Tether is the cryptocurrency industry’s biggest threat in 2021, says a report written by Messari’s founder Ryan Selkins.
The 134-page thesis ventured into the rise of the stablecoin as a proxy for the US dollar that helps crypto traders get in and out of their positions on exchanges quickly. It also focused on the controversy behind Tether following the New York State Attorney’s class action lawsuit against its founders and a sister cryptocurrency exchange BitFinex.
Tree against gloom
Lawyers Vel Freedman and Kyle Roche alleged in their October 2019 filing that Tether defrauded its investors, manipulated the cryptocurrency markets, and hid illegal proceeds. They added that Tether has pushed billions of dollars in USDT stablecoin to artificially inflate the price of Bitcoin, Ethereum and other cryptocurrencies.
But the market largely ignored the warnings. Tether’s market cap increased from $ 4 billion in October 2019 to $ 20.9 billion in December 2020. Mr. Selkins noted that the exchanges have significantly increased Tether’s popularity in the absence of any other major alternative. However, the situation may change in 2020.
Tether market cap. Source: USDT on TradingView.com
The research analyst discussed the worst-case scenario for Tether and BitFinex, citing the “double lawsuits” against BitMEX filed by the Commodity Futures Trading Commission and the Justince Department. He stated that an active investigation against the crypto derivatives exchange caused users to migrate to alternative platforms.
Fearing the same thing could happen to Tether, Mr. Selkins presented an opposite Tether outlook for 2021 – a do-or-die situation as the market cap continues to grow amid an ongoing rally in the cryptocurrency market led by Bitcoin.
“Tether will go through an existential crisis or will redouble its offering in 2021,” he wrote. “There seems to be no middle ground.”
SEC investigation rumor
Following the Securities and Exchange’s lawsuit against Ripple and its grossly negative impact on the company’s original token, XRPmany agree that the Tether’s USDT could suffer a similar fate. But that requires the US Treasury to categorize stablecoins as securities.
And that seems to be coming true. A Twitter user @RealWillyBot shared details about a DoJ order that ruled stablecoins as securities. He shared a screenshot that read:
“Depending on design and other factors, the stablecoin may constitute a security, commodity or derivative subject to US federal securities, commodities and / and derivatives laws.”
If the proposal becomes law, USDT will become a security token. That could generally shock cryptocurrency markets due to its over-addiction to the stablecoin coughing an average of $ 77 billion in transaction volume every day.