Independent Ratings Agency Alerts Investors About Dangers of Tether

Independent Ratings Agency Alerts Investors About Dangers of Tether

Another outside observer of the controversial tether cryptocurrency is warning about the dangers it presents for the uninterrupted operation of USDT exchanges. Weiss Ratings is seeking to educate investors on the systematic risk tether introduces to the ecosystem.

Also Read: Faced With Criticism IOTA Fans Try to Bully Growing List of Detractors

Inherent Risks of Blind Trust

Independent Ratings Agency Alerts Investors About Dangers of TetherWeiss Ratings, an independent U.S. agency which recently published letter grades for cryptocurrencies, has issued an alert to investors about the dangers of tether (USDT). It highlights common fears about the stablecoin which is claimed to be fully covered by U.S. dollar reserves.

“The big issue: There’s never been an audit, and the folks behind Tether has been quite shady when asked. They have continuously claimed their tokens are backed 100% by actual dollars, yet they have failed to present any evidence to support this claim. On social media, there appears to be consensus that what Tether is actually doing is running a fractional reserve system. In other words, most observers claim they DO NOT have the dollars to back up all those Tether coins. I tend to agree. It’s just too suspicious,” says Weiss analyst .

What Happens When the Feds Stop USDT Printing?

Independent Ratings Agency Alerts Investors About Dangers of TetherWeiss explains how the importance of USDT to the entire ecosystem is that many non-fiat exchanges (like Binance or Okex) use it as a proxy for real dollars in trading. Because of this, it is the third most traded cryptocurrency and the only one with trading volumes that regularly exceed its market cap. These exchanges are thus dependent on tether for liquidity and put investors at risk if any government decides to pull the plug out of its printers. Some consider this to be a likely scenario under U.S. law.

“The consequences of hanky-panky could be far-reaching. What happens if Tether does turn out to be fraudulent? Or what happens if a major government determines that cryptocurrencies like Tether are being used by exchanges to avoid regulations? What if this large source of liquidity suddenly evaporates?” asks. “Conceivably, it could cause exchange failures. It could drive investors to liquidate their positions, causing sharp declines in market prices.”

Should cryptocurrency investors worry about the continued liquidity of USDT exchanges? Tell us what you think in the comments section below.


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Do you like to research and read about Bitcoin technology? Check out Bitcoin.com’s Wiki page for an in-depth look at Bitcoin’s innovative technology and interesting history.

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This Week in Bitcoin: Who Do You Believe?

This Week in Bitcoin: Who Do You Believe?

The bitcoin space is a constant battle of truth versus untruth, rumor versus fact and optimism versus pessimism. With market manipulators up to their usual tricks and salty altcoiners crying FUD, it can be hard to tell what’s real and what’s fake. This week truly had it all: keks, lies, and videotape beamed live from the U.S. Senate. Throw in the obligatory multi-million dollar hack, and you’ve got all the makings of another seismic week in bitcoin.

Also read: Japan Cracks Down on Foreign ICO Agency Operating Without License

The Rumor Mill Goes Into Overdrive

The week started with rumors that China was banning bitcoin – yes, again. Not only that but they would be cracking down on mining too and laying the banhammer in Hong Kong into the bargain. It turns out the story was actual fake news, but that didn’t stop a couple of lesser publications from running with it. It was an elaborate hoax that showed much more sophistication than the average Nigerian phishing email, and was clearly an attempt at shorting the markets for monetary gain. As we reported:

The objective of the bogus email’s senders was to spread rumours and panic, in the hope of manipulating the price of bitcoin, after taking short positions on bitcoin futures and betting that the price of bitcoin will fall, said Leonhard Weese, president of the Hong Kong bitcoin association.

Discrediting fake news is one thing, but what about news that’s yet to occur? Who do you believe when it comes to predicting bitcoin’s future movements? Two very different sources gave their views on where bitcoin’s headed this year, one pessimistic, the other largely optimistic. While a central banker was trotting out the usual apocalyptic proclamations about bitcoin being a Ponzi and a disaster, a group of luminaries were predicting more positive price movements for the year ahead.

This Week in Bitcoin: Who Do You Believe?

Bitcoin Gets The Hero It Deserves

Tuesday saw  the Senate hearing on cryptocurrencies, which was interpreted as mostly positive for bitcoin, despite SEC chairman Jay Clayton opining that every ICO to date has issued tokens that constitute a security, not a utility. The hearing was also noteworthy for the first recorded usage of the word “HODL” in the U.S. Senate, a feat which made an instant hero of CFTC chairman Chris Giancarlo, whose Twitter follower count “did a bitcoin” and grew exponentially in the aftermath of the hearing.

