The Biggest Heist in History | Tether and Circle Target FDIC Funds
Edited By
Andrei Petrov
A new investigation reveals that Tether and Circle, often labeled as "shadow banks," could exploit the FDIC to siphon off billions from taxpayer-funded insurance. Despite creating billions in stablecoins daily, their lack of audits raises serious questions about financial security and ethics.
What’s Happening?
Tether claims $152 billion in USDT and Circle holds $60.5 billion in USDC, suggesting a combined total of $212.5 billion. However, no one can confirm if these digital dollars are actually backed by cash reserves. The "GENIUS Act," enabling these firms to claim FDIC funds ahead of average bank customers, presents a serious risk to the financial system.
The Implications of the GENIUS Act
The act allows Tether and Circle to receive priority access to FDIC funds whenever insolvency occurs.
"This sets a dangerous precedent for taxpayers and traditional banks," one source noted.
This legislation suggests that Tether and Circle might already be insolvent, leading to potential havoc on the financial landscape reminiscent of the 2008 crisis — where profits were privatized while the risks fell on the populace.
Users Speak Out
Commentary from forums highlights the broader sentiment:
“Bitcoin is denominated in USDT, not USD.”
“Banks create money from thin air every day,” some claimed, highlighting the inconsistencies in the financial system.
Financial Industry Shadows
Experts warn that the unchecked growth of stablecoins without proper audits may lead to a broader financial instability.
Tether: 152 billion USDT in circulation, No verified reserves.
Circle: 60.5 billion USDC in circulation, Lacks auditing transparency.
FDIC Coverage: Up to $250,000 per customer.
Key Points
🔹 Tether and Circle hold a combined $212.5 billion, unverified.
🔻 The FDIC could pay them first in insolvency cases.
⭐ “This allows them to skim money from the FDIC fund,” notes a financial analyst.
The potential fallout from allowing these financial players into the FDIC fold could set off alarms for regulators and taxpayers alike. Actions taken today may redraw the lines of trust in an already precarious system.
Predicting the Shifting Landscape
There's a strong chance that Tether and Circle will face increased scrutiny from regulators in the coming months. Analysts estimate that the likelihood of a major crackdown on these firms could be around 70%, particularly as stories of financial instability circulate. If these companies are forced to prove their reserves, we might see a significant reduction in the total supply of stablecoins, leading to turbulent market reactions. Should the GENIUS Act lead to claims on FDIC funds, the reaction from traditional banks could be fierce, potentially resulting in a stricter regulatory environment across the board. Financial experts predict that within such turmoil, the systemic risks could rise, recalling past crises, while consumers could start seeking safer alternatives in the digital currency realm.
A Fresh Lens on Financial Maneuvers
In some ways, this situation mirrors the rise of subprime mortgages before the 2008 financial crisis. Back then, many believed that certain financial products were insulated from risk due to the illusion of high returns. Fast forward to today, and we see stablecoins showcasing a similar veil. Just like subprime mortgages, the illusion of security from Tether and Circle's unverified reserves could lead to a larger collapse if left unchecked. In both cases, underestimating the interconnected risks and consumer trust could result in long-lasting damage to the financial fabric of society. As history unfolds, the key will be learning from these past oversights, heading off distress before it spirals out of control.