There has been a lot of controversy regarding Tether. Many claiming it to be a scam, others the opposite.
Tether was founded by Reeve Collins (CEO of BlockV) and sold to Bitfinex in 2015. And that's where things got dodgy.
An exchange which owns a 'money' printing machine.
So Tether claims to have for every Tether in circulation 1 real dollar in their bankreserve. This however has NEVER been proven.
However Zhao Dong claims to have seen these accounts
https://news.bitcoin.com/vouching-bitfinex-and-tethers-bank-accounts-hold-nearly-3-billion-usd/I for one do not trust what some guy says on the internet. I have learned my lesson not to blindly trust the word of a person that I don't know, how big and famous they might be. (eg. Trump, Lance Armstrong, O.J. Simpson, Bill Cosby, ....)
Tether has also NEVER been audited. No audits have ever happened by an independent 3rd party. So we have no proof of their books. Friedman LLP was going to audit them, but Bitfinex smartly canceled on them. WHY? If Zhao Dong and other claim to have seen their accounts they shouldn't be scared and just show it to the right?
https://www.newsbtc.com/2018/01/28/tether-dissolve-relationship-with-auditors/https://www.coindesk.com/tether-confirms-relationship-auditor-dissolved/here they claim to be the 1st project to be audited and need special regulations so that's why they canceled
"As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success." - Bitfinex.
FALSE: many crypto projects have been audited eg VeChain has been audited by PwC
http://www.universalcointrade.com/pwc-backs-chinese-blockchain-powered-supply-chain-startup-vechain/https://www.reddit.com/r/Vechain/comments/7dbsdp/10_global_senior_leaders_from_pwc_visited_vechain/EVERY time that Tether gets printed, BTC pumps. Why is this?
So imagine if you were to buy 1 BTC from Bitfinex with real hard worked dollars. You wire 11K to them, they give you 1 BTC and you go on to happy trading. But what we don't see is what happens behinde the scene. Bitfinex, who can print Tether at any given time, buys 1 BTC but with THEIR TETHER and then gives it to you. So Bitfinex won 11K, because they gave you BTC bought with USDT which isn't 'worth' anything and they keep your 11K.
Now back to the BTC pumps during printing time. Bitfinex printed 500m in 5 days (WTF RIGHT?) and BTC starts pumping. They are buying BTC with printed Tether. Free BTC for them. And then they can happily dump it on you and take your dollars away again.
Why do exchanges even need Tether? I get it's a token on the blockchain which makes it easier and blabla. Why not just real dollars, euros, yuangs,...? Makes it easier and more reliable.
So what will happen when Tether gets exposed as a scam like Bitconnect?
- people sell their USDT for USD and cash out, but if there is MORE USDT then USD from their bankreserve, what happens then? What if Bitfinex decides to shut down like Bitconnect?
- people sell their USDT for BTC and continue cryptoing
- people sell their USDT for BTC/ALTS and cash out
In any of these conditions, the market will suffer. And every exchanges uses Tether, so imagine the psychological effect this will have when this gets exposed as a scam.
Market might crash with 80%
http://bitcoinist.com/tales-terror-tether/PLEASE tell me your opinions, thoughts, (conspiracy) theories, correct me where I'm wrong, whatever. But this might be one of the biggest scams in cryptospace right now?
EDIT:
France based Bitfinex CEO suspected of Ponzi scheme
https://steemit.com/bitfinex/@gaitan/bitfinex-ceo-suspected-of-a-ponzi-scheme31m Tether hack
https://bitcoinexchangeguide.com/bitfinex-tether-scam/
