Is Tether Putting Bitcoin at Risk?

By Trey Thoelcke Updated Jan 26, 11:02AM EST · Published Jan 26, 7:00AM EST

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Is Tether Putting Bitcoin at Risk? — © jcrosemann / iStock via Getty Images

By Yassine Elmandjra, Analyst

This week Tether, a dollar-pegged crypto token which is a source of liquidity for over-the-counter (OTC) trading desks and off-shore cryptocurrency exchanges, became a source of controversy. An article published by “Crypto Anonymous” asserted that Tether has been responsible for serious bitcoin price manipulation that could cripple both the Bitcoin network and bitcoin.

Bitcoin is no stranger to this kind of “Fear, Uncertainty, and Doubt” (FUD). In 2018, critics launched nearly identical arguments focused on Tether’s potential impact on bitcoin.

ARK believes that the latest article relies on misleading data and exposes a significant misunderstanding of Tether’s mechanics. While Tether operations are somewhat opaque, the scrutiny it has faced since 2018 would suggest a low probability of outright fraud.

That said, in our view even if Tether were to fail, its impact on the Bitcoin network and bitcoin’s price would be short-term and perhaps di minimis. While in the short term, Tether’s potential failure could cause chaotic price action and a loss in confidence in the crypto space, ultimately we believe its failure could benefit bitcoin, highlighting its differentiation as a liability free asset.

Catherine Wood, ARK Invest CEO, is a shareholder of 24/7 Wall St. LLC.

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.