Analysts from the Weiss rating agency urged investors not to use the stablecoin Tether (USDT). They posted a tweet on Twitter and noted that the acquisition of this tool carries enormous risks.
#Bitfinex's vaults are not publicly auditable and there have been many allegations that #USDT is not 100% backed, and that it is run like a fractional reserve bank. Because of this, we recommend you avoid exposure to #Tether.
— Weiss Crypto Ratings (@WeissCrypto) September 24, 2020
The team's statement noted that Tether is not fully backed by fiat money. The lack of sufficient reserves poses a threat to any trader using this tool.
The USDT developer periodically declares that it has sufficient funds to secure the coins and fully fulfill its obligations to investors. However, even if such reserves do exist, the company keeps them in accounts that are inaccessible for public audit, Weiss analysts emphasized.
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In this regard, another stablecoin USD Coin (USDC) is a safer instrument. Note that this coin currently ranks second in terms of capitalization after Tether.
Weiss also points to the DAI coin, which also has collateral. According to analysts, this tool can also be used in trading. At the moment, the capitalization of Tether is just over $ 15.2 billion.
USDT recently knocked out XRP token from the third place in the ranking of the largest digital currencies.