[Note, these are just my opinions based on my reading of publicly available articles. I have no insider information with respect to Tether or Bitfinex.]
Tether is a cryptocurrency that is supposedly backed on a 1:1 basis with US dollars.
Tether has issued over $950 million dollars in the last 9 months.
IMO, there no actual dollars backing them most of these Tethers. I think it's also likely that their sister company, Bitfinex, has been using these Tethers to manipulate the price of Bitcoin. IMO, both companies will collapse when this becomes more widely known.
These are some of my reasons for believing this.
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No publicly available independent audits
Although Tether claims to perform regular audits, they've never published the results of an independent audit of their alleged dollar reserves.
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They were cut off from fiat banking access months ago
They were cut off from access to the fiat banking system months ago--in May, 2017--when Wells Fargo cut off wire transfers to them. At that time, there were only $50 million Tethers in circulation.
https://hackernoon.com/the-curious-tale-of-tethers-6b0031eead87
They've not publicly announced that they've re-established any new banking relationships. Yet since then they’ve issued over $1 billion worth of Tethers. And they just produced another $125 million Tethers a few days ago.
https://twitter.com/TetheralReserve/status/941353534896959490
Without banking access, where did they get the dollars to back their Tethers?
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Bitfinex and Tether share the same underlying investors
Both Tether and Bitfinex, the largest cryptocurrency exchange, share the same shareholders. (As of August 2016, Bitfinex was the largest shareholder in Tether’s parent company, iFinex.)
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Bitfinex was hit by a heist, which created pressure to step up wash trading to make themselves seem more valuable than they really are
Bitfinex was hit with a $72 million Bitcoin heist in August 2016, which represented 36% of their holdings.
https://gizmodo.com/hackers-steal-72-million-in-bitcoin-from-honk-kong-exc-1784757592
Bitfinex responded to the attack by taking 36% from every customer's account. In exchange, they gave them a BFX token, which they promised to redeem for cash from future earnings, or redeem the tokens for shares in Bitfinex’s parent company iFinex.
In April 3, 2017, Bitfinex announced that they had redeemed all of the BFX tokens, thereby making their customers whole from the attack.
https://www.bitfinex.com/posts/198
How was Bitfinex--an exchange with no apparent access to the banking system--able to earn enough to make their customers whole?
One way might be by allowing the practice of "wash trading".
https://medium.com/@bitfinexed/wash-trading-bitcoin-how-bitfinex-benefits-from-fraudulent-trading-8bd66be73215
Wash trading is when a trader buys and sells the same financial instrument in quick succession, resulting in no net change in their holding of that asset.
What's the point of wash trading?
Exchanges make money by charging a fee for each trade on the exchange. By allowing wash trading, they can pump up the apparent volume, and make their exchange appear to be both more profitable and more liquid than it really is.
By appearing to be more profitable, they can increase the demand for their shares, and therefore their share price.
By appearing to be more liquid, they attract more (real) traders, and therefore can make more money.
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There's evidence that Bitfinex executives trade on their own accounts on their own exchange which creates a conflict of interest with their customers
Company insiders trading their own accounts have an unfair advantage relative to their customers. For example, if they see that a whale has recently wired a large amounts of funds into their account, they can make trades in their own account in anticipation of the whale's future trades.
Likewise, if you know where your customers stop limit orders are, or their margin calls, you can make trades that trigger those actions, to your benefit.
There’s also evidence of someone spoofing the price of Bitcoin on Bitfinex. Read this article to understand what spoofing is, and why it’s unethical:
Are Bitfinix executives trading their own accounts?
Phil Potter, Chief Strategy Officer for Bitfinex, does in fact operate a Bitcoin trading hedge fund, and he’s admitted to trading on his own exchange:
https://medium.com/@bitfinexed/wash-trading-bitcoin-part-ii-who-and-why-is-someone-wash-trading-on-bitfinex-e1c7b5e0b3bb
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Conclusion
Both Tether and Bitfinex were in financial trouble, with no access to traditional banking. By printing Tethers, and treating them as if they were real dollars, Bitfinex could be using them to pump the price of Bitcoin, in the hopes of buying time until they can re-establish banking relationships.
https://steemit.com/bitcoin/@jasmine.clarke/bitfinex-tether-usdt-does-the-price-of-bitcoin-manipulate-mu
In my opinion, that will never happen, and both Tether and Bitfinex will collapse when the Tether ruse is revealed.
-----
Coda
Bitfinex recently imposed a withdrawal minimum of $250, which likely prevents over 74% of its customers from withdrawing.
https://hackernoon.com/meet-spoofy-how-a-single-entity-dominates-the-price-of-bitcoin-39c711d28eb4
Tether is a cryptocurrency that is supposedly backed on a 1:1 basis with US dollars.
