With the way the cryptocurrency market has been moving lately, it looks like there is going to be a huge pump for Bitcoin and other altcoins. A few dips might come along the way definitely and from the looks of things, the current Tether lawsuit will affect the crypto market negatively thereby causing these dips.
Last year, beginning of July to be precise, the New York court approved an investor to look at the various businesses behind Tether. Tether experienced really massive growth over last year.
In 2014, Brock Pierce founded Tether so that traders could easily and quickly enter or leave positions without being exposed to the volatility of the crypto market. The stable coin was meant to be backed 1:1 by real USD but by November 2018, rumours of Tether not being backed began to spread and eventually reached the ears of the former State Attorney General of New York, Letitia James. She began an investigation in Tether and Bitfinex (the exchange behind Tether) but the two companies filed for an appeal thereby bringing the investigation to a pause.
The case on the two companies reawakened on the 5th of July, 2020 after being approved by the New York court. There have been several speculations that Tether was just printing USDT and pumping the cryptomarket. Tether and Bitfinex were given the 15th of January, 2021 as a deadline to submit documents explaining their financial relationship.
Turns out that a shortfall of $850m was supposedly printed by Tether to cover up for the losses Crypto Capital created. People believe that Tether and Bitfinex cannot submit those documents without implicating themselves thereby revealing that Tether is not backed 1:1 by USD.
Many different things could actually come from the lawsuit. If the rumors are true, hypothetically, people would begin to "jump" out of Tether in large numbers and this could pump up Bitcoin and Ethereum especially because people would sell up their USDT to buy other cryptos. They would either sell their USDTs back to their bank accounts or transfer their investment to other cryptos and altcoins. This news is already beginning to create panic.
The deadline may result in several other lawsuits and this case will most probably have a short term effect on the cryptomarket and there will definitely be a short dip.
The United States currently backs USDC and it will be no shocker if Tether goes down and USDC replaces USDT. Let's see what happens by the end of all this.
