Tether, the parent company of the dollar-pegged stablecoin (USDT) has been wading through rough water for quite some time and on Wednesday it announced that it has burned 500 million Tether (USDT) tokens. This news was made public by the company via Twitter.
— Tether (@Tether_to) October 24, 2018
The past few weeks have seen a continuous influx of USDT to the Tether Treasury and most of it happened last week when it was reported that USDT lost its peg against U.S. dollar and lingering doubts surfaced about Tether’s access to banking services.
Starting from 14 October when the USDT lost its peg and fell to $0.85 on the Kraken exchange, crypto exchange Bitfinex transferred a total of 630 million Tether [USDT] tokens to the Tether treasury in three separate transactions. In the first transaction which took place on October 14, Bitfinex sent 200 million tokens to cold storage vault which is reportedly linked to Tether treasury.
The second transaction took place on October 16, when another lot of 200 million tokens were sent to the Tether treasury. Another transfer of 230 million took place three days later to the same Tether treasury address.
These massive transactions seem to have wiped out a significant amount of USDT tokens from the market and as a result of it, the token's market cap dropped by over $600 million, roughly by 24% during this span. As a result of these transfers, the supply of Tether tokens in circulation dropped considerably and now have been burned by the company.
The official statement by Tether reads:
“Over the course of the past week, Tether has redeemed a significant amount of USDT from the circulating supply of tokens. In line with this, Tether will destroy 500m USDT from the Tether treasury wallet and will leave the remaining tokens (approx 466m) in the wallet as a preparatory measure for future USDT issuances. Conceptually, the Tether issuance and redemption process is outlined in the Tether whitepaper, with issuances and redemptions visible through observing the Tether treasury balance on the OMNI blockchain.”
Image via Shutterstock
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