Binance Coin [BNB] Collateralization to Get Fiat and Crypto Loans
Tether marred by controversy with Bitfinex
The concerns around Tether came to light when Bitfinex and Tether together got into deep controversies associated with Bitcoin price manipulation. It was claimed by two researchers of the University of Texas at Austin, namely, John M. Griffin and Amin Shams that the Bitcoin prices were artificially inflated in December when the digital gold reached its all-time high at almost $20,000.
Griffin, who is known for catching fraud in financial markets reveals several distinct patterns in trading that suggest several people or a person at the major cryptocurrency exchange Bitfinex inflated virtual coin prices.
The 66-page report, which was titled,
“Is Bitcoin Really Un-Tethered? “stated that Bitfinex might have used the virtual coin Tether, which it owns, to generate fake demand for bitcoin by buying up the virtual currency and keeping its price up while it sank at other exchanges. The paper found that the more Tether entered the market, the higher cryptocurrency prices would rise, “similar to the inflationary effect of printing additional money.”
In December, the US Commodity Futures Trading Commission subpoenaed Bitfinex and the company Tether, after investors expressed concerns over these very same price manipulation issues. In January, reports of the subpoena began to surface, as did news that Tether had dissolved its relationship with an audit firm it had hired for an internal audit. Recently, Bloomberg reported that the Department of Justice is working with the CFTC to investigate bitcoin and price manipulation, although that investigation is still in the early stages.
The situation is definitely risky for Binance as if USDT goes down it will definitely take away the sheen of Binance as well.
Will Binance be able to dilute USDT holdings and save itself in case of a tether downfall? Do let us know your views on the same.
The post Binance CEO Concerned of USDT’s Collateral Damage in Case of Tether’s Downfall appeared first on Coingape.
Written by Nilesh Maurya @ https://coingape.com/binance-ceo-concerned-of-usdt-collateral-damage/ August 1, 2018 Nilesh Maurya