Real Time Cryptocurrency News & Analysis

Tether burns 500 million USDT tokens as part of redemption process

Tether, the company behind the eponymous dollar-pegged stablecoin, announced yesterday on Twitter that it had destroyed 500 million Tether (USDT) tokens from a wallet known as the ‘Tether Treasury’.

In a brief announcement preceding the tweet, Tether said over the past week it had redeemed “a significant amount of USDT from the circulating supply of tokens”.

“In line with this, Tether will destroy 500m USDT from the Tether treasury wallet and will leave the remaining USDT (approx 466m) in the wallet as a preparatory measures for future USDT issuances,” the company also said.

Industry website Coindesk said in its report on the story that the recent influx of some 680 million USDT to the Treasury wallet came from an address controlled by cryptocurrency exchange Bitfinex, which shares ownership and management with Tether. The website also noted that Bitfinex's cold wallet's balance had fallen by some 100,000 Bitcoin since early September, prompting speculation that the firm had been spending BTC in order to take USDT of the market – possibly to push the exchange rate back towards the $1.00 mark, or perhaps even to exit the stablecoin business entirely.

Earlier this month, Tether experienced an unexpected crash, with its price falling to as low as $0.925, according to data from digital currency tracker Coinmarketcap.

Bitfinex's director of communications, Kasper Rasmussen, told Coindesk that the move “does not have anything to do with defending dollar parity”, because both the exchange and Tether guarantee 1-for-1 redemptions. He also denied that Tether is intentionally scaling back supply.

Rasmussen went on to explain that USDT tokens were redeemed "when the amount circulating exceeds the amount required for e.g. Bitfinex or Tether to operate", adding that the reason most of the destroyed tokens came from Bitfinex's wallet was that the exchange was one of Tether’s main customers.

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