Tether makes a sneaky update to its terms: USDT is not 100% backed by fiat

14 Mar, 2019 | Updated: 14 Mar, 2019
by Will Heasman
News
Tether makes a sneaky update to its terms: USDT is not 100% backed by fiat

The high divisive stable coin which faced huge controversy last year for various insolvency and manipulation allegations is once again facing flak from the crypto community after the discovery of the firms updated terms. According to the Tether website USDT is no longer claimed to be 100% backed by fiat…

The revelation was pointed out by a Reddit user known as Toyake, earlier today in a thread dubbed: “Tether once again pulls a sneaky update.”

Within the thread, Toyake explains that they noticed a subtle change to Tether’s terms.

A quick google search for the old terms returns the following definition of 100% backing:

“Tether is always backed 1 to 1 by traditional currency held in our reserves, So 1 USDT is always equivalent to 1USD” 

However, the newly updated terms read:

“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.” 

Confirming the Redditor’s case against Tether, and their sly change of terms.

Essentially Tether has (quietly) admitted that USDT is no longer 100% backed by USD reserves, and may, in fact, include debts owed from loans, as well as “other assets.”

This caused quite a stir of speculation, with many postulating that “other assets” actually relate to cryptocurrencies.

Others Redditors pointed to the term “affiliated entities,” speculating that this may include Bitfinex.

Of course, this is a major point of contention seeing as both Bitfinex and Tether share a CEO in Jan Ludovicus van de Velde, an issue that some believe point to a clear conflict of interests.

Ironically many responses to this ‘revelation’ were fairly lukewarm, with a few noting that hs confirmed what many already suspected.

However, others were more outraged:

Tether has received its fair share of criticism, especially when it comes to its reserves.

Back in June 2018 Tether hired a law firm to check to conduct an independent audit of the firm’s reserves, the report claimed that every USDT in circulation was in fact backed by USD, however the report also noted several times that it was not an official security audit, once again causing concerns and given rise to speculation of potential insolvency.

Read more: What's going on with Tether? Trading as low as $0,86, 'a lot of volatility ahead'Tether has its bank deposits confirmed by law firm

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