Tether Not a Ponzi scheme: bitmex

 Bitmex  exchange research team back with  another  ranging investigation. this time its tether.

 Now Bitmex Research has chipped in, and while its report won’t be the last word on the matter, 

according to research team: 

 There is some scepticism about Tether, with accusations that the system is not backed by sufficient reserves. We think that scepticism is misplaced. We have found possible evidence in published financial data that the impact of Tether may be visible in Puerto Rico’s banking system. Tether is likely to be, or is already, encountering problems related to regulation and we think this should be the primary long-term concern for Tether holders. 

 Tether probably does have the assets to back its dollar-based tokens, $31 million of USDT stolen and subsequently isolated by Tether .

 Bitmex writes:  

 The hacking incident demonstrated that Tether is effectively in complete control of the ledger, as they can force a hard fork at will and reverse any transaction…This raises the question of why Tether bothers to put the database on the Bitcoin and Ethereum blockchains at all — it would be far cheaper for Tether to create its own public database without needing to pay fees to the miners.

 Lack of transparency does not indicate fraud  security researcher Nicholas Weaver said:

 [Tether’s] characteristics potentially make it attractive to criminals, just like Bitcoin…Regulators are unlikely to be particularly happy about this and banks are likely to consider Tether with scepticism. Tether also requires the use of a bank, to hold the USD reserves required to back Tether. Many banks are therefore likely to be very cautious in respect of this issue and if Tether is accepted as a client, it may violate the banks’ compliance procedures such as rules meant to prevent money laundering. 

 The report finishes by  :

 In our view, Tether therefore has two choices: 1. Reform such that the system includes KYC/AML procedures enabling the operator to easily block transactions or freeze funds…2. Continue as it is and risk being be shut down by the authorities at some point. 

 If Tether is shut down, history shows us that there is a risk some users may lose access to their funds, perhaps temporarily. Therefore we do not recommend holding Tether for the long term.

Do you think Tether is at risk of being shut down by U.S. regulators? Let us know in the comments section below.

READ COMPLETE NEWS:https://news.bitcoin.com/bitmex-research-tether-not-a-ponzi-but-susceptible-to-shutdown/

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