USDT Printing Watch: Another 50 Million Added Over the Weekend

While no one can say how much Tethers affect the Bitcoin price, what remains as a hard fact is that the printing of new USDT continues. At the same time, the USDT manages to keep its levels around $1 unchanged, and to serve a vital purpose in trading, spread out through several exchanges.

The address of the Tether mint wallet has logged two more large transactions:

Amounts of 20 to 25 million Tethers are the usual injection in the past month. The injection happens after anightmare Thursday on Bitfinex, where order book mistakes made coins drop their price to zero.

The issuance of Tethers coincided with another wild ride forBTC prices, where it rose above $11,700, with talk of going over $12,000 soon.

And while Tether may soon be audited, the most dramatic increase in new USDT may not be covered in the time period. The most active new issues of Tethers fall after May 2017, and coincide with the uptick in BTC prices.

Bitfinex could release an audit that covers up to May 2017 and it would miss over $600m tether creation since. Just gotta accept this is a pirate ship and hope the royal navy is still at sea.— Scott Bell (@ElevenGrover)December 3, 2017

In fact, some believe the rise in altcoins may be due to a withdrawal from Tethers, as other digital assets may hold some utility beyond being a means for trading on Bitfinex. At the moment, the total amount of Tethers is upward of 84 million.

But another piece of the puzzle came with an alleged leak of a Bitfinex quarterly update, stating that issuing Tethers is a direct response to investors' demands. In other words, using Tethers still has some utility, and Bitfine, which now has cash deposits, substitutes users' balance of USD for USDT, if they need to withdraw to USDT and move it to another exchange. In the quarterly report to investors, this is listed as an advantage, but it is in fact a mechanism to move real dollars into USDT.

"Because Bitfinex and Tether have common principals and banking, there is no limit to the timing or amount of money that can flow between the two entities," a leaked memo to investors stated.

Bitfinex claims to only hold about 20 million USDT and in cases of increased demand for withdrawals, usually for moving from one exchange to the next, there is a need to mint additional coins and distribute them immediately. However, this still does not answer the question of what happens in cases users want to withdraw to fiat at one point. So far, exchanges that allow fiat withdrawal are few and far between.

"The principal use for Tether is exchange arbitrage," states Bitfinex.

At the same time, it is unclear if all Bitfinex users realize their cash is being exchanged for USDT with no mechanism of guaranteed conversion back to fiat, despite the price peg.