Tether, a stablecoin issuer, froze $46 million of USDT held by FTX at the request of law enforcement.
- Tron block explorer confirmed that the frozen wallets worth $46 million belong to FTX.
- Amid its connection with FTX and Alameda Research, Tether clarified that it is unexposed to them.
Tether Loses Its Peg To The U.S. Dollar
In an interview with CoinDesk, a Tether spokesperson that assets are temporarily frozen ''while an investigation occurs.'' Tron block explorer confirmed that the frozen wallets belong to FTX, the crypto exchange going through a liquidity crisis at the moment.
The news follows Tether (USDT) losing its peg to the U.S. dollar. On Thursday, the world's largest stablecoin dipped as much as 4% to around 96 cents.
Additionally, Tether Global is rumored to have been connected to FTX and Alameda Research to which the company clarified on its website: "Tether has nothing to do with FTX or Alameda Research. Tether is completely unexposed to Alameda Research or FTX’’.
Stabelcoin Not So Stable
A stablecoin is a cryptocurrency whose value is pegged to another currency, commodity, or financial instrument, so it doesn't fluctuate in value. However, the recent turmoil at FTX has shaken the whole crypto world.
"During periods of market volatility, the trading price for USDT that is quoted on exchanges may fluctuate. This happens because there is more demand for liquidity than exists on that exchange's order books and has nothing to do with Tether's ability to hold its peg nor the value or makeup of its reserves," Tether posted on its website.
The Bottom Line
The turmoil at FTX and the instability of USDT are sudden and have shaken investors' confidence. If it continues to be the same, perhaps the repercussions will surpass those caused by the Terra crash.