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.
Aluna.Social is a Compelling Social Platform for Crypto Traders and Investors
When one thinks about the social media landscape, the companies that first come to mind are most likely Facebook, Instagram, LinkedIn, and Snapchat. These platforms are a great way to stay connected with friends, families, and colleagues, especially when geographic distance is a factor. But, in addition to just chatting about life in general and sharing pictures, social media can be used to bridge the information gap that exists within the investment community.
Over the last decade, many trading offices have been established in large cities all over the world which allow solo traders and investors to pay a monthly fee in exchange for a workspace. The real benefit to trading in these offices is to participate in the free flow of trading ideas and information. Proprietary trading is one of the most challenging careers to be successful at and the exchange of ideas is almost required in order to succeed. Traders at hedge funds and investment banks work in teams so why shouldn’t remote traders?
While these trading offices are a great way to help bridge the information gap, Aluna.Social may provide an even better way, especially as it relates to cryptocurrency trading.
Aluna.Social, founded by Alvin Lee and Henrique Matias, is a multi-exchange social trading terminal for crypto traders and investors. The goal of the platform is to help newcomers shorten their learning curve,…
CoinFlip Scores Big with BRD Wallet Partnership
As the crypto markets move closer to mass adoption, one of the keys for future success will revolve around attracting as many market participants as possible. While many crypto users are extremely tech oriented, a lot of those on the sidelines are not. The cause of waiting on the sidelines could be due to a variety of reasons such as fear of the unknown, lack of knowledge, age, or a combination of all of the above. In order to entice new users to join the crypto revolution, crypto ATMs are rising up across the country. Of those, the largest and most influential crypto ATM company by a significant margin is CoinFlip.
In early October, CoinFlip announced on its Twitter that it had officially partnered with BRD Wallet to re-introduce their crypto ATM map. Now, BRD wallet users will be able to locate their nearest CoinFlip ATM and receive a 10% discount for both buys and sells. BRD brand awareness is growing quickly within the crypto community thanks to its innovative and entrepreneurial spirit. The team strongly believes in the value of financial freedom and independence, and want to empower people across the world by leveraging the possibilities that Bitcoin and other cryptocurrencies provide.
Cryptocurrencies are already making a huge difference around the world. Citizens of Venezuela, a country devastated by rampant inflation, have been using several cryptocurrencies…
Cryptocurrency Collateralized Debt Positions Are Growing in Popularity
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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