By George Ward
Tether has stopped the withdrawal of USDT funds from personal wallets following an executive order from financial regulators. Tether has locked over 46 million USDT possessed by failing crypto trading firm FTX through, as reported by blockchain transaction figures released via WhaleAlert on November 10.
Why Did Tether Freeze $46 million worth of FTX’s USDT?
Last month, a Tether representative said the firm “won’t lock wallets of entities or individuals.” The rep added that the firm would only lock privately owned wallets when there is an order from law enforcement agents.
This wallet lock with FTX’s USDT has never occurred, and this is the first time this kind of situation has ever occurred. Also, within 24 hours of the exchange halting withdrawals, Japan’s financial watchdog instructed FTX to stop offering its services to Japanese residents.
“Without making direct comments, Tether often communicates openly with federal regulators, such as the US Justice Department. We take it as one of our responsibility towards compliance, and transparency,” a Tether representative told a local media outlet.
“We would want to function as a spokesperson for the whole crypto ecology and underline that one issue does not form an industry. His statement comes amid allegations of insolvency at the cryptocurrency exchanges FTX and concerns about the financial situation at Alameda Research.”
The spokesperson reiterated that Tether didn’t owe FTX’s trading company, Alameda Research, or the exchange itself. A reaction to several baseless claims that it had USDT risk to the embattled exchange.
“This company’s Tether-backed reserves are 100% guaranteed by holdings greater than liabilities. The source stated: “Tether would continue to concentrate on protecting those reserves. Tether owns a liquid portfolio that comprises retained earnings, US treasuries, and physical cash.
An 87% Drop In FTX Balance Sheets In 5 Days
Data indicated that within the previous five days, withdrawals from the FTX cryptocurrency exchange have been so quick and violent that the entire amount of crypto assets on the platform has fallen 87%.
The blockchain industry equivalent of a massive bank run came to a head on November 8 when Sam Bankman-Fried declared a withdrawal freeze. (By Thursday, new reports stated that several withdrawal orders were unexpectedly being completed. However, some Twitter users claimed that they had since been disconnected.