In brief

  • Tether has flipped XRP as the third-most valuable cryptocurrency, according to market cap figures.
  • Tether says it has surpassed $5 billion in market cap.
  • Tether also says it backed by USD reserves. Authorities aren't so sure.

Tether, the stablecoin designed to be priced and backed by the US dollar, has surpassed Ripple’s cryptocurrency XRP as the third-most valuable by market capitalization, according to figures by Messari and CoinMarketCap, which track live metrics. 

In a press release in which Tether called itself “the undisputed king of crypto,” the company said that as of March 12, the stablecoin had surpassed $5 billion in market cap. Figures on Messari and CoinMarketCap place it at around $4.8 billion. (Tether did not immediately respond to Decrypt’s request for clarification.)

Its current place on the market cap leaderboards is no coincidence. As the price of Bitcoin and other cryptocurrencies continue their downward spiral, traders move to hedge their risks by selling volatile currencies for stablecoins. Bitcoin has shed close to 40 percent of its value over the last two days, in lock step with the collapse of the stocks and equities market, as panic regarding the spread of the deadly coronavirus intensifies.

At the moment, Tether remains the most heavily traded cryptocurrency. In the last 24 hours, Tether’s trading volume was around $4.1 billion, more than five times higher than crypto’s market cap leader Bitcoin, according to Messari. 

There is some question, however, as to how “risky” Tether really is. The company is currently in the midst of a fraud investigation led by the New York Attorney General’s office. The NYAG is investigating Tether and its sister company, crypto exchange Bitfinex, over allegations that they conspired to mask an $850 million dollar hole in Bitfinex’s finances. 

Tether had also previously stated that the stablecoin was “fully backed” by dollar reserves but then conceded that reserves were only “74 percent” backed. The stablecoin company also faces a class-action lawsuit which accuses Tether of damages of $1.4 million for printing billions of dollars worth of the cryptocurrency and for manipulating the price of Bitcoin in 2017. 

The stablecoin’s market cap has more than doubled from $2 billion since February 2019, according to Tether’s own figures.