More than 10 million Paxos Standard stablecoins were minted in the 18 hours after the New York Attorney General's bombshell allegations about rival issuer Tether.
Chad Cascarilla, CEO of Paxos, which issues the Paxos Standard token, said the company saw a surge in demand overnight.
"There was a lot of minting that happened yesterday throughout the day and overnight as well," Cascarilla told CoinDesk Friday morning. "I think that's definitely a function of the news because PAX started trading at a very significant premium to Tether and the dollar."
He attributed this behavior to increased demand for his firm's stablecoin, adding:
The NYAG claimed Thursday that crypto exchange Bitfinex had lost $850 million in customer and corporate funds to a payment processor, and was making up the shortfall by borrowing reserves from Tether, the company behind a dollar-pegged stablecoin of the same name (also known as USDT).
Tether has long claimed that each of its nearly 3 billion circulating tokens are backed 1-to-1 by U.S. dollars. But Thursday's news rekindled long-simmering questions about whether Tether indeed has nearly $3 billion in holdings.
Traders seem to be fleeing to other stablecoins in light of the allegations.
Indeed, according to TokenAnalyst.io, stablecoins not named tether have seen massive volume increases over the past 24 hours, with the majority trading at a premium as well.
USDCoin, the Gemini dollar, TrueUSD, DAI and Pax have all seen their prices climb above the dollar as Tether fell to $0.99.
"The recent revelations regarding [Bitfinex parent] iFinex and Crypto Capital [the payment processor that allegedly lost Bitfinex's funds] raise questions about the reserves purported to be backing USDT," said Jesse Proudman, CEO of Strix Leviathan, a trading tech firm.
As a result, he said:
Chad Cascarilla image via CoinDesk archives
Anna Baydakova contributed reporting
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.