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- 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.
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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.
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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.
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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.