Tether Floods Into Kraken Exchange, Where Crypto Traders Can Get Dollars

Tether tokens are flooding into a wallet address controlled by the Kraken exchange, one of the few places where the troubled stablecoin can be converted into U.S. dollars.

The implication, some market watchers have argued, is that traders wish to exchange their USDT for dollars.

Kraken is one of the few exchanges that offer direct trades between USDT and dollars.

Kraken only offers one Tether pair, USDT/USD, so traders cannot exchange USDT for other cryptocurrencies on Kraken.

There are other indications that traders are heading to Kraken to offload USDT. On Oct. 15, the date that saw tether's exchange rate fall the farthest against the dollar, the greatest selling pressure was on Kraken, where USDT briefly touched $0.85.

Tether trading volume for that day was the highest it's ever been on the exchange.

According to the 2016 white paper for tether, token holders are able to redeem their USDT for U.S. dollars by returning them directly to Tether Ltd. In practice, a number of users have been unable to do so in recent months.

Jeff Perrin, the founder of Spiga, a fintech startup, told CoinDesk that he tried to redeem tether tokens for dollars through the company's site in January or February.

With users apparently unable to convert their USDT into dollars in the way envisioned by Tether's white paper, they seem to be trying to accomplish the same goal by moving tokens onto Kraken.

The official Kraken Support Twitter account addressed potential reasons for the increase in Kraken's Tether balance: "Traders will transfer USDT to Kraken, sell it for USD at whatever rate the market is willing to pay for it at the time, and then they can use the actual USD to buy other cryptocurrencies."