US Congressman Warren Davidson assures that Tether “is a time bomb” – DiarioBitcoin

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US Congressman Warren Davidson assures that Tether "is a time bomb" - DiarioBitcoin For Angel Di Matteo @shadowargel

For Davidson, the lack of transparency with which he has operated Tether over the last few years is more than enough for the SEQ pay more attention to the stablecoin, indicating that it is more important than the legal dispute it has with Rippl for the marketing of XRP.

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US Congressman for the party Republican, who has already spoken on several occasions in favor of Bitcoin In several of his public participations, Warren Davidson assured during an interview that stablecoins such as Tether pose a significant financial risk today.

“Tether is a ticking time bomb”says Davidson

Davidson’s statements came to the fore during an interview conducted by the team of TheBlock, where the congressman expressed his concern about currencies whose value is parity with the US dollar, specifically referring to the case of the controversial stablecoin Tether.

In this regard, Davidson commented:

“Tether, for example, is a ticking time bomb… There is no transparency or disclosure there. They acknowledge that they have commercial paper, but do not reveal what exactly that is. That is where I think a framework that mandates proper disclosure of data provides greater investor protection.”

Davidson’s comments come amid a strong emphasis by regulators on cryptocurrencies, which have especially mentioned Tether and other stablecoins as a priority, precisely because of the risks posed by private companies issuing forms of value that can rival the US dollar, especially backed by the use of blockchain that enables low-cost cross-border transactions without proper third-party supervision.

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Faced with the latter, the congressman highlighted:

“Regulators should address Tether. Frankly, there is more reason for the SEC to turn its eyes on Tether than for it to turn its attention to Ripple and XRP.”

concerns about Tether

The concerns about Tether They already have a long history, since it is suspected that in 2017 the digital currency was used to artificially inflate the value of Bitcoin during the bull run that took place at the end of that year. In addition to the above, there were also strong suspicions that the company responsible for the stablecoin made use of the reserves of the digital currency to finance external projects, with which it did not maintain the due backing in US dollars to justify the amount of investment. USDT circulating at that time.

The situation became especially difficult for Tether, since the regulatory pressures and the doubts of the community put in evidence the opacity with which the responsible company has been managing the finances of the digital currency. This opened the space for a legal process that lasted a long time, which led to the payment of fines of USD $18.5 million to the New York District Attorney at the beginning of 2021.

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However, at the end of last year, the Commission for the Commodity Futures Trading (CFTC) also imposed another fine on Tether for USD $42.5 million, accusing it of misleading statements, precisely because it could not effectively demonstrate that it had the proper backing of all the USDT currently in circulation.

The elephant in the room

Faced with all these previously mentioned allegations and many others, Tether it has been at the center of political discussions for various regulatory entities.

The president of Senate Banking Committee, Sherrod Brown, indicated that he has had problems contacting the directors of Tether and access information that accounts for their practices.

On the other hand, the parent company of Tether, Bitfinex, has had problems with certain media outlets, especially highlighting the case of CoinDesk, with whom they have openly come into conflict due to the coverage of certain events linked to the company and the controversial stablecoin.


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Fountain: TheBlockCrypto

Angel Di Matteo version / DailyBitcoin

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WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.

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