Bitfinex CTO Addresses USDT Manipulation Concerns
Paolo Ardoino, the chief technology officer of Tether and Bitfinex, recently expressed his apprehension about possible manipulation of the USDT stablecoin. In a tweet on August 3, Ardoino pointed out that USDT was experiencing downward pressure of around 10 basis points, equivalent to a 0.1% decrease or a price of approximately $0.99. Interestingly, while one would expect USDC, a major competitor to USDT, to benefit from this situation, it instead faced heavy redemption, while a relatively new competitor seemed to gain significantly.
"It feels definitely organic and not manipulative at all," Ardoino says (sarcastically)https://t.co/PiaoWAaHQg
— crypto.news (@itscrypto_news) August 4, 2023
Manipulation Concerns
Ardoino’s tweet appeared to sarcastically imply that the situation felt “definitely organic and not manipulative at all.” Stablecoin data analysis indicates that the new stablecoin in question is likely First Digital USD (FDUSD). CoinMarketCap data revealed that FDUSD’s market cap surged from $20.25 million on August 2 to its current value of $256.55 million.
Notably, FDUSD quickly rose to become the sixth largest stablecoin by trading volume. The trading volume for FDUSD skyrocketed from approximately $620,000 at the beginning of August 2 to nearly $245 million later in the day.
Financial analyst Adam Cochran further added context through a Twitter thread, stating that numerous on-chain addresses were swapping USDT for DAI, a stablecoin pegged to the US dollar. Interestingly, these addresses were funded by an address holding thousands of Ethereum (ETH) tokens, which originated from the exchange Binance.
2/11
Until now, *all* of these addresses were just amounts of USDT coming in and out pic.twitter.com/CRPtuE0YNY
— Adam Cochran (adamscochran.eth) (@adamscochran) August 3, 2023
USDT-Dai Swaps
Cochran noted that all the involved addresses exclusively had USDT transactions, hinting at the possibility of artificially influencing USDT’s market forces. The swapping of USDT for DAI began around 100 days ago, and Cochran suggested that the exchange itself might be behind these activities, considering its frequent exposure to spoof phishing attacks targeting exchanges.
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As concerns over potential manipulation arise, industry experts stress the importance of regulatory scrutiny and transparency in the stablecoin market. Any attempts to artificially influence stablecoin prices could have significant consequences for market participants and the overall stability of the cryptocurrency space. Traders and investors are closely monitoring the situation for further developments and regulatory responses to ensure the integrity of stablecoin trading.
