The head of Binance called Tether a "black box"
Date: 2023-08-03 Author: Karina Ziganova Categories: BLOCKCHAIN, BUSINESS
The exchange also decided to ramp up its investment in the stablecoin market amid the confusion over Tether's finances.
The issuer of the largest USDT stablecoin by market capitalization, Tether, keeps the cryptocurrency market in the dark. Changpeng Zhao, the founder of the Binance cryptocurrency exchange, hinted at this during the AMA session with the crypto community. As the head of Binance noted, he himself has not yet seen any audit reports on Tether.
“It seems to me that many have not seen them [reports] either. So [Tether] is kind of a black box because we are just not aware,” Zhao said.
The financial details of Tether have been the subject of discussion for several years now. In June 2023, for example, Bloomberg journalists found out that the company's reserves included billions of dollars of short-term loans to Chinese companies. At the same time, the issuer of the stablecoin itself has not previously reported on the ownership of securities of Chinese companies.
Tether Insurance
The founder of the crypto exchange also noted that the company now wants to expand its presence in the stablecoin market through “diversification.” To do this, Binance will increase investment in "stablecoins", but it is not clear which ones and under what conditions. Zhao also stated that a new algorithmic stablecoin is being developed in the market. However, it is not clear from the context whether it was a stablecoin from Binance or some third-party product sponsored by the cryptocurrency exchange.
Recall that at the beginning of 2023, the issuing company of the binance USD (BUSD) stablecoin, Paxos, curtailed the issuance of the stablecoin on the Ethereum network. The reason was pressure from the US regulator. In January 2023, Binance acknowledged flaws in its system that caused the supply of BUSD on the BNB Chain (formerly Binance Smart Chain) to be underfunded by at least $1 billion in 2020 and 2021.
There are several versions of BUSD in total. One version of the stablecoin was issued by Paxos on the Ethereum blockchain and fully backed by the US dollar under the control of an American company. Another version of BUSD is deployed on the BNB Chain network. The BNB Chain version of BUSD is not regulated in the same way as on Ethereum.
In mid-June, BUSD's market capitalization fell below $5 billion, up from just under $10 billion in March. At the time of writing, BUSD's market capitalization is just over $3.6 billion, according to CoinMarketCap.
