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Comment by ac29 | Hacker News Reader

Impossible to know. 30 billion Tethers ago, it was at 74% according to a filing from Tether with the New York Attorney General.

In my opinion, best case scenario: Tether is buying Bitcoin and other assets with Tether, and has been able to sell them at a profit as prices rise, leaving their reserves at or above 100%. This sort of initially unbacked issuance may be a crime in and of itself, but its possible Tether holders would have a legitimate claim on any assets if Tether fails or is shutdown and wouldnt take a loss (though it could take years to get back their money).

Worst case scenario: its entirely, or almost entirely fraudulent, and Tether insiders have embezzled and spent as much of Tethers available hard currency as they can.

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Consider their T&Cs are very clear - owning USDT gives you no rights or claims on their reserves. They can also arbitrarily, and indefinitely, delay/postpone your withdrawal request. They can also substitute whatever they want from their assets to satisfy your claim. They can also just tell you to go pound sand.

Owning a USDT gives you as much right to cash from the Tether treasury as owning a Chuck-E-Cheese token gives you right to the coins in the cash drawer at your local fun-a-torium.

Why would they sell their bitcoin? I think that the most plausible explanation is that they're almost completely backed with bitcoin. In a bull trend, they're able to keep issuing more Tether because their collateral value increases. They can buy unlimited amount of bitcoin as long as the bull trend continues. In a down trend, they'll liquidate/sell the bitcoin.

> most plausible explanation is that they're almost completely backed with bitcoin.

Even if that's true it would be a direct contradiction to what they promise to their customers, that Tether is fully backed by USD. Any angry customer can then sue them for fraud.

They don't promise that. From their website: "Every Tether token is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”)."

That's a recent change, and come about since they've been taken to court.

They originally claimed that every USDT issued was backed by cold hard USD cash. No 'cash equivalents', no 'other assets', no 'loans'. The wayback machine can give you a historical view on their pages and their claims.

Your best case scenario is worse than what most people in the industry consider the truth..

Or rather, what most people in the industry pretend doesn't exist, because they know it's a systemic risk and everyone's in way too deep at this point.

Look, it's easy, just phone up Paolo and get us an audit, you seem to imply you're connected.

Then we'll move on! I'll eat my hat and apologize to everyone I've ever told Tether is anything other than the most legitimate entity in the entire world. I'll borrow from the r/wsb folks and tattoo a Tether logo on my backside, even.

Not sure this aged like you think it would:

> Or rather, what most people in the industry pretend doesn't exist, because they know it's a systemic risk and everyone's in way too deep at this point.

Are you referring to the NYAG here?

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