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Tether (USDT) stablecoin withdrawals top $10 billion

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Tether asserts that its dollar-pegged token “fully backed”

Justin Tallis | Afp | Getty Images

Over $10 Billion has been taken out by investors tetherThe past week has seen heightened regulation scrutiny of stablecoins.

According to CoinGecko data, Tether, which is the largest stablecoin in the world, saw its supply drop from $84.2 billion (on May 11) to $73.3 billion Monday. Late Friday night, $1 billion of Tether was taken out.

The cryptocurrency, which is meant to be pegged to the U.S. dollar, temporarily dipped as low as 95 cents on May 12 after another type of stablecoin, terraUSD — or UST — plunged well below $1. This led to a sale of UST’s associated luna coin, which resulted in a wipeout of more than $40 Billion in holders’ wealth.

After Terra collapsed, the blockchain that powered UST and luna crashed, shockwaves swept through crypto markets, sending bitcoin and other cryptocurrencies plunging sharply. Regulators are now concerned.

Kathleen Breitman (co-creator of Tezos Blockchain) said that whenever there is a crypto catastrophe or failure, it’s always possible for someone to misunderstand the situation and correct in a way that doesn’t benefit the whole community.

“As much I love seeing things make no sense fail, there’s always the tinge like: “Are people going out to extrapolate this that every stablecoin that exists is unsound?” This is always my biggest fear.

Unlike tether UST didn’t have fiat currency in reserve. It was based on complicated engineering that ensured price stability through destruction and creation of UST, and the sister token luna. Anchor, Terra’s most popular lending platform, promised investors 20% savings, which many investors found unsustainable.

Do Kwon was also the creator of Terra. He had accumulated trillions of dollars of value. bitcoinAnd other tokens from his Luna Foundation Guard account, nearly all of the funds were depletedIn vain attempts to save UST.

Nevertheless, the panic over UST has drawn attention to other stablecoins — tether, in particular.

Economists and regulators long wondered if Tether had enough assets to support its purported peg for stablecoin. the dollar.

The company previously claimed tether was backed one-to-one by dollars in a bank account, but subsequently revealed it was using other assets including commercial paper — short-term corporate debt — and even digital tokens as collateral after a settlementWith the New York attorney General.

Tether announced it last week reduced the amount of commercial paper it ownsIncreased its U.S. Treasury Bills holdings. The British Virgin Islands-based company said that it has foreign debt. This is the first time this has happened. Tether did not comment on where the funds came from, however it said that they are conducting an audit to determine its reserves.

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