Bloomberg returns to what they do best: promoting fear, uncertainty, and doubt (FUD). This time, the target is Tether, the largest stablecoin issuer in the crypto industry, and the weapon is Donald Trump’s presidency.
Bloomberg's latest op-ed predicts what could happen when Trump’s crypto-friendly policies clash with Tether’s controversial activities.
Tether functions like a digital dollar, providing traders a safe haven from unstable domestic currencies and other volatile cryptos. Simply put: for every Tether token issued, there is a real dollar held in reserve. But Bloomberg does not believe that.
According to the op-ed, Tether operates more like a fraudulent offshore bank than a transparent financial institution. Its reserves are said to include Bitcoin, risky loans, and investments that seemingly no one can fully identify.
Adding to this are the shady connections. Over the years, Tether's name has surfaced in investigations related to various aspects, from North Korean hackers to organized crime in Ireland and Hamas agents. Bloomberg highlights these connections while accusing Tether of allowing billions of dollars to flow in and out of the underground world.
Trump has made Tether stronger
It must be acknowledged that Trump’s administration has been too cozy with Tether. His nominee for Secretary of Commerce, Howard Lutnick, has direct ties to the stablecoin issuer through his company Cantor Fitzgerald. This company owns 5% of Tether, earning millions in custody fees and promoting plans to lend billions in Bitcoin.
For Bloomberg, this is the beginning of the end. They argue that the deeper Tether integrates into Wall Street, the higher the likelihood of catastrophic consequences. Trading volumes surged after Trump’s election, with Tether moving $4.6 trillion just in November.
Worse still, the news agency claims that Tether's continuous growth could turn a collapse in the crypto space into a full-blown financial crisis. Imagine if Tether's reserves, already filled with risky assets, were to collapse. Bloomberg warns this could drag companies like Cantor down and infect traditional financial markets.
But it goes beyond that. Bloomberg accuses Tether of being a tool for criminals. Federal prosecutors have been keeping an eye on this company for years, and the Treasury has floated ideas for sanctions to completely remove Tether from the U.S. market.
For its part, Tether denies any wrongdoing and asserts that its reserves are fully backed. However, with Trump back in the Oval Office, Bloomberg argues that Tether could thrive despite these allegations.
Bloomberg criticizes Trump’s Bitcoin reserve plan
Bloomberg is not just targeting Tether. They are also criticizing Trump’s strategic Bitcoin reserve plan.
This idea, supported by Trump and initiated by crypto-friendly Senator Cynthia Lummis, involves the U.S. government holding 200,000 seized Bitcoins worth $20 billion and acquiring an additional 1 million BTC over 5 years.
Supporters compare it to the nation's strategic oil reserve, where oil is stored for emergencies. However, Bloomberg published an op-ed earlier this month, calling it 'the largest crypto scam ever.' The article argues that Bitcoin has no industrial application, no intrinsic value, and is irrelevant to the real economy.
From this news agency's perspective, BTC is nothing more than a speculative asset, with its value entirely dependent on market hype.
According to Bloomberg, the government's strategic Bitcoin reserve would enrich early holders, drive up prices, and leave taxpayers to bear the consequences. Using the budget for purchases would mean taking on more debt, increasing national debt or printing more money, thereby fueling inflation. And if Bitcoin's price drops, this reserve could become worthless, leaving the government with a pile of useless digital tokens.
Bloomberg also warns that the Bitcoin reserve could push banks deeper into crypto. Banks lending USD collateralized by Bitcoin would panic as prices drop.
The media giant states that this could lead to another financial crisis, with bailouts and rescues funded by taxpayers. And Bloomberg also mocks the idea of freedom from government and banks.
The bias and political games of Bloomberg
However, the issue here is: Bloomberg's motives may be more politically driven.
Michael, the head of Bloomberg, is a Democrat and a long-time critic of Trump, as well as someone who hates cryptocurrencies. He even ran for president in 2020 with a strong anti-crypto campaign.
So it's no surprise that Bloomberg's editorial board is closely monitoring Trump’s cryptocurrency policies. Yet, while Bloomberg's warnings may scare some, they do not tell the whole story. Tether and Bitcoin have survived all these years.
The crypto industry is thriving due to uncertainty, and every time someone claims a collapse, it rises stronger than before.
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