Fears grow over Tether ‘printing press’ as auditors part ways

Are there actually people in the world who think Tether's USDT pricing is legitimate? I can't figure out how in the hell it could be. It doesn't make any sense at all.

I have to admit that I didn't consider it's effect on the price of Bitcoin as a whole. If it really is inflating the bubble that hard then yeah, it's going to pop at some point. Probably sooner rather than later.

It is /possible/ that their books add up, in a technical sense which would make wall street blush.

They never claim that USDT are backed up by USD. They claim that every USDT is backed up 1:1 by "Assets."

Here's the scene: BFX is hacked, loses banking, and has tens of thousands of crypto millionaires ready to sue them. What they /do/ have is cold storage of lots of crypto under their control.

Say they start with 0 holdings of their own, generate 100M in USDT, and use it to buy up e.g. 10k bitcoin. However, due to that price movement, those are now worth 120M. That gives them 20M of "assets" which are not 1:1 matched to their tether, so they print 20M more. The cycle continues ad infinitum (until it doesn't). Every time It becomes more effective as their previous crypto holdings also increase in value.

Technically they are always "backed" 1:1 by "assets" for as long as they sustain upward momentum on crypto prices. But really it only needs to last long enough to dip set.

I would think that the orgs / people holding Tether would be the ones to suffer the most, not the holders of BTC.

And who is holding the Tether that was exchanged for BTC? Probably Bitfinex, right? So, if Tether does turn out to be not backed by USD, they would be left holding worthless Tether. The BTC is already transferred out and gone.

I think this is much more realistic assessment on the risk to Bitcoin:

> Julian Hosp, co-founder of cryptocurrency payment service TenX, has listed tether as one of four big risks, with a 10 per cent likelihood of a crash this year which could pull the market down by 15 per cent.

So, 10% chance that Tether is a scam, and if so, it would hurt BTC (and probably other coins too) by 15%. That seems much more realistic to me.

They absolutely used to claim that each tether is backed up by 1 USD in their reserve account, and that’s precisely what the audits were supposed to prove. Maybe they are backpedaling away from that now, but it’s not right to say that they never claimed this. This was the whole point of Tether.

Bitfinex is Tether, they are basically the same company. I wouldn’t worry about them getting screwed on this one, they are the ones doing the screwing.

Most exchanges shouldn’t be holding Tether because the exchange itself isn’t supposed to be on the other side of the trade. Every time you buy BTC with Tether you are buying it from someone else. So someone is holding Tether, and when they realize it’s not real money they will start dumping it.