Tether (USDT) tokens are flooding into a wallet address controlled by the Kraken exchange, one of the few places where the troubled stablecoin can be converted into U.S. dollars.

The exchange’s wallet balance stands at nearly 47.8 million USDT at the time of writing, making it the eighth-most valuable wallet holding this asset, according to the Tether Rich List.

Contrast that to the situation less than two weeks ago, on Oct. 7, when Kraken’s tether wallet ranked much lower – 22nd place – and held less than half its current balance: 21.6 million USDT. Archived versions of the rich list show the wallet balance fluctuating between around 10 million and 24 million USDT in the period from late December 2017 to early October.

The current balance, in other words, is a notable outlier. The implication, some market watchers have argued, is that traders wish to exchange their USDT for dollars.

Kraken is one of the few exchanges that offer direct trades between USDT and dollars. (Others include Bitfinex, which is closely tied to Tether Ltd., the issuer of USDT, and Bittrex.) So the influx is a sign that the cryptocurrency market may still harbor doubts about USDT, which saw its exchange rate fall significantly below its $1.00 peg earlier this week.

For instance, on Thursday a Twitter user going by the name Soleil Du Soir posed the question, “What are the reasons to transfer USDT to [Kraken]?” Another user answered, “You can get USD there.”

Indeed, Kraken only offers one Tether pair, USDT/USD, so traders cannot exchange USDT for other cryptocurrencies on Kraken.

There are other indications that traders are heading to Kraken to offload USDT. On Oct. 15, the date that saw tether’s exchange rate fall the farthest against the dollar, the greatest selling pressure was on Kraken, where USDT briefly touched $0.85. Tether trading volume for that day was the highest it’s ever been on the exchange.

Since being listed on Kraken in March 2017, USDT volume has never been higher than its level on Oct. 15 – and its price (depicted) has never been lower than on that date.

Seeking redemption

According to the 2016 white paper for tether, token holders are able to redeem their USDT for U.S. dollars by returning them directly to Tether Ltd. In practice, a number of users have been unable to do so in recent months.

Jeff Perrin, the founder of Spiga, a fintech startup, told CoinDesk that he tried to redeem tether tokens for dollars through the company’s site in January or February. He provided all the necessary know-your-customer information, he said, but did not receive any responses from customer support. As of mid-October, he said, his account was “pending approval.”

Oguz Serdar, a full-stack developer and the CEO of the marketing startup Limk, described a similar experience in December 2017, saying his account had been “stuck in their verification process for months.”

Some have claimed that redeeming tether is still possible. Dovey Wan, a partner at the investment firm Primitive Ventures, wrote recently, “two of my trader friends have successfully redeem[ed],” and posted a screenshot.

Yet a Twitter user going by “Auditcarlo,” who is a virulent critic of Bitfinex and Tether, said the screenshot appeared to show trades on an exchange, not redemption through Tether Ltd. Wan did not immediately respond to a request for clarification.

With users apparently unable to convert their USDT into dollars in the way envisioned by Tether’s white paper, they seem to be trying to accomplish the same goal by moving tokens onto Kraken.

A spokeswoman for the exchange did not immediately respond to questions sent by CoinDesk (nor did a Tether representative).

But the official Kraken Support Twitter account addressed potential reasons for the increase in Kraken’s Tether balance: “traders will transfer USDT to Kraken, sell it for USD at whatever rate the market is willing to pay for it at the time, and then they can use the actual USD to buy other cryptocurrencies.”

Soleil Du Soir responded to that tweet, asking whether USDT was likely to crash, and Kraken Support replied, “Not necessarily. Not everyone who transfers USDT will sell right away or at any price. Some might be using it for margin trading. Some might be using it for [over-the counter trading]. There are many possibilities.”

Despite being the eighth-most valuable cryptocurrency by market capitalization, Tether has long been a subject of concern in the cryptocurrency community, since many doubt that its tokens are fully collateralized by U.S. dollar deposits, and the company has not provided regular public audits, as it said it would in the white paper.

Safe image via Shutterstock; charts by Trading View

Sam Ouimet contributed reporting