Could USDT depeg following recent accusations from Consumers' Research?

A digital billboard accusing Tether of corruption was featured in Times Square.
Historically, stablecoins often depeg following controversies surrounding respective parent companies.
Tether recently launched a new synthetic dollar backed by gold.

Consumers' Research launched a campaign against USDT stablecoin issuer Tether on Tuesday, accusing the company of being a threat to consumers and raising questions about it being the next FTX.

Tether faces serious accusations following allegations of corruption

USDT issuer Tether has been the subject of a series of accusations from Consumers' Research over ties to the fallen FTX and its relation to criminal activities.

Also read: Tether moves against Venezuelan government's plans to leverage USDT for oil transactions

In a recent display, the issuer was featured on Times Square with the tag "Tether to corruption," following a press release from Consumer Research confirming it was behind the ad.

Consumers' Research’s CEO, Wild Hild, cited several reports claiming that the company had some unlawful affiliations with Sam Bankman-fried FTX before its demise.

Other reports from blockchain analytics firm TRM Labs stated that Tether was the most used stablecoin for criminal activity, linked to $19.3 billion of illegal transactions in 2023. "Approximately 1.63% of Tether (USDT) volume was linked by TRM to illicit activity, compared to 0.05% of USDC," the report stated.

Meanwhile, Consumers' Research launched several other campaigns claiming to expose the largest stablecoin issuer for its affiliations with these bad actors.

"We are shining a light on Tether for their suspicious business practices, including a decade-long refusal to perform an audit and the routine use of the product by terrorists and traffickers of drugs and humans," said executive director Will Hild.

If found guilty, Tether's USDT could experience a depeg from the US dollar due to the FUD such an event would cause. Stablecoins often lose their peg when faced with controversies.

Also read: DOGE sees high liquidations as meme coin sector bleeds heavily

A popular example is the LUNA/UST algorithmic stablecoin depeg, which sent the crypto market into a sustained bearish season.

Circle's USDC also suffered a depeg in March 2023 due to its exposure to the failing Silicon Valley Bank (SVB). Several crypto community members expressed concerns after discovering Circle had significant USDC reserves worth $3.3 billion locked up at SVB.

Despite the accusations, Tether has introduced a new stablecoin Alloy (aUSDT), backed by gold, as the company plans to expand its operations.

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.