The collapse of FTX will have its repercussions. The wiles of Sam Bankman-Fried and his team caused their companies to implode. However, in this crisis, they are going to pay just for sinners. Many VC funds, for example – Sequoia, SoftBank and others – have already written their FTX holdings off the books to put a big zero in its place. This crisis will surely create other crises. The Big Question: Who’s Next?
In the minds of many, “Tether” arrives like a shooting star. Tether is one of these concerns that refuse to go away. It appears and reappears at the top of the list. questions arise. Is the Tether team telling us the truth? Do you have the reserves you claim to have? Will you be able to respond in the event of a bank run?
The lack of transparency, the lack of regulation and the past full of irregularities of this stablecoin They are not exactly balms for the soul. According to the Tether people, Tether is the eighth wonder of the world and a tabernacle of solidity. However, users want more than nice words and calls for calm. They want proof. Why so many evasions to carry out an independent audit?
In this space, we already know this Chinese tale. I mean all that rhetoric about a libertarian paradise of a total free market. “Freedom” as a synonym for non-regulation, non-controls and non-transparency. I repeat, all of that sounds very nice and beautiful (in theory). Nevertheless, this wild west creates the perfect setting for scammers and cheaters to make and break with other people’s money. The “freedom” used as an empty label to hide fraudulent schemes is not “freedom”. Is a free market possible without honest participants? Is a free market possible without justice?
Asymmetric information reduces the efficiency of the market. And this asymmetry problem is not solved with a tweet. Alex Mashinsky, CEO of Celsius, spoke very nicely. In all the interviews, Mashinsky assured that his platform had the best practices in risk management. Sam Bankman-Fried, CEO of FTX, also spoke very nicely. In fact, it was a child genius. One of the richest men in the world. Solvency problems? The idea seemed absurd. During the Terra/Luna and Celsius crisis, Sam was in fact offering ransom. He presented himself as the savior hero of the crisis. Today we know that it was all a big farce. His empire was nothing more than a house of cards.
Now, why does Tether still maintain its popularity despite the doubts raised by its lack of transparency?
Age and size. Tether (USDT) has been with us since 2014. And it was the only stablecoin in the ecosystem for a long time. That gives you an advantage. Lots of people have accepted and used USDT. This gives it a much higher level of credibility than other initiatives. Many users assume that their popularity is their validation. After all, “a widely accepted cryptocurrency can’t be that bad.” Nope? And exchanges cannot afford not to accept the most popular cryptocurrency by volume. In other words, this market is very used to living with Tether.
Tether’s opacity has been tolerated for a long time, because Tether takes advantage of this “Wild West” culture of libertarianism so much in vogue in this space. So, the perfect toxic relationship has been formed. They, apparently, do not want controls. Users, by idiosyncrasy, do not demand controls. Which, of course, is a recipe for disaster. Tether is a time bomb.
A big plus point for Tether is that despite all the doubts and concerns it raises, the cryptocurrency has (so far) done very well. This “normal” operation has served as the perfect excuse not to question the project any further. And, in the process, it has been possible to avoid a “bank run”. I mean, somehow or another, the project has managed to stay afloat. In fact, the project has grown and prospered in recent years. With many doubts, yes. But what is or is not behind the scenes, has been able to be maintained behind the scenes. The business, for better or worse, continues to function without apparent problems. One. Actually, there is no problem. And all fears are unfounded. or two. She’s known (so far) to handle the tangle, but they’re walking on ice. Which makes Tether a huge threat.
Of course, over the years, and due to pressure from regulators and users, those responsible are not so brazen anymore. I mean, lately, they’ve been trying to accommodate their act. Reluctantly, they have been forced to start the long road towards transparency. Which means that the project could theoretically evolve. Rather, the threat could be gone. And the whole thing could turn into a simple scare and nothing more.
Of course, the Tether case is not new. Here’s the irony. Tether is still with us. And Terra/Luna, Celsius and FTX, no. It was thought that the collapse would come from one side. But it turns out that the collapse came from another. Some think that Tether is the next black swan. Is this likely or unlikely? Are we saved? False alarm? Or the calm before disaster? These things are not easy to predict. In retrospect, it all seems self-evident. But it is not so evident before the fact.
The truth is that regulation is on the way, whether we like it or not. And most likely, regulators will start with stablecoins. The consensus seems to tell us that this is the case. This makes Tether the number one suspect. Tether’s competition has made efforts to avoid Tether’s mistakes. USDC, in particular, has gained a lot of space thanks to its reputation as a “regulated” stablecoin in contrast to the bad boy of unregulated Tether.
Tether as we know it has its days numbered. Sooner or later, this controversial cryptocurrency will have to change its ways. It will survive, if you adopt best practices. Otherwise, they will not leave a court. Of course no one wants a Tether crash like Terra/Luna. And nobody wants a bankruptcy declaration, brought about by a bank run, in the style of FTX . At this time, however, There is not much that can be said about these possibilities, because we do not have the necessary information to ensure anything. Given the lack of transparency, a “I don’t know” is solely responsible. What will happen to Tether? Will it be the next project to collapse? I’m afraid I don’t know.
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