I mean yeah, the burden of proof here is very much on Tether, as it always has been. They've claimed it was backed 1:1 with cash, that was proven false. They then claimed its backed by all sorts of stuff maybe, who knows?
What we do know is that their own website T&C says by holding a USDT token, they owe you nothing. They never have to allow anyone to withdraw a single penny. They can sail off to a (different) island and keep any assets they may or may not have, scot free. They're chuck-e-cheese tokens.
They hired an auditor, then the auditor quit.
They bank with a domestic bank in the Bahamas, Deltec (chaired by the creator of Inspector Gadget, Jean Chalopin), who they may well own. Just as they owned Noble in Puerto Rico before it was bankrupted due to their ownership being revealed. And guess what? The Bahamas' government domestic bank foreign liabilities do not show a 24B influx of USD over the last year.
There's no reason - nor has there ever been reason - to believe Tether is anything other than a scam to enrich Tether and bank Bitfinex. The crazy thing is that USDT volume amounts for 80% of BTC trading volume. [1]
I just can't understand the "well, let's just assume it's fine until proven otherwise" attitude. If that's your attitude I've got a tokenized bridge to sell ya.
To call Tether a systemic risk to the entire crypto space is quite the understatement.
The fact that Tether has gone on for so long is proof you can do these kinds of things on the year-long scale and have plenty of time to plan an exit well before the cards collapse. People have been calling the risk of Tether for a while (self included) but it just hasn't been realized. It's entirely possible it survives a significant amount of time for it to become a necessary part of BTC, whether that's ultimately good or bad.
They've been relatively modest with their scam for quite a while, e.g. they printed less than 5 billion in the first three years of their existence. Then another 5 billion in just 6 months, and then it went completely off the charts and now they are printing billions weekly, 2 billion just in the in the last 7 days. If they kept it reasonable they probably could have kept it on for a while, but at this scale it'll have to collapse.
Most of those calculations are based on self reported volume from exchanges no one has even heard of.
How systemic that risk really is is not very clear since it is concentrated to certain types of exchanges where the regulatory risk tends to be already quite high. A bank run on them would still be huge.
If you were a big Bitcoin miner and you knew that there was only $2,000 flowing into the ecosystem for every Bitcoin mined, which would you rather?:
- Selling each Bitcoin for $2,000 to pay your electricity bills?
- Selling each Bitcoin for $40,000 USDT, which you know is only backed by $2,000?
Clearly the latter, because you make the same amount of money but get to keep 95% of your Bitcoin. The Tether fraud only makes sense if you assume that the miners aren't colluding, and that they don't make more money the more Tether gets devalued.
The miners have to pay their electric bills in actual dollars, not play money, so they sell for cash. Even if USDT is completely 0% backed, miners can get the $40K USD for so long as the inflows exceed outflows.
What we do know is that their own website T&C says by holding a USDT token, they owe you nothing. They never have to allow anyone to withdraw a single penny. They can sail off to a (different) island and keep any assets they may or may not have, scot free. They're chuck-e-cheese tokens.
They hired an auditor, then the auditor quit.
They bank with a domestic bank in the Bahamas, Deltec (chaired by the creator of Inspector Gadget, Jean Chalopin), who they may well own. Just as they owned Noble in Puerto Rico before it was bankrupted due to their ownership being revealed. And guess what? The Bahamas' government domestic bank foreign liabilities do not show a 24B influx of USD over the last year.
There's no reason - nor has there ever been reason - to believe Tether is anything other than a scam to enrich Tether and bank Bitfinex. The crazy thing is that USDT volume amounts for 80% of BTC trading volume. [1]
I just can't understand the "well, let's just assume it's fine until proven otherwise" attitude. If that's your attitude I've got a tokenized bridge to sell ya.
To call Tether a systemic risk to the entire crypto space is quite the understatement.
[1] https://coinlib.io/coin/BTC/Bitcoin