It's all over the internet now that Tether seems dodgy as sin.
They clearly aren't backed by anything, I mean you can't deposit or withdraw unless you speak directly to Bitfinex.
By their terms, they aren't backed by anything. I'm guessing that legally, this is the only way they feel they can survive. If USDT is linked to an underlying currency (USD), that makes it a derivative. That requires licensing, since Tether was/is serving US residents (among other jurisdictions that probably require formal registration for derivative instruments).
I'm not going to vouch for Tether, but my guess is that they actually have the USD backing the circulating supply. I don't think that Friedman LLP would have put their reputation on the line without some assurance of that. I'm guessing they are "banking like criminals" as Bitfinex's CFO once called it. The money is sitting in bank accounts where the bank doesn't know what it's for. And Tether/Bitfinex has no realistic way to get people their money.
Bitfinex also don't have a bank, so where are their $750m being stored? Is it in cash in a room somewhere!?
Follow Bittrexed on twitter, you'll get running updates there about Tether.
Bitfinex recently reopened USD and EUR deposits/withdrawals. However, the bank has a very small balance sheet, so I'm skeptical that it's sustainable. Also, the problem is not necessarily insolvency. It's easy to park money in bank accounts around the world. It's increasingly hard for an unregulated/unlicensed exchange to freely wire $$ with increasing volumes.
I actually think that Bitfinex's reliance on Taiwanese banks is what triggered Taiwan's AML reforms this year.
