Tether ownership is worryingly concentrated, citing Coin Metrics data that showed just 318 addresses held 80 percent of all Tether in circulation.
Coin Metrics data shows Tether ownership highly concentrated
Tether, a stablecoin created to provide liquidity to cryptocurrency exchanges, hasn’t been a stranger to controversy. Since it was introduced in 2015, the company has been in the center of several media scandals, most of which focused on its inability to back its coins with fiat currency. Most recently, Tether’s parent company (iFinex) was accused by the New York Attorney General of hiding its losses and mixing client and corporate funds.
And now, recent Coin Metrics research found that the cryptocurrency was much more concentrated than originally thought—the data showed that only around 300 entities control around 80 percent of all Tether currently in circulation. Only 318 addresses hold $1 million or more USDT, Coin Metrics reported.
John Griffin, a finance professor at the University of Texas at Austin, told Bloomberg that this concentration of Tether suggests that control of Tether is in the hands of a few central players. All of them, he said, have the unique ability to swing Bitcoin prices and a vested interest in doing so.
“It also suggests that many exchange players have a vested interest in keeping the Tether game going,” he explained.
Most Tether held by exchanges, not whales
Tether’s high ownership concentration raises the level of risk in the crypto market, Bloomberg wrote, citing Sid Shekhar, the co-founder of market tracker Token Analyst. Shekhar said that the extremely centralized holdings bring about extreme volatility when large swathes of Tether are released in the market. Griffin echoed the statement, saying the dramatic surge Bitcoin’s price saw in 2017 was a direct result of market manipulation by Tether.