Tether Redeems and 'Burns' More than Half of USDT in Circulation

Tether, issuer of stablecoin USDT, says it has "Redeemed a significant amount" of tokens from the circulating supply and will now "Destroy" 500 million USDT from the Tether treasury wallet, in an official post published Oct. 24.

According to the firm, this will leave 446 million USDT remaining in its treasury in preparation for future USDT issuances - meaning that those tokens redeemed and "Burned" account for 52.8 percent of the total former supply.

"Every tether issued or redeemed, as publicly recorded by the Bitcoin blockchain will correspond to a deposit or withdrawal of funds from the bank account."

As the white paper notes, for the crypto side of its accounting processes, the public and transparent nature of the public Bitcoin blockchain - onto which tethers are issued via Omni Layer's protocol - ensures that the token transaction can be verified and tracked.

Omni Explorer further indicates that Tether's token reserves are now 466,678,763.

Tether has a notably contentious history in regard to its transparency conduct, as crypto investor and entrepreneur Michael Novogratz recently underlined.

Casting doubt on the firm's claims that USDT is backed one-to-one by the U.S. dollar, some have gone so far as to accuse the firm of covering up an alleged fiat reserve deficit in complicity with Bitfinex.

After the firm is alleged to have dissolved its relationship with a third-party auditor this January, its "Proof of Funds" released in June claimed that Tether did have sufficient dollar reserves for circulating tokens, held in an undisclosed bank.

Today's large-scale token redemption and destruction has provoked heated speculation on crypto Twitter, notably as tether had just recently - if briefly - lost its U.S. dollar peg to trade as low as $0.91, leading some to accuse the firm of manipulating the market by redeeming at low cost and liquidating after the market rebound.

Others have suggested that the company is unable to back the tokens with adequate reserves, alluding both to Tether's troubled transparency history, the protracted crypto bear market, and the fact that associated crypto Bitfinex has recently been plagued by rumored insolvency and alleged banking difficulties, which it has since been prompted to officially deny.