Tether Resolves To Burn $500 Million USDT Tokens As Part Of Redemption
The firm started removing USDT tokens from supply, channelling them to the Tether treasury.
USDT Tokens From Bitfinex Destroyed
Tether, the supplier of USDT has announced the destruction of 500M USDT tokens. The announcement was made on Wednesday through the firm’s Twitter account. The destroyed tokens were previously stored in the Tether treasury reserve.
Over the past few days, more tokens have been moved to the account. The influx began after Tether lost its peg to the dollar. Rumours have been circulating alleging that the token had lost its banking partner.
The influx began a week ago when USDT dropped under the $1 mark. As a result, 680 million tokens were moved to the storage which is run by Tether. Notably, a single account under the ownership of the Bitfinex exchange platform was used to move the tokens. Tether and Bitfinex have common owners.
As a result, the cold wallet owned by Bitfinex has dropped to approximately 100, 000 bitcoins since the beginning of last month. This led to speculation that Bitfinex was focusing on Bitcoin as a route of getting rid USDT. This move would then restore the $1.00 peg. Others speculated that USDT might call it a day in the stablecoin sector.
Following the movement, USDT in circulation has declined to about $2 billion. A majority of the token has been withdrawn from the market or destroyed by Tether.
According to Bitfinex spokesperson Kasper Rasmussen, the withdrawal of USDT should not be linked to restoration of the dollar peg. He affirmed that Tether was not removing USDT from the market intentionally. He further explained why tokens from Bitfinex were among the majority to be destroyed. He maintained that it is not a surprise considering that the exchange was a major partner with Tether.
According to Tether, about 466 million USDT in treasury storage were not destroyed. The firm pointed out that the reserves will be held as a preparatory means for future USDT supply.
Many view the transfer of USDT from Bitfinex as a means of redemption. The move is part of Tether’s white paper released in 2016. Tether has affirmed all USDT tokens have the backing of dollar deposits.