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Bitfinex/Tether (USDT) Scandal Knocks $10 Billion Off Market Cap

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The still-recovering crypto market endured a massive loss on Thursday, April 25th, after allegations were made against a popular crypto exchange, Bitfinex. According to the New York Attorney General’s office announcement, the exchange covered up a massive $850 million-large loss by using the crypto market’s largest stablecoin, Tether (USDT). The Attorney General’s office also claims that the amount was taken from customer and corporate funds.

The announcement was followed by a $10 billion drop in the market cap of the entire crypto industry, and it even managed to affect Tether’s peg to the US dollar. However, the newest scandal quickly spread, as mentioned, and even the largest cryptocurrencies are currently experiencing massive losses, as the coin owners entered a massive sellout.

At the time of writing, the largest losses among the top 10 largest coins are being experienced by Ethereum, XRP, and Cardano, with their prices dropping by nearly 5%. Meanwhile, while the total market cap of the crypto industry did drop by $10 billion, and it reached $167 billion at one point, it is currently seeing recovery which allowed it to climb back to $171 billion at the time of writing.

The announcement impacts Tether

As a stablecoin, Tether’s price is supposed to be permanently bound to the price of USD, meaning that 1 USDT = $1. However, at 21:00 UTC on Thursday, USDT price started dropping from the set price of $1 to around $0.955, according to several exchanges and TradingView. The price then climbed back up to $0.97, and at the time of writing, it sits at $0.994120.

The other stablecoins immediately started seeing a lot more usage as numerous investors from around the world shifted from Tether towards them, including GUSD, USDC, and TrueUSD. In addition, Maker (MKR), which is the cryptocurrency behind the MakerDAO project, is also seeing a massive loss of over 14.65%, with its value dropping by over $73 in the past 24 hours.

As for Tether, this is far from being the first scandal in which the stablecoin was involved, and it might impact its future performance and usage. The coin has been rejected by a lot of investors ever since it was suspected that the company behind it might not have the funds to back every single USDT coin in circulation. Now, it is possible that even more investors will avoid using it, which is good news for its competitors, but it might also be devastating for Tether itself.

The crypto space suffers a massive drop in prices

While the announcement by the Attorney General’s office only concerns Tether and Bitfinex, a lot of other major cryptocurrencies had started trading in the red, and seeing massive price drops. Bitcoin, for example, dropped down to $4,953 after the announcement, although it is currently well on its way to recovery, with the price at the time of writing once again being above $5,300.

However, around 4,000 BTC was reportedly moved from Bitfinex following the announcement, which translates to around $20 million. Similar moves were seen before whenever an exchange was considered unsafe or troubled, which is not a particularly surprising reaction.

As mentioned, many other stablecoins started seeing a lot more usage following the announcement, as investors started selling Tether and going for its alternatives, such as GUSD or USDC. Most other coins among the top 10 largest cryptos also saw massive drops, but fortunately, the prices are currently starting to return to normal, indicating that the scandal might not leave particularly large consequences on the entire market.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.

Photo by Quintin Gellar from Pexels

Altcoins

Cryptocurrency Collateralized Debt Positions Are Growing in Popularity

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While Bitcoin (BTC) continues to hover around the magical 10,000 price level, altcoins continue to fight an uphill battle.  Simply put, hopes of a future bull run continue to diminish as Bitcoin maintains its dominance.  One school of thought is that a few altcoins will survive and flourish, but which ones are anyone’s guess.  That being said, it’s hard to go wrong picking against the top coins like Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and EOS.  These projects have managed to find a foothold in the market and have a better chance than most of staying there.  While traders wait for their positions to increase in value, one opportunity that may be worth looking at is initiating a collateralized debt position.

What is a Cryptocurrency CDP?

In traditional terms, a CDP is essentially putting up collateral in order to receive a loan against the deposited amount.  There are several examples of this in our day to day lives.  Auto title loans from large companies like TitleMax are extremely popular with consumers.  Consumers are essentially able to use their car as collateral in exchange for a cash payment which can then be used for whatever needs the consumer has.  The consumer can continue using their car as long as debt payments are made.

The same concept applies to cryptocurrency CDPs.  Consumers are able to put up crypto tokens, such as…

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Altcoins

Hodium Presents a Compelling Opportunity for Outsized Investment Returns

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Hodium
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I’m sure all of us remember the cryptocurrency glory days of 2017 and early 2018.  It was one of the biggest bull runs in history and created incredibly wealth for quite a few early entrants.  Unfortunately, for most of us, those gains have most likely been wiped out during the altcoin apocalypse.  The truth is that traders probably thought a bit too highly of their trading abilities when the reality was that anyone could have thrown a dart at a board and ended up making money.

As markets mature (and the crypto market is definitely maturing) it becomes more and more difficult to generate alpha.  In that regard, it’s similar to traditional financial markets.  I can remember trading during my high school days.  It was the late 90s and right in the middle of the dot.com boom.  Eventually, however, the euphoria fades away and reality hits hard.  Now, it’s become rather difficult to actually trade profitably which has given way to the rise of hedge funds.

Hedge funds are investment funds that pool capital from accredited and/or institutional investors and invest in a variety of assets, often with extremely complex portfolio-construction and risk management techniques.  The professionals employed by hedge funds are the best of the best and have spent years honing their craft.  That is why they’re able to make the millions of dollars that they normally…

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Altcoins

KaratGold Proves Its Business Model By Providing Official Documents

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There has been a lot of renewed enthusiasm in the cryptocurrency market thanks mainly to Bitcoin’s strong move about 10,000.  Although Bitcoin continues to show its dominance, the altcoin market has yet to benefit from that rally.  A few of the largest altcoins remain popular but the rest of the market continues to lag behind.  In 2018, there was a lot of talk regarding a possible altcoin apocalypse where only the strong would survive.  That prediction appears to be playing out as expected.  Going forward, only the best projects that have a real world need will survive.  Crypto traders will have to spend a lot of their time doing proper research in order to find the best opportunities, just like in all financial markets.  One promising project that appears to have the makings of a future winner is KaratGold Coin.

KaratGold Background

KaratGold Coin is a cryptocurrency developed by the reputable German company Karatbars International, which maintains a leading position in the market of small gold items and investments. The project is part of a larger ecosystem, which involves several blockchain solutions that can be used for transactions, communication, investing and other tasks. During the past few weeks, however, the KaratGold ecosystem has been a target of unsavory scam allegations.  

Karatbars International and GSB Gold Standard Banking Corporation…

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