Tether CTO Paolo Ardoino Explains Brief USDT Price Discrepancy Amid Binance Legal Battle
Tether chief technology officer Paolo Ardoino is addressing a recent depegging of USDT, the largest stablecoin in the world by market cap.
Over the weekend, USDT appeared to lose its peg to the dollar, briefly trading as low as $0.94 on Binance.US.
However, Ardoino clarifies that USDT never actually lost its peg to the dollar, but that liquidity issues on Binance.US’ platform caused a price discrepancy unrelated to the stablecoin itself.
Ardoino, also CTO of crypto exchange Bitfinex, says that Binance.US is likely having trouble finding enough market makers due to its ongoing legal issues, making it difficult to keep its markets liquid, consequently creating exaggerated volatility.
“I saw few accounts overnight suggesting that since USDT is trading below par on Binance.us then USDT is depegging…
Here are the facts
– Binance.us is going through some legal challenges so it probably doesn’t have many market makers willing to arbitrage at this moment in time. On Binance.com USDT is trading 1bps (basis point) above the dollar.
– Tether is in charge of its primary market (Tether.to). Market making secondary markets (crypto exchanges) is the role of arbitrageurs and market making professionals.
– BTC/USD trades at $27,600 there ($30,100 on other exchanges).
– Seems there is a general spread of ~8%.
– Does it mean that BTC is also worth less globally? Of course not. Same logic applies.
– Do the math on the spread for BTC/USD and USDT/USD and you get pretty much the same percentage”
Binance.US is in the midst of a battle with the U.S. Securities and Exchange Commission (SEC) and is currently attempting to prevent the regulator from seizing its assets. The SEC originally sued the crypto exchange last month, alleging that it was selling unregistered securities.
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Author: Alex Richardson
