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Comment by beaned | Hacker News Reader

Isn't correlation also what you would expect in an honest scenario as well? If there's demand for acquiring tether to trade Bitcoin, and it has to be printed, so it is, and then it's used for Bitcoin trading, I don't understand where the fishy-ness is. At least not from that one timing perspective.

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People buy Bitcoin with regular money, not with USDT. People exchange from cryptocurrency to USDT because they really want USD, but that is significantly harder to convert to.

As people are pointing out elsewhere in this thread, the biggest liquidity for BTC is in BTC/USDT markets

So when people want to buy BTC they often do exchange from USDT.

Sure, but that's irrelevant as far as the scam goes. What matters is real money entering the markets for fake money, e.g. USD for cryptos. That people after that can trade back and forth between different fake moneys is irrelevant, although it naturally keeps the illusion alive that these are valuable assets. USDT stands out because it's marketed as almost the same thing as USD, which it of course isn't.

I also do think Tether is dodgy, but even if they weren't, the illusion would be the same – real money enters the market through the usual fiat onramps, then it gets traded for BTC. Since BTC/USDT is one of the most liquid markets, this often can result in new Tether being issued to trade with (potentially in a transparent way to the user) and as long as the other party does not redeem these new USDT they inflate the market cap

The question then becomes whether the fiat going in matches the new Tether being issued, and that can't be answered without a proper audit.

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