Singaporean crypto exchange Digifinex has announced its decision to replace its platform stablecoin USDT with TrustToken’s TrueUSD in what comes as yet another blow to Tether’s embattled stablecoin.

Tether has been accused of overstating its USD reserves, with many market players expressing doubt that the company actually has sufficient dollar reserves to back the over 2.7 billion USD-pegged USDT tokens in circulation. Some have also alleged that Tether is used to manipulate crypto markets through suspiciously-timed issuance of USDT tokens.

Tether in Crisis?

Referencing a market belief that Tether does not actually hold the amount of US Dollars it claims to, Digifinex co-founder Kiana Shek stated that she has been looking for a way to get rid of USDT for months, a goal that has now been achieved by replacing it with a stablecoin  

Speaking to Coindesk she said:

I simply don't believe in Tether but I had no choice. […] Through my research, due diligence, and my communications with the TrustToken team, I have come to appreciate their commitment to industry-leading best practices.

A number of critics have accused Tether of creating USDT tokens out of thin air by issuing them without backing reserves, which would effectively amount to fraud if true. Such accusations have not been proven because thus far, no third-party audit has been carried out to confirm or dispel rumours. Tether’s link to Bitfinex – a relationship implicated by the Panama Papers leak – is also problematic for many investors and traders.

Shek also referenced these long standing Tether issues, stating that TrueUSD is in compliance with the U.S. Financial Crime Enforcement Network’s (FinCEN) regulations, and that it has been independently audited by a third party firm.

Tether has consistently denied all allegations as it struggles to convince investors that it actually holds the requisite USD reserves, albeit without independent verification.

More Stablecoins Join the Fray

Tether’s problems look set to intensify in the coming few months as more stablecoin offerings come into the market to challenge its dominance.

TrueUSD’s adoption by Digifinex is the first real body blow as a top 20 crypto exchange for the first time changes from Tether trading pairs to a competitor. More stablecoins are eyeing bits of Tether’s market share, offering assurances and utility that Tether currently does not offer investors.

For example, CryptoGlobe reported recently that Gemini, the crypto exchange owned by Cameron and Tyler Winklevoss launched the Gemini Dollar. This stablecoin is being marketed as the world’s first regulated stablecoin, offering the full range of assurance and protection for investors under the New York State Department of Financial Services.

According to information provided by Digifinex, TrueUSD trading goes live on Monday September 17 at 15:00 Singapore time with trading pairs for bitcoin, ether and tether, until Tether is eventually dropped from the exchange.