A report published by Bloomberg on June 29 regarding the odd trading orders for Tether in Kraken sparked outrage from the exchange, prompting Kraken to publish a blog post that snapped back at the publication.
Titled “On Tether: Journalists Defy Logic, Raising Red Flags,” the exchange savagely deconstructs the points made in the original Bloomberg article, where a journalist considered it suspicious that large trades against Tether “are not impacting prices,” in the words of Rosa Abrantes-Metz, a university professor in New York.
“The title is a nod to a recent article in which a reporter covering market structure for Bloomberg News inexplicably fails to comprehend basic market concepts such as arbitrage, order books, and currency pegs. More troubling, however, was the applause from other ‘journalist’ lemmings as they followed in walking their reputations off a cliff,” Kraken wrote.
The exchange goes on to explain that USDT is often used as an arbitrage instrument to hedge against the volatility of the cryptocurrency market by converting the assets they’re trading into another cryptocurrency that is almost a one-to-one peg of the US dollar.
“Tether is unique in that each USDT is (according to the issuer) collateralized with $1 US dollar,” Kraken explained.
Although the buy orders are immense, so are the sell orders. And because of this, the price changes that Tether experiences are usually microscopic in comparison to Bitcoin’s, which could swing $500 in the span of a few minutes.
There’s always been plenty of controversy surrounding Tether, especially since the issuer of the coin doesn’t go through regular audits to demonstrate that the coins are actually backed by a supply of US dollars.
However, a recent snapshot of the issuer’s bank account reveals that it does indeed have the amount of capital required to back Tether’s supply. Although the investigation was by no means a full audit, it certainly helped calm some of the fears people had in this particular respect.
This article appeared first on Cryptovest
