Renowned veteran trader Peter Brandt has compared holding Tether (USDT) to the risk of holding ‘the Nigerian Trinket’.
In a tweet earlier today, Brandt took aim at the controversial stablecoin, calling people “fools” for holding Tether “even overnight”. “It is a joke when people condemn USD as fiat, yet hold Tether,” he said.
To be fair to Nigeria, their currency is actually called the ‘naira’ — not the trinket — and inflation there is around 18%, which isn’t good, but also isn’t terrible compared to countries with hyper-infation like Venezuela.
Brandt’s point appears to be that Tether is neither reputable nor well regulated, which makes it a risky asset in which to park funds:
“Tether holders -- sleep well. Your wealth will sit overnight with a patch-work of exchanges not subject to regulatory authorities and for whose financial strength you know little about. LOL with that one.”
He also warned investors against the idea that holding funds in Tether will prevent them from being investigated by the Internal Revenue Service or having to pay tax on their holdings:
“Point of clarification for U.S. citizens. Selling BTC or other cryptos for tether does NOT let you escape the IRS. The trigger to the IRS is the amt of cryptos sold/traded. Once you hit that level (AND THAT LEVEL WILL BE DOWN TO $1k within years) you will be reported by exchange.”
History of controversy
Brandt is far from Tether’s only critic. In 2018, research suggested that Tether issuance was a form of market manipulation that had caused the price pump to the all time high. The research was cited in multiple lawsuits against the firm. However, more recent research contradicted the idea.
Still, many people do believe there’s a correlation between the issuance of Tether and BTC price rallies. According to reports based on Whalebot Alerts, Tether issued more than $1 billion new Tether coins immediately before a rally that saw Bitcoin recover the majority of losses seen in March. And in the past day, Whalebot Alerts, also reported that an unknown wallet had transferred 50 million USDT to Binance just minutes before Bitcoin jumped $400 to almost $8,800.
Tweet:
🚨 🚨 🚨 🚨 🚨 50,015,000 #USDT (50,036,755 USD) transferred from unknown wallet to #Binance
— Whale Alert (@whale_alert) April 29, 2020
Tx: https://t.co/rBHriAswyn
For years Tether claimed it held 100% reserve in USD, however it emerged during a court case that Tether reserves can sit as low as 74%. Tether has not been subject to a public audit and their relationship with their previous auditor was dissolved in 2018.
Brandt backlash
Brandt is not backward in coming forwards. Yesterday he called Bitcoin traders ‘amateurs’ in relation to their supposedly short-sighted views on the coin’s price action:
Tweet:
Come on you amateurs, you can do better than this. You are missing the forest from the trees. This is a 28-month coil with the price action most recently being the famous "six-blind-mice signal." Get with it. pic.twitter.com/YjKpFBwpG7
— Peter Brandt (@PeterLBrandt) April 28, 2020
That said, two days earlier Brandt claimed he wasn’t going to Tweet about Bitcoin anymore. “I no longer Tweet on BTC. Too many disrespectful trolls,” he said.
It appears he finds the subject too interesting to stay away.