Tether Accidently Mints and Transfers 5 Billions of USDTs

Tether accidently issued a transfer of 5 billions of its own stablecoins on July 13.

Whale Alert a twitter account that announces major crypto transactions recently notified a transfer of 5 billions of USDT between 2 companies, going from Omni to Tron.

The CTO Of Bitfinex and Tether explained that the mistake was due to a problem with the token’s decimals. Paolo Ardoino, the CTO of Tether said that the amount they wished to transfer was originally equal to 50 million USDT.

Tether Coin Burning.jpg

On July 14, the Tether removed 4.5 billion worth tokens from circulation, in a process called Coin burning. In a first intent to burn all 5000 million, Tether Treasury made another mistake of burning 500 million USDT, missing a zero this time, after which they burned the remaining 4.5 billion.

Questions arose from how could a mistake like such infiltrate the system, although quietened a little by CTO’s explanations. But questions like how was Tether able to mint 500 million USDT in the first place, especially that there were some uncertainties whether Tether can back all of its circulating cryptos with fiat money.

Some people suspected Tether to have done it on purpose to damage Bitcoin’s rates, who effectively dropped a few days back, but it remains uncertain whether both incidents are correlated or not.

After the incident, USDT lost its peg to the US dollar, before quickly recovering. However, irreversible repercussions could be faced. The New York State Attorney General(NYSAG) filed a lawsuit against iFinex, the parent company of Bitfinex and Tether, for an injunction in April 2019. One of the accusations was around the fact that iFinex unlicensedly serves New York districts without a Bitlicense, a license that allows crypto companies to transact in New York.

As a result, the New York-based Metropolitan Commercial Bank closed Tether and Bitfinex bank accounts.

Companies under iFinex have until July 22th to answer the accusations pointed towards them.

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