I have little doubt that Tether is fully backed 1 to 1 by USD reserves. The elephant in the room question, though, is where is the USD to back it coming from?
Wiser, each Tether is equal in value to US$1. Every Tether issued must have an equal corresponding reserve. If there is 1 million Tether in circulation there must be $1 million in reserve. Any discrepancy is a cause for concern.
I understand the $1 to 1 Tether deal. There was some concern that maybe there were not enough fiat reserves to cover the amount of new Tether being put into circulation. Further investigation indicates that there are indeed plenty of fiat reserves to cover the Tether. However, the part that is not clear is just how much of those fiat reserves came from investors buying into Tether, and how much is from a completely different source. It's all speculation of course, but there appears to be at least some circumstantial evidence that the source of some of those fiat reserves may be from various forms of illegal activity. That's what I mean by the elephant in the room.
https://medium.com/thedailydose/uncovering-the-real-cartel-in-bitcoin-65b56a7a00a2I agree with your concerns, wiser. Tether has been less than transparent for some time now, and there were some outside observers questioning whether it had the reserves to fully back up its 1:1 claim. The law firm report is an attempt to put those questions to rest, but it does nothing to address the other equally important concerns about where the money comes from and how Tether may have been used to manipulate the market. FSS even noted as much when it said that their report was not making a judgment about any potential legal concerns. You're correct: there are still elephants lurking in that room. We'll no doubt learn more in the weeks and months to come.
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