Yes, the I believe the sum of fiat deposited on bitfinex, bittrex, huobi,... is close to that amount. I even see people from high school "investing" in crypto now.
It's really not hard to believe when you consider how many millions of people are on these exchanges. Binance touts 3 million users, and has 425,819,642 tethers. 141$ average a user is completely believable.
You're being taken in by a basic accounting trick.
Let's suppose I buy 100 USDT on an exchange.
What Tether claims happens:
0. Bob and I own $100. Tether and Bittrex own nothing.
1. Bob sends $100 to Tether Limited.
2. Tether limited sends Bob 100 USDT. They now have $100 in their bank account.
3. Bob transfers 100 USDT to bittrex.
4. I send $100 to bittrex. I buy 100 USDT using that $100 from Bob.
5. Bob withdraws his $100 from Bittrex. I withdraw my 100 USDT from Bittrex.
6. Now, I own 100 USDT, Bob owns $100, Bittrex owns nothing.
7. Tether Limited has to hold $100 in reserve. It's not their money - it's supposed to be backing USDT. In addition to having assets of $100, they also have $100 of liabilities.
The reality:
Steps 0-6 are the same.
Step 7: Tether Limited buys a vacation to the Bahamas with their $100, and ignores the $100 liability. They are actually insolvent, and I have no recourse against them, because the Tether TOS make it very clear that I cannot redeem my USDT for USD from them.
The whole point of tether is that it is supposed to be backed 1:1 with USD in Tether Limited's accounts. They have not proven to anyone that this is actually the case. For all we know, all that money went to the Bahamas, or a Swiss bank account, and they are just issuing USDT, pocketing what people pay them for it, and keeping none of it in reserve.
While I think you're absolutely right in general, there are a few exchanges that are registered as serious financial institutions, which means they need to follow stricter regulation and actually back 100% of their user's assets. As far as I know at least Coinbase and Bitstamp are among these.
Yes, and to my knowledge the legit folks like Coinbase aren't using Tether. They're using actual USD. They'll still likely get hurt when the scam collapses, but nowhere near as much.
For the Tether to exist, someone's supposed to give Tether USD in exchange to USDT. If these exchanges are trying to avoid USD, where's the USD to buy the Tether coming from?
The suspicion is they're siphoning it off to their personal accounts, and that they're claiming to have received way more USD than they actually have so they can issue USDT that aren't actually backed to manipulate the market.
For clarity, there's a variety of very suspicious things about Tether. While they're clearly receiving some USD, they're printing $100M in Tether every couple days now.
If I claim to have $50k, you'll probably assume it comes from my job. If I claim to have $2B, as Tether does, you'll probably want some proof. Tether's promised regular audits, but they've released none and their supposed auditor has now scrubbed any mention of them off their site.
There's been a fair amount of conspiracy-theory-like thinking around Tether in general, with people making a morass of self-contradictory claims about it and shifting their positions every time someone points out one of the claims doesn't stand up.
Tether is a huge red flag to me..Enron level.