Controversial “stablecoin” Tether is under the gun again, as Weiss Ratings recently released a report detailing the red flags associated with the project.
According to the alert, the largest issue facing Tether is the lack of a completed audit that accounts for the assets in circulation.
Some other critical facts:
Fact #1. Tether is the only “cryptocurrency” with trading volume that regularly exceeds that of its market cap.
Fact #2. This means the entire Tether supply changes hands regularly, sometimes more than once a day. In economics, we call this the “velocity of money.”
Fact #3. This is important to know because it tells us that Tether is used for trading A LOT. It’s one of the main sources of liquidity in the cryptomarkets.
Fact #4. Liquidity is the lifeblood of a market. It’s what makes prices stable and seamless trading possible.
Fact #5. The consequences of hanky-panky could be far-reaching. What happens if Tether does turn out to be fraudulent? Or what happens in a major government determines that cryptocurrencies like Tether are being used by exchanges to avoid regulations? What if this large source of liquidity suddenly evaporates?