A massive amount of Tether (USDT), the most popular stablecoin in the crypto market, has been minted at Tether treasury.
According to a tweet by @whale_alert, a service that tracks large cryptocurrency transactions, one billion USDT were minted on the Ethereum network, which could indicate a surge in demand for the token.
However, Paolo Ardoino, the CTO of Bitfinex and Tether, quickly clarified that the minting was not an issuance but an inventory replenishment.
Ardoino explained that this amount would be used as inventory for the next period of issuance requests and chain swaps, meaning that it would be transferred to other blockchains or exchanges as needed.
He also said this was an authorized but not issued transaction, implying that reserves backed it.
Tether claims to maintain a 1:1 peg with the U.S. dollar by holding equivalent reserves in bank accounts.
However, the project has been on the wrong end of several controversies recently, with critics questioning its transparency and solvency, especially after a legal settlement with the New York Attorney General (NYAG) that revealed that Tether was not fully backed at some point.
Additionally, Tether has come under fire after a Wall Street Journal investigation stated that its partners used fake paperwork to gain access to bank accounts.
According to the investigation, Tether used shell firms to get access to the banking system in 2018.
Tether moves to dominate stablecoin market
This latest USDT minting coincides with rising competition in the crypto sector, where Tether aims to woo investors away from other stablecoins.
However, some remain concerned that the minting of USDT could impact the crypto market, as traders and investors widely use it as a medium of exchange and a store of value.
Analysts believe an increase in USDT supply could signal a bullish trend for bitcoin (BTC) and other cryptocurrencies, as it indicates more liquidity and demand in the market.
Others, however, warn that USDT could pose a systemic risk for the crypto industry if it faces any regulatory or legal challenges in the future.
The total supply of USDT as of April 21 was 85,091,735,572, distributed across various blockchains and platforms.