Tether’s USDT Stablecoin Depegs from US Dollar on Exchanges After Company Froze $435M

cryptonews.com:

Tether’s USDT, the largest stablecoin by market capitalization, depegged from its intended $1 price amid growing scrutiny over the company’s December 15 announcement of a wallet-freezing policy in collaboration with law enforcement agencies including the DOJ, FBI, and Secret Service.

Data from CoinMarketCap shows USDT dipping as low as $0.985 at times in major exchanges like Binance, Coinbase, and Kraken, indicating a deviation from its dollar peg.

Stablecoins like USDT are designed to maintain parity with fiat currencies like the dollar. Various factors can cause temporary drifts from the peg, however, resulting in devaluation. For USDT, this latest depeg appears connected to declining faith in Tether policies after the massive asset freeze.

Tether also sent a letter on December 15 to Senator Cynthia M. Lummis and Congressman J. French Hill outlining that it had frozen crypto wallets holding over $435 million in USDT tokens on requests from government agencies during 2023. This demonstrated the stablecoin issuer’s extensive collaboration with authorities to disrupt criminal activity involving USDT.

“Tether is grateful for the opportunity to address the concerns raised by U.S. lawmakers, and we are committed to continuing Tether’s close work with law enforcement in the U.S. and globally,” Tether CEO Paolo Ardoino stated in the letter. “Tether seeks to be a world class partner to the U.S. as we continue to assist law enforcement and expand dollar hegemony globally.”

Tether maintained it works with agencies to counter illicit financial activity. But its posture as a neutral stablecoin issuer is under question post-freeze.

The huge value frozen and Tether’s willingness to blacklist addresses has shocked many in the crypto