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Comment by blackoil | Hacker News Reader

Who'll be buyer for 2B worth of tether?

The exchanges and crypto trading firms take billions of Tether in the form of bitcoin-collateralized loans [1].

Alex Mashinsky, former CEO of the now-defunct Celsius Network, described how it works [2]:

“If you give them enough collateral, liquid collateral, bitcoin, ethereum and so on ... they will mint tether against it,” he said.

“New USDT is issued for such loans,” he added, and later destroyed when the loan is closed “so it does not permanently increase USDT in circulation”.

If true, this contradicts Tether's claims that it only mints USDT in exchange for USD-backed treasuries.

No one. But they don’t need a buyer to create Tether coins.

But if they want to buy Bitcoin with them there needs to be someone on the other side of the transaction.

Which is fine, as long as the Tethers aren’t turned into real money their value isn’t realised. They stay in the system and the charade goes on

The users of USDT are fine with this scheme (at least, they've been so far)

It could be pretty much the Germany police, directly or indirectly, since Tether proposes non volatile "currency" easily convertible with Bitcoin.

But the German police wants real money not Tether. There needs to be someone to offer it or BTC/USD will collapse.