In recent months, we have seen allegations that USDT is not fully backed by cash reserves, which has caused widespread concerns. This is generating a massive switch from USDT to USDC, another stable coin pegged against the US dollar.
USDC is considered by most a more transparent option, with an improved legal framework and increased interoperability. USD Coin is backed by “fully reserved assets”, unlike Tether, which is, supposedly, backed by cash and cash equivalents.
However, Tether has been through legal battles over their claims that each USDT is backed by $1 in fiat currencies, as documents show that from June to September 2017 there was only $61.5 million backing Tether, even though another 442 million USDTs were in circulation.
In October of last year, Tether settled their legal battle with having to pay a fine of $41 million, though they did not admit to any wrongdoing. This does not instil much confidence into this stablecoin, so the switch from USDT to USDC doesn’t come as much of a surprise.