But, from what I've read, every USDT token that's issued to the public is to be backed by an equivalent amount of fiat. This is, in theory, supposed to make USDT resistant to market volatility. But how is this possible when it's backed by Bitcoin? This is especially troublesome because the USDT they issue will ultimately be used to buy Bitcoin. So this would be a double whammy if the market ever crashes.
At the very beginning they claimed that for every tether, there is 1 USD in their bank accounts.
But then they were caught lying, and they had reserves only 25% of the time (in a period of 1-2 years).
That's what they received the sentence from CFTC and the settlement in the NYAG.
And back then, the Tether marketcap had been around $2B. Now it's more than $100B.
They have been promising a financial audit for 7 years. Why can't they produce one?
They are claiming that they have always been able to redeem the dollars. Their CEO at the time answered to the question whether can he guarantee the redemption at dollar value forever, he said "I can't guarantee anything, but i believe we will be able to."
I don't believe they are sufficiently backed. Their dollar peg is artificial. Just look at luna's UST. It would have collapsed a year earlier, but trading firms allocated money to restore the peg(so they could sucker more money out of the system)... The same goes for Tether in my mind.
They keep it pegged so the cash cow can be milked further. Don't kill the goose that lays golden eggs.
At some point though, it's likely to burst.