Tether has issued over $950 million dollars in the last 9 months.
IMO, there no actual dollars backing them most of these Tethers. I think it's also likely that their sister company, Bitfinex, has been using these Tethers to manipulate the price of Bitcoin. IMO, both companies will collapse when this becomes more widely known.
These are some of my reasons for believing this.
-----
No publicly available independent audits
Although Tether claims to perform regular audits, they've never published the results of an independent audit of their alleged dollar reserves.
----
They were cut off from fiat banking access months ago
They were cut off from access to the fiat banking system months ago--in May, 2017--when Wells Fargo cut off wire transfers to them. At that time, there were only $50 million Tethers in circulation.
https://hackernoon.com/the-curious-tale-of-tethers-6b0031eead87
They've not publicly announced that they've re-established any new banking relationships. Yet since then they’ve issued over $1 billion worth of Tethers. And they just produced another $125 million Tethers a few days ago.
https://twitter.com/TetheralReserve/status/941353534896959490
Without banking access, where did they get the dollars to back their Tethers?
-----
Bitfinex and Tether share the same underlying investors
Both Tether and Bitfinex, the largest cryptocurrency exchange, share the same shareholders. (As of August 2016, Bitfinex was the largest shareholder in Tether’s parent company, iFinex.)
▶ Watch on YouTube
-----
Bitfinex was hit by a heist, which created pressure to step up wash trading to make themselves seem more valuable than they really are
Bitfinex was hit with a $72 million Bitcoin heist in August 2016, which represented 36% of their holdings.
https://gizmodo.com/hackers-steal-72-million-in-bitcoin-from-honk-kong-exc-1784757592
Bitfinex responded to the attack by taking 36% from every customer's account. In exchange, they gave them a BFX token, which they promised to redeem for cash from future earnings, or redeem the tokens for shares in Bitfinex’s parent company iFinex.
In April 3, 2017, Bitfinex announced that they had redeemed all of the BFX tokens, thereby making their customers whole from the attack.
https://www.bitfinex.com/posts/198
How was Bitfinex--an exchange with no apparent access to the banking system--able to earn enough to make their customers whole?
One way might be by allowing the practice of "wash trading".
https://medium.com/@bitfinexed/wash-trading-bitcoin-how-bitfinex-benefits-from-fraudulent-trading-8bd66be73215
Wash trading is when a trader buys and sells the same financial instrument in quick succession, resulting in no net change in their holding of that asset.
What's the point of wash trading?
Exchanges make money by charging a fee for each trade on the exchange. By allowing wash trading, they can pump up the apparent volume, and make their exchange appear to be both more profitable and more liquid than it really is.
By appearing to be more profitable, they can increase the demand for their shares, and therefore their share price.
By appearing to be more liquid, they attract more (real) traders, and therefore can make more money.
----
There's evidence that Bitfinex executives trade on their own accounts on their own exchange which creates a conflict of interest with their customers
Company insiders trading their own accounts have an unfair advantage relative to their customers. For example, if they see that a whale has recently wired a large amounts of funds into their account, they can make trades in their own account in anticipation of the whale's future trades.
Likewise, if you know where your customers stop limit orders are, or their margin calls, you can make trades that trigger those actions, to your benefit.
There’s also evidence of someone spoofing the price of Bitcoin on Bitfinex. Read this article to understand what spoofing is, and why it’s unethical:
Are Bitfinix executives trading their own accounts?
Phil Potter, Chief Strategy Officer for Bitfinex, does in fact operate a Bitcoin trading hedge fund, and he’s admitted to trading on his own exchange:
https://medium.com/@bitfinexed/wash-trading-bitcoin-part-ii-who-and-why-is-someone-wash-trading-on-bitfinex-e1c7b5e0b3bb
-----
Conclusion
Both Tether and Bitfinex were in financial trouble, with no access to traditional banking. By printing Tethers, and treating them as if they were real dollars, Bitfinex could be using them to pump the price of Bitcoin, in the hopes of buying time until they can re-establish banking relationships.
https://steemit.com/bitcoin/@jasmine.clarke/bitfinex-tether-usdt-does-the-price-of-bitcoin-manipulate-mu
In my opinion, that will never happen, and both Tether and Bitfinex will collapse when the Tether ruse is revealed.
-----
Coda
Bitfinex recently imposed a withdrawal minimum of $250, which likely prevents over 74% of its customers from withdrawing.
https://hackernoon.com/meet-spoofy-how-a-single-entity-dominates-the-price-of-bitcoin-39c711d28eb4