Tether recently froze over $150 million worth of USDT. It’s not the first time the company has done this, but the action has once again stoked concerns about centralization in the crypto community.
According to blockchain data, Tether locked over $150 million worth of USDT on January 13. This is not the first time the company has frozen funds in this way, and it has often been a point of contention within the crypto community. Additionally, Tether has blacklisted three new addresses.
So far, the company has given no information as to why these funds were frozen. Due to smart contract coding, Tether has the ability to freeze, destroy, or issue tokens whenever it sees fit, as well as add addresses to its blacklist.
There have been many incidents in the past where Tether has done this, causing a large part of the crypto community to advocate for the use of decentralized stablecoins like DAI. Much of the stablecoin market is made up of centralized tokens like USDT and USDC. However, some have pointed out that a significant amount of DAI is backed by the USDC, which also poses risks.
That said, the most controversial aspect of Tether remains the backing of its reserves. With over 76 billion USDT in circulation, investors have questions about the adequacy of these reserves. In December 2021, Tether issued 1 billion USDT on the TRON blockchain.
For its part, Tether said it has several types of assets that support its circulating supply. However, investors and analysts demand a reliable audit. The network’s operations even caught the attention of the US Commodity Futures Trading Commission, which found no malfunctions but fined the company $41 million.
Tether struggles to improve its reputation
Tether has long been the subject of controversy. Last December, the company once again found itself in court over its dollar reserves. Indeed, two investors in New York alleged that the project misled investors about its reservations.
For its part, Tether is doing its best to remain compliant with regulations. In November 2021, the company announced its intention to work with regulators around the world to meet compliance standards. As stablecoin regulatory efforts multiply in several countries, the company will have to better meet the expectations of regulators and investors.
Indeed, stablecoins have become a major concern for governments, which fear their potential to affect the sovereignty of national currencies. Being the most widely used stablecoin in the market, USDT is currently the first target of regulators.
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