The world’s largest stablecoin triggered skepticism from the community for minting $1 billion USDT on Christmas Day.
Tether’s chief executive Paolo Ardoino calmed such concerns, indicating that the minting involved authorized and not issued USDT.
Whale Alert Flags Mysterious Christmas Day $1 Billion USDT Mint
The incident took the efforts of blockchain-based tracking platform Whale Alert to reveal to the community that Tether Treasury successfully minted 1 billion USDT, equivalent to $ 1 billion.
Ardoino quickly downplayed the concerns with a subsequent response conveyed publicly to Whale Alert’s post on X (formerly Twitter) that the December 25 transaction involved an inventory replenishment executed on the Ethereum blockchain.
The long-serving chief technical executive who replaced former chief Jean-Louis van der Velde this month calmed the concerns by stating that the $1 billion minted constituted an authorized though not issued. He implied that the amount constitutes an inventory for use in the subsequent period of issuance requests and settling chain swaps.
Tether Labels $1 Billion USDT Mint Inventory Replenishment
The Tether’s chief pointed to the inventory replenishment applied in traditional finance (TradFi) to imply placing orders for supplies to satisfy customer demand, thereby avoiding stock shortages and averting stockpiling surplus inventory.
Tether’s terms consider inventory replenishment as the creation of new USDT imminently stored within its treasury inventory. Tether classifies such units as authorized though not issued.
Ardoino’s response echoed the explanation offered in Tether’s frequently asked question (FAQ) that excludes such tokens from constituting the market capitalization of the USDT stablecoin. Such are neither issued nor released into circulation.
A review of data furnished by the Tether Transparency page on Tuesday, December 26, reveals that $925 million of USDT stablecoin was classified as authorized and not issued on the Ethereum blockchain.
The public service announcement offered by Ardoino regarding the mysterious $1 billion mint echoes the pronouncement provided in September this year. The previous announcement involved a similar 1 billion USDT, also flagged by Whale Alert.
Ardoino, then as Tether’s chief technical officer, indicated that the $1 billion mint involved an authorization transaction, ruling out actual issuance. He explained that the allocated $1 billion was meant to settle the upcoming issuance requests and emerging chain swaps within the Tron network.
Tether’s Chief Executive Pressed for Inadequate Transparency on Mysterious USDT Mint
The explanation by Ardoino in the recent public service announcements has not tamed dissatisfaction among the online industry observers. They express skepticism on Tether’s move, citing the inadequate transparency with the authorized yet non-issued classification on transactions.
One user urged the need to examine the agreement and document as it would become exciting for in-depth learning of individuals behind the Christmas miracle generating 1 billion USDT of thin air. The user inquired whether Ardoino is part of the team responsible for reaching such decisions.
A contingent of skeptics opined that the latest USDT mint is suspicious and its creation would likely serve to pump Bitcoin price. The argument echoes industry observers who have previously attributed Tether’s USDT minting with stimulating the Bitcoin price pump.
A disappointed user questioned Tether’s chief for failing to admit that the $1 billion mint was meant for pumping Bitcoin.
Factors Driving Tether USDT Growth
The revelation of the mysterious $1B USDT minted on December 25 coincides with a period when Tether has realized significant growth in 2023. In particular, the third-largest crypto by market capitalization saw it test all-time highs.
Tether’s market capitalization growth nearly tests 38%, from $66 billion in January to $91 billion at present, as per CoinGecko data. Bitcoin has rallied 158.8% to exchange hands at $43,101.69 in 2023.
Last month, Tether disclosed the factors fuelling the USDT’s growth. It associated the primary driver as the continued excitement of likely approval of the pending bids for spot Bitcoin exchange-traded fund (ETF) by the US securities regulator.
The Hong Kong-incorporated firm indicated growth from its active movement into Bitcoin-related activities in 2023. The firm disclosed its roadmap to start accumulating Bitcoin to manage reserves and later unveiled several Bitcoin mining operations in Uruguay, Paraguay, and El Salvador.
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