Bitfinex Took 630 Million Tether Out of Circulation After Drop Below $1

Bitfinex is sending massive quantities of tether tokens back to the vaults.

It's notable that a wallet address controlled by Bitfinex has sent 630 million USDT to an address known as the "Tether treasury" in six large transactions over recent days.

The first, of 200 million USDT, was sent the morning of Oct. 14, when Tether's dollar exchange rate was beginning to hit multi-month lows.

It's unclear why Bitfinex is taking supply off the market, but one theory is that Tether is getting out of the stablecoin business, buying back its own tokens at a profit.

According to Tether's white paper, holders of the token can "Redeem" USDT for U.S. dollars, which - according to the white paper - Tether holds in a bank at a one-to-one ratio with the USDT tokens in circulation.

According to Zhu and Hasu's argument, Tether is in effect redeeming the tokens with itself, buying them at a discount on the market and transforming the U.S. dollar collateral from a liability to an asset.

It's worth noting that the tokens have not been destroyed, as Tether said it would do with redeemed tokens in the white paper.

"Anyone could make money by arbitraging the USDT spread," Hasu told CoinDesk in a private message, adding, "It would make sense that Tether itself would be participating in these buybacks."

Hasu isn't the only one to espouse the theory that Tether would pursue this kind of strategy, said a vehement critic of Bitfinex and Tether who goes by Cas Piancey.

Piancey disagrees with Zhu and Hasu's assertion that "There is nothing shady" about Tether hypothetically buying its own tokens at a discount.