If this is true then the 2018 crash was nothing compared to what gonna happen when this pops. That’s for sure 
I don’t really like what I’ve just read. Thx for sharing though!
Hello everyone, is the situation the same with tusd, usdc and the busd ?
I’ve never really followed crypto either, so starting to go down that rabbit hole was wild. No one has a clue how it works or what’s going on from what I can tell. It’s crazy.
I didn’t get into it a ton, but I had a few thoughts as I read through that and tried to figure out how Tether actually works.
The chart in the article showing $10B of Tether flowing into Bitcoin isn’t super clear. The author insinuates it’s Tether “printing” money and buying Bitcoin with it, but Tether only has a cap of $50B. How could they add $10B per day to the market? That must be total trade volume which would make more sense if there’s a lot of volume and many people are trading in Tether.
I can’t figure out how Tether even works in the context of “how is it created?” There’s no information that’s easy to find. Even the Wikipedia page is unusually terrible. For example, it says that Tether claims 65% of Tether is backed by “commercial paper”, but the chart linked to in the sources clearly show they’re claiming 65% of 75% which is closer to 50%.
If you look at the 3 month market cap vs the trade volume for 3 months it feels a little weird to me. I would think that if Tether’s used like a reserve currency, the trade volume would go up with the market cap. I don’t know enough about it though. Why do they need +50% the number of Tethers (in the last 45 days) to satisfy the same amount of trade volume? Is that weird?
I don’t understand how they peg Tether to USD if they don’t have access to the US banking system. Any takers on explaining that?
The biggest issue, in my opinion, would be if the 50% “commercial paper” is lending to exchanges that are using it as liquidity. IE: There’s enough liquidity, but only in USDT and you’ll never convert to real USD.
On the more optimistic side, I wonder if it even matters in some markets. If you’re in a market where the government and institutions are so corrupt that crypto is safer than the local currency, and people trade crypto directly, everyone agreeing that $1 USDT = $1 USD makes it reality right? The only people who would care if it’s actually redeemable for real USD would be people trying to move large sums of money into USD so they can use it in the US.
If you want to waste an evening, go looking for theories on why the price of Bitcoin jumped so fast and then plummeted. The first three I saw were this one (Tether is printing money), that US hedge funds are pump and dumping crypto to cover their short positions in GME, and that Elon Musk is a narcissist. LMAO.
The reality probably lands in the middle of all the wild theories. Tether is probably cheating. The lack of regulation probably means a bunch of pump and dump schemes. Crypto is probably being used to move money between banking jurisdictions (ex: China > US). Retail investors are buying because they think it’s a hedge against inflation. There’s real value in emerging markets with corrupt financial systems. Etc…
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Someone I respect immensely on this topic definitely thinks so.
Short version: Tether is the internal accounting system for the largest fraud since Madoff.
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This is no news. Many lesser known chains with smart contract ability (e.g. TRX) also printed USD in this way… And USDT crashed once to 0.8 back in the days.
I bet with chialisp we are also able to print some USD.
USDC is what Tether ought to be.
“Each USDC is backed by one US dollar, which is held in a bank account.” – https://www.coinbase.com/usdc
Holding cash in a bank isn’t hard to do unless, like Tether, you want to cheat by reinvesting or laundering the dollars received.
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Imagine WallStreet, but with even the last pretense of regulation blown to smithereens. Now add a lavish garnish of all the world’s unsavory underworld money. Now look beyond three levels of pure hell down and you might see the crypto markets in the depths below. YOLO!
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More Tether shenanigans that should not come as a surprise to anyone paying attention
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