The cryptocurrency market never ceases to amaze. Last week, a new “war” for dominance in the stablecoin world emerged, involving giants like Binance, Tether, USDC, and the controversial figure of Justin Sun from Tron. What is this conflict, and why is it worth looking into?
For over a week, the Tether cryptocurrency (USDT) has been experiencing slight depreciation. In the past, any deviation from the US dollar value was quickly adjusted by market players. This time, however, the situation is different, and the reasons for this anomaly remain a mystery.
Research company Kaiko highlights in its report that it’s unclear why investors are moving away from USDT. There are no clear negative market signals. Paulo Ardoino, CTO of Tether, suggests that this might be due to unfair competition, especially since Binance introduced a new stablecoin, FDUSD, on July 26th.
Despite promotional efforts, FDUSD trading volumes on Binance remain low so far. Given the previous successes of other stablecoins, such as TrueUSD (which is reportedly also issued by Justin Sun), the lack of interest in FDUSD is intriguing.
A real war of words has ignited between Binance and Tether. Adam Cochran, a renowned cryptocurrency analyst, noticed a particularly large deviation in USDT value. He also noted that there seems to be significant selling pressure from accounts associated with Binance.
Tether’s CTO, Ardoino, and Binance’s CEO, Changpeng Zhao (known as “CZ”), openly quarreled on Twitter. Ardoino described the unusual transactions as “attacks” on Tether by competitors. In response, CZ stated that Tether is a “black box”, hence he plans to replace it with his own stablecoins, such as TUSD and FDUSD.
However, the USDT versus USDC is another dimension to this conflict. Jeremy Allaire, CEO and founder of Circle, the issuer of USDC, emphasized the transparency and liquidity of USDC. Tether, on the other hand, is criticized for lacking transparency regarding its reserves.
Analyst Cochran suggested the possibility that Tether could sell at a lower price, withdraw USD from USDC, and reissue it as USDT, thus attacking its competitor. Tether could take advantage of this, placing the base assets in money market funds and achieving a potential return.
We also come to the intriguing role of Justin Sun, whose financial activities, including significant withdrawals from Huobi Global to Binance, raise many questions. Sun, with deep ties to Binance CEO “CZ”, might be employing tactics to boost confidence in Huobi amidst rumors of its insolvency.
Recent events point to high stakes in the stablecoin world. With Tether’s transparency issues, new stablecoin offerings from Binance, and rumors about Justin Sun’s involvement, the battle for dominance in the stablecoin world is in full swing. While all connections remain far from clear, a heated battle is undoubtedly unfolding behind the scenes.
