Yesterday, a 69 million USDT transaction from Tether Treasury to Bitfinex was discovered on-chain.
🚨 🚨 🚨 69,000,000 #USDT (69,007,072 USD) transferred from Tether Treasury to #Bitfinexhttps://t.co/cNGaax5Jf9
— Whale Alert (@whale_alert) September 12, 2023
This was a transaction on the Tron network, which occurred between one of the public addresses belonging to Tether and one of those belonging to the crypto
Both companies belong to the iFinex group, and Bitfinex is in fact USDT’s primary marketplace, i.e., the exchange used to place tokens on the crypto markets.
- The transaction involving Tether (USDT)
- The second transaction
- The conspiracy theories
- Doubts about Tether, iFinex, and USDT
The transaction involving Tether (USDT)
There is nothing abnormal about the transaction in question, and the amount is not even particularly significant.
In fact, USDT has a market capitalization of about $83 billion, so $69 million is not a lot.
Add to that the fact that just yesterday USDT’s market capitalization went from just under $83 to $83.06 billion, just as if about 60 or 70 million USDT had been added.
Since Bitfinex is the iFinex Group’s crypto exchange that is used by Tether to place their stablecoin tokens on the markets, the transaction in question may well have been just one of those by which Tether places USDT on the markets.
The second transaction
The problem is that shortly after the first transaction there was another one.
🚨 🚨 🚨 69,000,000 #USDT (69,044,275 USD) transferred from #Bitfinex to Tether Treasuryhttps://t.co/GyxKF42QKg
— Whale Alert (@whale_alert) September 12, 2023
This second transaction has the same amount as the previous one, but opposite direction.
That is, it is a transfer of 69 million USDT from Bitfinex to Tether Treasury.
The two transactions occurred about 20 minutes apart.
However, this second transaction took place on the Ethereum network, so it was a substitution on Bitfinex of ERC-20 tokens on Ethereum into TRC-20 tokens on Tron.
It is worth noting that Tether also created USDT tokens on the Tron network because the Ethereum network is slower and, more importantly, has much higher fees.
For example, the first transaction, the one on the Tron network from Tether to Bitfinex, cost practically zero fee, while the second one, the one on the Ethereum network from Bitfinex to Tether, cost 0.0046121
By now, USDT’s TRC-20 tokens are increasingly being used instead of ERC-20 tokens, precisely because of lower transaction costs.
Therefore, Tether provides for the replacement of ERC-20 tokens that are no longer in use with new TRC-20 tokens, using Bitfinex as a means of withdrawing old tokens from the market and placing new ones.
The conspiracy theories
Although delving even minimally into this transaction gives a pretty good understanding of what happened, the above two transactions have triggered the most disparate and fanciful conspiracy theories online.
According to some, this was a liquidity test to see how easily it would be possible to carry out large transactions without causing market impacts.
This thesis is surely wrong, since there was no sale.
According to others it was arbitrage, that is, an initiative to generate a profit.
This thesis is also false, since it was a mere substitution of tokens between two different blockchains.
There are also those who went further and hypothesized that Bitfinex momentarily needed additional liquidity for precisely liquidity issues, such as resolving large transactions.
However, the fact that less than twenty minutes passed between the first and second transactions makes this hypothesis rather weak.
Finally, there are even those who came up with the idea that this would be a marketing operation to get the word out.
Doubts about Tether, iFinex, and USDT
Tether was born in 2014, and doubts about it have been circulating since at least 2017.
There are basically two major doubts.
The first concerns USDT’s underlying, that is, whether it actually covers the entire market value of all USDTs in circulation or not.
Tether has been publishing an independent audit for months now that certifies that the company has reserves of greater value than the market value of USDT. However, there are those who do not believe those audits because they do not consider the company performing them authoritative.
The second concerns the iFinex group, and especially the management.
There are those who argue that the management team of iFinex, and thus also of Tether and Bitfinex, is not composed of reliable people.
However, even with regard to this objection, no definite information has emerged regarding any dubious behavior on the part of members of the iFinex management team, and so for now these theses should be considered not particularly dissimilar to the conspiracy theories about yesterday’s two transactions.
By now, the FUD about Tether has reached such amplitude that it is very difficult for most to distinguish reality from invention, even when, as in this case, it is enough to go and check on-chain, since decentralized blockchains are public and open to all.