USDT- The Biggest Scam In Crypto History?
USDT, also known as Tether, is a cryptocurrency issued using the Omni Layer Protocol. Every Tether printed is supposed to be equivalent to one US dollar, and is meant to serve as a safe haven to store your money out of other cryptos when the market becomes extremely volatile, or cryptos are down across the board in order to prevent further loss. In order to ensure that people who want to cash their tether to usd out will get paid in full, every tether minted is supposed to be backed up by one real US dollar held in a bank account. Currently, the bank account sits at $594,000,000.
The fact is that no one can really know if there even is that much money in their bank account. If that proves to be the case, it could mean various cryptos have been flooded with counterfeited money essentially, creating a bubble that may very well pop one day.
On Tether's own website, they state, "There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money." Now, this seems plain and simple: Tether does not have any legal obligation for Tether holders to pay them out. This is a very, very bad sign.
Essentially what it boils down to, is that Tether can print as many tethers as they want, which will all be valued at one dollar. They then sell those tethers off and make money off of selling something that is not even backed up by anything. And they can do it at any time.
If you are currently holding tethers, I would advise being extremely cautious. In addition, the markets could very well correct, considering how many tethers have been printed that may be propping up the prices of certain cryptos. Leave a comment below on what you think about the tether situation, and if it is worrying.
Sources: coinmarketcap.com
tether.to
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Here's a really good analysis of the situation from back in September, none of which has improved much since then: https://medium.com/@bitfinexed/the-so-called-tether-audit-that-isnt-an-audit-at-all-5a40cfcc2a75
It is really a scary situation, especially for exchanges and altcoins. There's a lot of shady stuff going on.
What do you think right now? It’s really scary situation.
I think we should just boycott Tether.
Tether was created by the people who manage Bitfinex. I find it suspicious that the exchange decided to blacklist all US citizen accounts around the time that the SEC stated they would be auditing ICO's. This indicates that they are fearful of being investigated. If they are truly afraid of being investigated, it must mean that they know they are doing something illegal and that they will be shut down.
Before this can occur I would like to see a thorough audit of Bitfinex and Tether carried out by the community. If we can bring some truth to light about this we can either petition other exchanges to drop Tether as a trading pair or possibly validate Bitfinex's claims that Tether is a legitimate operation.
If they are somehow selling the crypto's we buy with Tether for actual USD and can prove it, that would help their case. But if they can't it would be further proof that the exchanges we use are manipulating the markets in massive ways. It's possible that the exchanges have over-inflated the prices of many cryptocurrencies to the point that the majority of the overall market cap is entirely false.
There are reports of them setting very large buy and sell orders in order to manipulate the prices of certain coins. They are setting these orders without having any of the actual currency in any wallet. It's just a number that "looks" like someone is posting an order, but really it's just an empty number.
This is the kind of thing regulation is supposed to prevent. If we can't self-regulate as a community and hold these exchanges accountable the governments and financial elite of the world will step in and do it for us.
I can't imagine an investigation held by these entities coming to a positive end for any of us. It may very well result in a rapid decline in value of all of our coins. i.e. The "bubble" popping.