Is Kraken “Wash Trading and Offering Special Treatment” to Tether (USDT)?

by Dalmas Ngetich

Kraken USDT

There is this doubt cloud hanging over Tether Limited and USDT in particular. In fact, it’s a headliner and a reason for concern for USDT owners and cryptocurrency investors. Tether, as we all know, is a stable coin and theoretically, all these stable coins should cushion investors against unnecessary volatility common in the crypto market.

But the good thing is that the influx of capital into the market is helping to stabilize Bitcoin and other cryptocurrency prices against widespread volatility. Statistics indicate that the volatility index of Bitcoin is almost near central-bank fiat issued volatility and this is positive more so for institutional level investors who needed an entry point to the uncharted crypto markets.

Tether, being the most liquid coin in the space, for a long time was an option but it kept being rocked with subpoenas, unnecessary dramas and even accusations that the proprietors of the coin thrive in opaqueness. A level deeper, and crypto sleuths were able to connect dots linking BitFinex and Tether Limited founders, Brock Pierce and John Betts, to the owner of the collapsed Mt Gox, Mark Karpeles.

BitFinex Banking Problems

So, in the midst of gas lightning and resisting deeper audits into their USD reserves, banks are finding it difficult to strike and maintain a working business relationship with BitFinex—who owns a majority of USDT, providing liquidity to one of the most liquid stable coins in the space.

This was evident in the run-up to the USDT meltdown of Oct 15 when BitFinex users experienced difficulties depositing and delays in withdrawals. It was later revealed that Puerto Rico’s Noble Bank had canceled their partnership and BitFinex was expecting a six-month-old bank from Hong Kong, Prosperity Revenue Merchandising Limited.

Prosperity Revenue Merchandising Limited.png

There were rumors that during the period when BitFinex deposits were drawing liquidity from Deltec Bank from the Caribbean making it possible for withdrawals. Remember, BitFinex’s don’t play by the KYC AML rules and it was no wonder when HSBC called it quits after one week.

The Migration to Kraken

Now that crypto users are moving their USDT from Binance, BitFinex and other crypto exchanges that support USDT, to Kraken, should the community be worried that Tether might end up caving in because of lack of trust? As statistics indicate, Kaken is now the nine largest holder of USDT with more than $46 million worth of Tether.

Holding Tether.png

A few months ago, their Tether holdings, from a snapshot done on Nov 20, stood at $1.345 million. It might be because Kraken is one of the few exchanges where you can trade the USDT/USD pair and later withdraw USD. This again poses risk for USDT and could collapse due to oversupply because traders are willing to dump Tether at any rate the market offers.

Related Posts