Cryptocurrency company Tether is being questioned over whether $814m of its digital tokens actually exist. The cryptocurrency prides itself on being a stable alternative to bitcoin, as Tether’s asset (USDT) is pegged one-to-one with the US dollar. However, a lack of evidence and recent revelations suggest the company may not have anywhere near this amount, meaning it would be unable to guarantee the tokens exchange for US dollars.
How Tether Works
The cryptocurrency enables users to dampen the volatility of bitcoin, by tethering their cryptocurrency (USDT) to the US dollar. A small business owner could take payments in bitcoin, and then transfer the bitcoin into USDT, to avoid bitcoin’s price fluctuations. This allows them to stay clear of bitcoin’s volatility. The company claim every USDT token is backed by a US dollar, which it holds in reserves. There are currently $814m USDT tokens outstanding, so there should be $814m in the company’s bank accounts.
Why It’s Important
Whether the crypto firm can account for these reserves is now being questioned. USDT owners are not guaranteed their tokens can be redeemed for dollars, according to their website and the company has not disclosed who it banks with.
In March 2017, Tether lost American bank Wells Fargo, who acted as the correspondent between the US and Taiwanese banks, where the company has banked in the past. Back in March, Tether “said they had about $50m worth of Tether outstanding, they now say it’s $814m, so you can see the jump there without US banking,” said Bloomberg’s Matthew Leising. This colossal jump has drawn attention to the company’s lack of transparency.
Oguz Serdar, a USDT user who encountered issues when attempting to convert $1m USDT into dollars said he, regarding the company, “I don’t think they have even $100m or $200m in a legitimate country.” On declining his request, Tether told Serdar that “due to ongoing banking difficulties we are only able to process requests for verified corporate customers.” Serdar was unable to transfer his funds directly from USDT to dollars. Whether Tether’s claim is legitimate is unclear, but commentators suggest the company may not be able to account for its liabilities.
Tether has not disclosed where its dollar reserves are held.
Google to Open Artificial Intelligence Centre in China
Google will be opening its first artificial intelligence (AI) research centre in China, despite many of its services being blocked there.
Fei-Fei Li, Chief Scientist of Google Cloud, said:
“I believe AI and its benefits have no borders. Whether a breakthrough occurs in Silicon Valley, Beijing or anywhere else, it has the potential to make everyone’s life better for the entire world. As an AI first company, this is an important part of our collective mission. And we want to work with the best AI talent, wherever that talent is, to achieve it.”
The research centre will focus on basic AI research, and will consist of a team in Beijing, who will be supported by Google China’s engineering teams.
Google’s search engine and its Gmail are banned in China. However, the country has 730 million internet users, making the market too large to ignore.
Google is not the only tech giant facing restrictions in China. Facebook is also banned, while Apple’ App Store has been subject to censorship. In order to comply with government requests, Apple removed many popular messaging and virtual private network (VPN) apps from its App Store in China earlier on this year.
China has recently announced plans to develop artificial intelligence, and wants to catch up with the US. However, human rights groups are concerned by China’s use of artificial intelligence to monitor its own citizens.
A Deal Looks Likely for Disney’s Fox Takeover
Disney is on the cusp of confirming a deal to buy most of 21st Century Fox in a $60bn deal, reports claim. The sale would see Disney acquire 20th Century Fox film studios as well as Sky and Star satellite broadcasts in the UK, Asia and Europe, according to the BBC.
21st Century Fox would retain broadcasting network Fox News and Fox Sports 1. While both would remain independent initially, they “could consider a merger later with the Murdochs’ publishing company, News Corp.,” reported Bloomberg’s David Hellier and Anousha Sakoui.
Fox CEO James Murdoch could potentially be offered a senior position at Disney once the deal is done.
Why It’s Important
Fox has reassessed its place in the current media landscape and decided that to in order to be successful it would need to scale up. Disney has the scale that Fox lacks. By consolidating their efforts around news and sports, Fox will be able to play an important role in the media industry.
On the other hand, Disney’s acquisition will extend the company’s reach. Plans to roll out a new Disney streaming service could benefit from the increased international exposure, where there appears to be the most growth.
Disney would also acquire Fox’s streaming service Hulu, opening new opportunities for Disney to compete with the likes of Netflix and Amazon Prime Video.
ExxonMobil under Shareholder Pressure
The world’s largest oil group has agreed to publish the impact of climate policies on its bottom line.
In recent years, shareholders of the world’s largest oil and gas conglomerates have been pushing companies to publish analysis of the threat they face from climate change and the threat of green policies. In a regulatory filing, Exxon announced that it would change how it reports its results to include a paper on how climate policies are hurting its business. The proposal was backed by around 60% of Exxon’s shareholders back in May, which was led by the New York state employees’ retirement fund. The move follows Exxon’s gradual shift towards addressing climate change; in the 90s, the group campaigned against the Kyoto protocol but has since committed to reducing emissions.
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