Other major stories that got heads talking this week include Forbes’ Crypto Rich List which is either harmless fun or a gross invasion of privacy depending on your perspective. Weiss Ratings defended its decision to give bitcoin a C+, and there was good news from Korea, where the PM confirmed that crypto exchanges are in no danger of being shut down provided they play by the rules. As always, you’ll catch the best of this week’s stories in the This Week in Bitcoin podcast, embedded below.

Bitcoin Springs a Bear Trap

It looked like bitcoin was back on track after a glorious green candle sent it scurrying above $9k, but the joy was to be short lived. Possibly feeling the effects of the global slump induced by the sliding stock market, bitcoin was dragged back into the low $8k territory, where it’s been floundering every since. Eric Wall sees a clear correlation between the crypto markets and the U.S. stock market. Watching the bitcoin price ticker rise and fall can be heart-stopping stuff; you can’t blame Steve Wozniak for tapping out and selling the bulk of his BTC.

This Week in Bitcoin: Who Do You Believe?

Finally, Ripple came in for scrutiny after Bitmex Research revealed just how centralized the XRP is, and the IOTA mafia were out in force after Andreas Brekken dared to deliver a few home truths in his latest shitcoin review. Still, better to be an irate IOTA holder than a Nano holder with your XRB in Bitgrail. $170 million of cryptocurrency lost due to a withdrawal bug that was mercilessly exploited for months. Next week can we please have no hacks, no phishing attacks, no bulls, and no baseless cries of “FUD”?

What was your favorite story from this week in bitcoin? Let us know in the comments section below.


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Weiss Ratings Defends its Decision to Give Bitcoin Only a C+ Grade

Weiss Ratings Defends its Decision to Give Bitcoin Only a C+ Grade

Wall Street is known for being a cut throat place where shrewd business people play as tough as possible in order to make gains or their destroy opponents. However, the crypto ecosystem can be at times far more nasty than any other market. One company that had the audacity to rate everyone’s favorite cryptocurrency somewhat poorly learned this recently, but it still stands by the rankings. 

Also Read: NFL Superstars Like to Talk About Bitcoin Just Like the Rest of Us

Crypto+

Weiss Ratings Defends its Decision to Give Bitcoin Only a C+ GradeWeiss Ratings, an independent U.S. rating agency which recently issued letter grades for cryptocurrencies has published a new report to explain its decision to score bitcoin a mere C+ (“fair”).

The company obviously felt it needed to counter attack against critics after its rankings caused it to get hurled insults from many cryptocurrency people and opinion leaders on social media. It even suffered a cyber attack which took down the Weiss site temporarily. The 14-page report is meant to answer the outcry by revealing key factors and data behind the rating.

Where is my A?

Weiss Ratings Defends its Decision to Give Bitcoin Only a C+ Grade“For investors,” explains Weiss Ratings founder Martin D. Weiss, PhD, “an A rated crypto would be one that rarely crashes, and right now, there’s no such thing. But we do understand where developers are coming from. They tell us they don’t care about market fluctuations. They feel our ratings should reflect strictly the quality of their work and its relative success in the real world.”

Aiming to address both investors and developers, the Weiss model combines a number of sub-models: Risk and Reward, adapted from its stock and ETF ratings, plus Fundamentals and Technology, which are unique to cryptocurrencies. Here’s how they determined bitcoin performs on each:

Risk and Reward-“Bitcoin investors have recently made less than altcoin investors, while continuing to experience the risk of extreme volatility.”

Fundamentals-“Due credit is given for adoption and security, but Bitcoin loses points on network congestion with just four transactions per second and high fees of about $10 per transaction. In addition, the top five miners control some 70% of total hashpower, also a negative.”

Technology-“Bitcoin lacks the governance needed for prompt upgrades and is falling behind in a rapidly evolving industry.”

Another criticism that was leveled at the agency is that Weiss overweights price volatility. “Not so,” he says. “Our model accurately reflects an inconvenient truth about the market’s extreme swings. But our ratings are continually updated. If prices stabilize or speed enhancements are rolled out successfully, an upgrade is possible.”

Should cryptocurrency investors even worry about what rankings? Tell us what you think in the comments section below.


Images courtesy of Shutterstock.


Do you like to research and read about Bitcoin technology? Check out Bitcoin.com’s Wiki page for an in-depth look at Bitcoin’s innovative technology and interesting history.

The post Weiss Ratings Defends its Decision to Give Bitcoin Only a C+ Grade appeared first on Bitcoin News.