The Existence of Tether Whales is a Threat to Cryptocurrency

Very few cryptocurrency or blockchain projects make an impact on the scale of Tether and their USDT asset. In the case of this company, the public’s perception is anything but positive, despite how popular its asset has proven to be. New research by Coin Metrics confirms there are enormous Tether whales out there who own over $1m worth of digital dollars. The bigger question is whether these individuals and companies pose any real threat. 

Identifying Tether Whales

When a project is marred by controversy as much as Tether is, every snippet of research will be scrutinized along the way. Since its inception in 2015, the company has had a few noteworthy headlines in the media, although most of them have not been all that positive. This new piece of research won’t necessarily do anything to effectively change that situation, albeit it is pertinent to put everything in its correct perspective first and foremost. 

As it turns out, there are very few “wallets” which effectively control the current supply of USDT. Roughly 320 different addresses have been identified, all of which hold a balance of $1m worth of USDT or more. This is referred to as the proverbial “Tether whales”, even though it seems unlikely any individual users will own so many assets. It is more than likely the vast majority of these addresses belong to Tether itself, exchanges, and other cryptocurrency service providers. As such, it is to be expected these wallets to control over 80% of the Tether supply. Very few traders hold on to USDT for a long time, primarily because its value will not deviate from the $1 level all that much. 

Centralization is a Problem

The statistics provided by Coin metrics confirm most people’s worst fears: Tether is as centralized as stablecoins can get. At the same time, that should not come as too big of a surprise, as the company is the biggest stablecoin provider in the cryptocurrency world today. As such, it is only normal all of its assets seem to be very centralized, primarily because it is an asset primarily used on cryptocurrency exchanges and trading platforms. The average user won’t pay too much attention to this asset except for moving out of and into new cryptocurrencies, tokens, and assets. 

At the same time, it raises a lot of questions regarding the control,, issuance, and distribution of Tether. As most of the funds is in the hands of a select few entities, the suspicions regarding Bitcoin price manipulation will only intensify as more time progresses. Some experts even claim these “controlling parties” also have a major interest in manipulating cryptocurrency prices, although it is very difficult to prove such claims in the real world. Until proven otherwise, these Tether whales are not doing anything illegal. 

The Tether Game Continues

What makes all of these findings even more interesting is how it puts a different spotlight on Tether’s presence in the cryptocurrency industry. Considering how this asset is incredibly active on various exchanges – including Huobi, Binance, and a few others – it is evident that these companies may also have an interest in keeping the “Tether game” alive.  As these exchanges are also part of the Tether whales club, there may be more going on behind the scenes than people assume at this time. Again, proving anything nefarious is going on will pose its own set of challenges.

It is important to note the statistics provided by Coin Metrics only identify USDT supplies issued on OMNI and Ethereum. At the time of writing, Tether is accessible through other ledgers as well, thus it is possible this “asset distribution” looks either a lot better or even worse when looking at the bigger picture. In an industry that is as volatile as cryptocurrency markets, any degree of centralization combined with a high market cap will spark numerous rumors and claims for quite some time to come. 

Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency or digital currency.

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