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Cryptocurrency is a hot topic at the moment. When you start to join the crypto market, one of the first coins you meet probably is Tether token (USDT). Is USDT Safe Or a Scam? Let’s find out the answer.

Tether (USDT) Overview​

USDT stands for Tether tokens, which are pegged to the value of a U.S. dollar and are claimed to be backed 100% by Tether’s reserves.

USDT exists on several blockchain networks, including Omni bitcoin platform (OMNI), Ethereum (ERC20), EOS, and Tron (TRC20). Different blockchain platforms offer different transaction speeds and require different transaction fees.​
  • Tether (USDT) is a stablecoin, a type of cryptocurrency pursuing a steady valuation.​
  • Tether is used by investors who want to avoid the volatility typical of cryptocurrencies while holding funds within the crypto system.​
  • Tether's parent paid nearly $60 million in fines in 2021 to settle two regulatory probes alleging it mishandled and misrepresented its reserves.​
USDT is backed by cash reserves that are equivalent to $2.5 billion. Every time customers buy USDT (Tether) or sell it, the reserves are automatically transferred. This means that traders can always redeem the tokens at any time.

However, the company has faced criticism over its source of funds. The criticism stems from the fact that the company has never publicly disclosed how it operates or how it obtains its cash reserves. Still, the company has not denied these allegations.

Advantages and Disadvantages Of USDT​


There are numerous reasons why USDT is the most widely adopted stable coin. The company has shown a reputable amount of trust and accountability in management, which puts it out there as the most reliable stable coin provider. There are other advantages which include:​
  • Fast Transaction: The transfer of this stable coin is fast and borderless. USDT has all the features of a cryptocurrency, which allows it to be transferred at the speed of its incumbent blockchain. For example, on Tron Blockchain, the transaction time is nearly instant. On Ethereum Blockchain, it usually takes 10-50 seconds.​
  • Low Transaction Fee: There is near zero-fee transaction on Tron Blockchain and a reduced fee on transfer on Ethereum Blockchain and other blockchains compared to the traditional means of money transfer of USD.​
  • The cryptocurrency community trusts Tether, leading it to be among the most stable cryptocurrencies in value​
  • It has been around for a while, giving it an established history of reliability and trust. This can go some way towards reassuring people that the cryptocurrency is legitimate​
  • Tether (USDT) is widely available on major exchanges which makes it easy to buy or sell when necessary​


Ethereum has its limits, of course. There are many disadvantages include:​
  • Stability Issues: If the cash reserve fails to correspond to the amount of the crypto asset (USDT) in circulation, the coin’s stability to U.S. dollars will be affected. It will no longer remain 1:1 to U.S. dollar peg​
  • Asset Control: There is no full ownership of funds synonymous with crypto assets like USDT. Tether, the company behind the stable coin, can freeze addresses found violating rules of the usage of the asset.​
  • Tether has not made much effort to make its inner workings transparent or accountable to the public. This is concerning for many people who hold Tether units because it makes them unsure about how secure their investment is​
  • There are accusations that USDT has been used to manipulate the price of Bitcoin, or that it has been used to launder money for criminal activities​
  • Tether (USDT) is not divisible, which limits its functionality​
  • Trust Issues: An audit report taunting user confidence can lead to less adoption.​


  • In November 2017, Tether reported the electronic theft of $31 million in USDT tokens, after which a hard fork was performed.​
  • In January 2018, Tether dismissed an accounting firm it had hired to perform an audit, citing "the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether."​
  • In April 2019, New York Attorney General Letitia James obtained a court order enjoining Tether and BitFinex parent iFinex from further violations of New York law, after determining that BitFinex had borrowed at least $700 million from Tether's reserves to offset BitFinex corporate and client funds frozen and ultimately seized from its Panamanian banking partner Crypto Capital Corp. in a money-laundering probe.​
  • In February 2021 Tether and BitFinex settled the case by agreeing to pay a fine of $18.5 million, discontinue trading with any New York state residents or entities, and to furnish information about its reserves to the New York Attorney General's office for the next two years​
  • In October 2021, the U.S. Commodity Futures Trading Commission (CFTC) announced that Tether agreed to pay a $41 million fine "over claims that Tether stablecoin was fully backed by U.S. dollars.​

Tether (USDT) is often referred to as a stable, reliable cryptocurrency, but the lack of transparency about its inner workings makes it difficult for people to trust Tether completely. Tether is used as a way to transact without having to go through fiat currency which is helpful for some users. However, Tether’s price cannot be easily checked and many people suspect that USDT has been used for illegal activities, which is a major cause for concern.

Another con is that there have been allegations of fraud and mismanagement at Tether Ltd. in the past. While these allegations have not been proven, they do cast a shadow over the currency. Finally, it is subject to inflationary pressures.
Now that you have reached almost the end of this review. Is Tether (USDT) A Scam? Leave your impressions about USDT at the comment section down below.

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