Coinbase Tells Users Swap USDT To USDC — Sparks New Theory

USDT Swapped for USDC
USDT Swapped for USDC
USDT Swapped for USDC

Coinbase is calling USDC the ‘trusted stablecoin’ now.  America’s #1 cryptocurrency exchange even waiving fees associated with converting Tether (USDT) stablecoins to the Circle-owned USD.


Tether has been trading for $0.99 cents as of late with certain crypto-pairings on Binance and all of those on Coinbase. This is concerning to company analysts.   

After FTX Collapsed, the ‘stable’ cryptocurrency that’s supposed to maintain a price of $1 at all-times, dropped to a low of $0.93.  It sent shock-waves through the entire cryptocurrency world because the ‘law of stablecoins’ is that a stable coin can never lose nor gain value. It’s always to maintain 1 price.

 Though it’s returned to the whole dollar on most exchanges, this could be a sign that Tether Holdings Inc does not have the proper collateral banked —  $1-dollar per 1 USDT coin minted.

The decision is a big one for Coinbase.  USDT  is the third-most exchanged cryptocurrency on its exchange.    Of all trades done daily, 5% involve Tether.  

Tether Proof of Reserves

Through the speculation however, USDT’s parent company has not shied away from the rumors.  The company released proof of Assets in November after audits were completed. In all there was a total of $68.06-billion-dollars of assets but liquid and extremely liquid.   And for their liabilities, there was only $67.8-billion.  

The overall audit proved USDT was nearly US$200M in the green, above liabilities.  If indeed accurate, it would mean Tether is more than healthy and secure.

Based on the audit’s proof of reserves, another theory has emerged.

Coinbase Trying To Keep Circle Afloat?

Some crypto-analysts are now eyeing America’s #2 crypto-exchange even harder for this power-move.  It can be perceived as authoritarian or a ‘centralized’ display of power.

Though it’s not proven and only speculation, it could also be an attempt to pump more money into USDC’s parent company.  Circle had exposure to the effects of the now bankrupt cryptocurrency exchange, FTX.    Some theorize this could be signs that the exposure is bigger than the company let on.

However, this has been disputed earlier.

Cirlce & FTX Invested in Each Other

According to the stablecoin’s CEO Jerey Allaire , FTX invested in Circle and vice-versa.  The Executive tweeted that only $10.6-million-dollars was invested in the FTX group.  And this is only a small fraction of the company’s earnings. Therefore it would not affect anything dealing with USDC as it had more than enough collateral to cover the small liability.

However, it’s not quite been specified how much money FTX invested into Circle.  It’s only known that the USDC creators received an investment from Sam Bankman-Fried’s exchange during their $440-million funding round in 2021.

Regardless, if the theory of Circle being weakened by FTX to the point Coinbase needs to bail them out is true, costs to the crypto-world could be ghastly.  In fact, some say USDC collapsing could mean Coinbase crumbling as well.

But for now, there is no actual proof of this theory and is possibly just fears derived from FTX’s collapse, causing people to overthink.

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