Tether Backing Controversy
The cluster focuses on skepticism about whether Tether (USDT) is fully backed 1:1 by US dollars, highlighting lack of independent audits, past revelations of partial backing by cash equivalents and loans, and concerns over transparency and potential fraud.
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Wait, tether is fractional now? Wasn't one of their big promises that Tether is always backed up 1:1 by the dollar?
The token is called "Tether" and it's run by the Bitfinex exchange. It's supposed to be backed by US dollars, but they've refused to release any third-party audits to support that statement and it says this on their website: "There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. There is no guarantee against losses whe
Tether is claimed to be fully backed by USD. If it is not then it quickly ends up being an effective Ponzi scheme.
Do we know what Tether is backed by now?
Back in 2019 Tether was proven to NOT be backed 1:1 in USD. Rather it is backed 74% by fiat AND cash-equivalents. So that 74% is not even 74 literal cents.Article: https://www.coindesk.com/markets/2019/04/30/tether-lawyer-ad...
4 statements of fact that are not in dispute.1) Tether is supposed to be backed 1:1 by USD.2) There are now $1.7 Billion in tehters outstanding3) They were turned down by all reputable banks they approached.4) They have printed $450 million of tethers in the past weekhttps://coinmarketcap.com/currencies/tether/
Tether might not "print" out of thin air but the company is so suspicious and unethical that it would not surprise me.- Tether was only backed 74% as of April 2019 rather than 1:1 (https://www.bloomberg.com/news/articles/2019-04-30/tether-sa...)- Tether loaned Bitfinex ~$600m after B
Here. They can redeem with the reserve assets instead of with dollars, and are not liable if the reserve assets decline in value due to illiquidity etcThey also refuse to disclose the nature of their reserves beyond unaudited attestations, and are known to have lied regarding their reserves multiple times before and admitted as such in a settlement.> Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes
The controversy is that it is unclear whether every Tether is backed by real USD. See: Tether's TOS, Bitfinex's banking issues, etc.
The best rebuttal to this is the following quote from the article in question, which shows that not only is Tether NOT fully backed by cash, a lot of their supposed collateral sounds quite shady and they are also not letting anyone else audit what they are doing:"Regulators and economists have long questioned whether Tether has enough assets in its reserves to justify its stablecoin’s purported peg to the dollar.“USDT is, quite simply, fully backed by collateral,” Tether said in a sta