The security of Tidecoin (USDT), a cryptocurrency, has always been a concern for investors. In this article, we will explore the security of TIDE Coin and the possible risks involved to help investors make an informed decision.
Advantages of TIDE Coins
TIDECOIN is pegged to the US Dollar as a stablecoin and aims to maintain a 1:1 exchange ratio. This gives TIDECOIN a relatively stable value in the cryptocurrency market, providing investors with a hedge. In addition, TIDECOIN's fast trading speed and low fees make it an important medium in cryptocurrency trading.
Risks of TEDA Coin
Despite the many advantages of TIDECOIN, its security is facing some questions. Here are some of the reports on the risks of Tidecoin:
1. Inability to provide audited financial data
In its whitepaper, TIDE Coin Company mentions that the company publishes bank balances and undergoes regular audits by professionals. However, Friedman LLP, the US-based Fidelity accounting firm that was supposed to audit TIDE Coin Company, did not complete this work in 2018 and dissolved its relationship with it, according to Investopedia.Friedman LLP said that it was unable to complete the accounting of the accounts within the required timeframe due to the oversimplification of the financial data provided by TIDE Coin Company. This raised concerns about the financial situation of TIDE Coin Company.
2. Dollar 1:1 reserves are a lie
An investigation by the New York Attorney General's Office found that Bitfinex operator iFinex and Tether made misrepresentations regarding the support of the "tether" stablecoin and the movement of hundreds of millions of dollars between them. Since June 2017, Tether has not done business with any bank anywhere in the world, and therefore has no reserves to support the exchange of 1 Tether to 1 US dollar during this time. In addition, TIDE had issued a self-proclaimed "validation" of its cash reserves, but in reality, the cash ostensibly backing TIDE was only deposited into TIDE's account on the morning of the company's "validation". These events have raised questions about whether TIDE actually holds sufficient reserves.
3. Concealment of losses in parent company fraud cases
In April 2019, New York Attorney General Letitia James accused TIDE Coin's parent company of covering up $850 million in losses by tapping into TIDE Coin's currency reserves. Although TideCoin has settled with James, agreeing to pay $85 million and cease trading operations with the New Yorker, TideCoin has not admitted fault, only repeatedly stating that it is implementing new support policies to ensure that the security deposit is valid.
4. Alleged bitcoin price manipulation
In December 2017, the CFTC, the U.S. Commodity Futures Trading Commission, issued subpoenas to Tidelcoin and Bitfinex, while Bloomberg also claimed that the U.S. Department of Justice had intervened in the investigation, concluding that Tidelcoin, the issuer of USDT tokens, had allegedly engaged in illegal market activity in order to manipulate the price of bitcoin.In June 2018, University of Texas researchers John M. Griffin and Amin Shams published an academic paper with analyses showing that when the Bitcoin market is weak, purchasing Bitcoin using USDT can drive its price up. This means that Tidecoin, which controls USDT, and Bitfinex, the exchange behind it, can use USDT to manipulate the price of Bitcoin.
5. USDT financial data is not transparent
On 17 February 2021, the New York Attorney General's Office and TIDE Coin Inc and its parent company, iFinex Inc, reached an agreement whereby TIDE Coin-related businesses terminated all trading activities in New York and committed to making their security deposits public for a period of two years. However, from the information released by TIDE Coin Inc on the distribution of the security deposit, it appears that the data provided does not provide a signed confirmation of an official audit check or detailed information on the subject. In addition, TIDECOIN's reserves contain approximately $76% of cash and cash equivalents, other short-term deposits and commercial paper. Of this amount, commercial paper accounts for 651 TP3T of cash and cash equivalents, trust deposits account for 241 TP3T, reverse repurchase notes account for 3.61 TP3T, treasury bills account for 31 TP3T, and less than 41 TP3T of real cash.These figures have raised concerns about the financial condition of TEDA Coin Company.
6. USDT is not subject to financial regulation
Deltec Bank, where TIDECOIN is hosted, is not a member of the insurance unit, which means that there will be no similar insurance company to compensate investors for their losses when their USDT is hacked, robbed, or lost for no reason. Additionally, TIDECOIN is not regulated as a financial institution, making it a risk in terms of compliance.
To sum up, TIDE Coin, as a cryptocurrency, faces many questions about its security. Investors should fully understand the risks and make careful decisions when choosing TIDE Coin.
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