Controversy Arises as Tether Mints $1 Billion in Unbacked Digital Currency
Tether faces backlash for minting $1B in unbacked USDT, raising market concerns
On April 16, Tether sparked debate within the crypto community by creating $1 billion USDT amid market downturns.
Labeled as "inventory replenishment" by Tether's CEO, Paolo Ardoino, this action faced immediate criticism for the tokens being "unbacked."
WhaleWire swiftly reacted on X, accusing Tether of fabricating the billion-dollar sum "out of thin air."
The tokens were generated on the Tron Network (TRX) and sent to Tether's treasury account, which now encompasses $1.19 billion in stablecoins.
In defense, Ardoino clarified on X that these were "authorized but not issued" tokens, meaning they don't yet have backing by Tether's reserves and aren't counted in the total market cap of USDT.
Tether's official FAQ states that only "issued" USDT, those in active circulation and sold to customers, are fully backed by reserves.
Tether's ease of token creation, which requires just a few lines of code, has triggered widespread concerns.
This issue is critical given Tether's substantial influence on cryptocurrency liquidity, which BlackRock highlighted in its ETF filings. Moreover, Circle and Coinbase have urged U.S. lawmakers to examine Tether more closely.
The controversy and opaque disclosures regarding the issuance and burning of tokens continue to shadow Tether, fostering ongoing uncertainty about its role in the cryptocurrency ecosystem.
