Tether, the most controversial stablecoin of all time is trapped in a controversy yet again. This time, Tether is being criticized for silently amending the details of the USDT token and removing the term ‘fully USD backed’ from the details.

 

Tether Has No Independent Proof of Backing

The details of the token earlier described it as fully backed by USD or United States Dollar by the ratio of 1:1. However, there hasn’t been a time when Tether has published an audited report from an independent auditing firm in order to support the claims of the company. Therefore, it was always criticized by the cryptocurrency community for wrongly claiming to have enough USD to back its supply.

However, now the company has silently removed the term ‘fully USD backed’ from the description of its stablecoin. The new terms seem to describe the token as being backed by other things as well. According to the recent updates on Tether’s official website, each Tether or USDT is backed by their reserves which include traditional currency and cash equivalents, and might also include other assets and receivables from advances made by the company to any third party which may also include an affiliated entity.

Earlier, Tether had released a document from a law firm, Sporkin and Sullivan LLP which agreed to the claims of the company that it holds USD worth the supply of USDT in the ratio of 1:1. However, the documents cannot be 100% trusted as the law firm has also stated an acknowledgment that the firm is a law firm and not an accounting firm, thus they do not follow the accounting terms that are generally accepted.

The company is also planning to release its USDT token on the TRON blockchain and has already been shown support by some of the top cryptocurrency exchanges.

In a recent announcement made jointly by Tether, the issuer of USDT and Tron, blockchain protocol Tron i.e. TRX have collaborated to introduce the stable coin USDT to its network by mid-2019.

 

USDT was launched in 2014 and has been providing excellent service for storing and exchanging the values at a very fast speed. The upcoming USDT would be based on TRC20. This technical token would be supported by the blockchain technology of Tron. It would collaborate with all the protocols and decentralized apps based on the Tron’ s technology. Eventually, it would allow the users to transact and exchange the digital asset all across the blockchain.

 

Tron has been defining them as a true competitor of Ethereum. They have been dominating the Ethereum by combining the decentralized finance with decentralized internet network. The addition of USDT would surely enhance its ecosystem. It would improve the value storage of the exchange as well as would improve the liquidity of the decentralized network of the exchange. This collaboration indicates the availability of blockchain at institutional as well as enterprise level. Last year, the Tron network made a significant impact on the market by partnering with one of the popular torrent client, BitTorrent. With this partnership, Tron launched a peer-to-peer token known as  Tron-based BitTorrent or BTT.

 

On the other hand, Tether has been facing tough competition after the evolution of several other stable coins in the market. Recently, the largest banking firm of America, JP Morgan also launched its own stable coin. With this collaboration of Tether with one of the giant organization in the crypto space, it would surely act as the catalyst for the Tether and would give it a superior lead over all the other competitors of the stable coin.

BitMEX is currently the largest Bitcoin Exchange according to trading volume, and BitMEX research is going pretty good regarding market research, but is BitMEX really that ethical? Let us explore.

Registered in Seychelles, BitMEX is not required to report to any regulator. This article is sourced through various articles submitted on Medium, Reddit and social media like Twitter.

 

Does BitMEX trade against its Customers?

Before I start to answer this question, let us understand the concept of Market Making. Market makers are the one responsible for filling up the order books. They also buy and sell continuously, proving the necessary liquidity to the market.

Market makers quote on both sides of the order book, that means both the buy side and the sell side. If their buy order gets executed, their immediate plan is to execute the sell order as well, thus acting as a neutral market maker. So a market maker profits from a spread instead of up-down movements of the market, in return offering quick liquidity to the users.

The question is thus, is BitMEX acting as a neutral market maker (which is a positive service to its customers) or not.

On 30th of April, 2018, MitMEX updated its Terms of Service. It says:

“BitMEX has a for-profit trading business that, among other things, transacts in products traded on the BitMEX platform. The trading business primarily trades as a market maker”

 

BitMEX also states that its profit does NOT come from trading:

 

BitMEX claims that its goal is to breakeven regarding profit and loss and that they make money by the service fee paid by the business. But unfortunately, there is no way to check BitMEX’s audit report as they have never released an external audit of their business.

BitMEX’s legal counsel, Sullivan & Cromwell was silently removed from their blog post from April. It’s earlier post stated this:

Later in May 2018, the updated post said this:

It is a possibility that Sullivan & Cromwell separated from BitMEX because it had issues with the exchange’s plans.

 

BitMEX’s Desk should not be allowed to trade freely on the exchange

Let’s assume the owner (or owner’s employees) of an online casino is allowed to play its own game, can he resist from not looking at everyone else’s cards?

Same goes with an online Bitcoin exchange. If BitMEX’s desk is allowed to trade on their own exchange freely, we can expect a similar outcome. This gives “extra information” to the desk, which is not available to all other customers. While some information is available to all the customers, for example, the order book or the past trades, additional information like the degree of leverage of each position or the price at which it will run out of margin is private and is only available to the BitMEX’s desk.

In a blog post, BitMEX has denied that it gives this explicit information to its desk, but BitMEX has not agreed to give out equal information to all the customers especially the two mentioned above.

Many users suspect that BitMEX gives unfair advantages to its desk. What are your views on the above? Comment below and let everyone know.