Backed By Nothing: How Tether Created the Largest Market Bubble, and Fraud Scheme in History.
Tether is a controversial coin that has been talked about amongst the crypto community for years now. It’s corrupt, and sketchy past has been a concern for many thinkers, while others deny any wrongdoings, and brush it off as FUD.
I’ve written an extensive thread on Tether’s price manipulation scandal last week, although I decided to take a step further, and write a detailed article in which I will address many of the concerns surrounding Tether’s past, present, and future.
This scheme goes well-beyond the depths many think which is why I’ve spent countless weeks researching, and sharing important information about the case with others.
Price Manipulation, Money Laundering, and Fraud.
Tether belongs to a breed of cryptocurrencies called stablecoins that aims to keep cryptocurrency valuations stable, as opposed to the rapid volatility we see in Bitcoin, Ethereum, ChainLink, Bitcoin Cash, Litecoin, and many others.
When Tether was first created, they claimed to be backed 1:1 with the US Dollar, but to date, there is not a single shred of evidence that supports their claims. Tether hasn’t had any audits, and refuses to show its reserves, which are hidden in shady offshore bank accounts.
Over the years, speculation regarding Tether’s legitimacy has grown. Investors are finally wanting answers to the lies Tether has spread. This increase in rumours that Tether isn’t fully backed has put a dent in Tether’s reputation, so they decided to take immediate action.
In 2019, They edited their website, and changed key words to secretly reverse their past claims with new, half-truths. Instead of being “backed 1-to-1 with USD”, they are now “100% backed by our reserves”, which, by the way, are unknown, and not verified by the public.
A study from two reputable scholars found that Bitcoin’s famous rise to $20,000 in 2017 was mainly caused by the injections of Tether. The injections came directly from a single holder on the Bitfinex exchange, which also happens to be owned by iFinex, the same people who own Tether limited.
By minting Tether, they essentially created an artificial surge in demand, which would ultimately attract new (real) money from investors FOMO’ing in. This creates a parabolic effect, and eventually results in a market bubble.
By tracking Tether’s printing history against movements in Bitcoin’s price, it reveals a suspicious correlation between the two. This chart I developed displays how Bitcoin grows when Tether mints, and declines when they stop.
In 2020–2021, Tether has printed more fake dollars than ever before. Contrary to what many think, this is the real reason we’re seeing this rapid price increase above $40,000, not a surge in “institutional demand” which makes up less than 10% of the market.
Many Tether defenders argue that Tether only prints when theres new demand, although this is not true. A simple glance at their market-cap and printing history would show how baseless these claim are, especially considering they’ve gone multiple months without printing any Tether, (which according to their logic, would mean zero demand for Bitcoin).
The majority of funds flowing into Bitcoin is from Tether.
Tether makes up an overwhelmingly large amount of volume on many top exchanges, including Bitfinex, Binance, Poloniex, and Bittrex. Data shows that almost 75% of all volume on Bitfinex (Tether’s subsidiary) is from USDT.
As we can see, the majority of Bitcoin is purchased with Tether. The moment Tether is shut down by authorities, Bitcoin’s price will tumble.
A common counter-argument I hear for this is: “If Tether is proven fraudulent, anyone owning USDT will just buy Bitcoin, and BTC will moon!”
This couldn’t be further from the truth. When Tether is proven fraudulent, it doesn’t just confirm Tether’s price is not worth 1 USD, but confirms that Bitcoin isn’t worth $40,000+ or whatever the latest price may be. It would confirm the majority of the market has been held up on fake money, and the amount of fear we will see would be unlike anything we’ve seen in the past.
New York Attorney General: Bitfinex and Tether Investigation
In 2019, The United States District Court sued Bitfinex, Tether, and Poloniex for being involved in a massive price manipulation, and fraud scheme in the crypto markets. Since the investigation would expose their extensive fraudulent frameworks, Bitfinex has rejected these accusations for years, and filed many motions to dismiss the $1.4T investigation.
Tethers own admissions for misleading investors
Tether’s lawyer signed an affidavit, and admitted that Tether wasn’t in fact backed 1:1 with the dollar, but rather only has reserves to back 74% of its ‘stablecoin’ issue.
After years of claiming they were fully backed, they found themselves cornered, and had to make the timed admission to avoid further prosecution, and prolong their scheme. This admission from Tether itself should’ve been a red flag to all investors, as they were misled for years.
One of Tether’s lawyers also accidentally admitted that they were purchasing Bitcoin with their reserves. This confession here confirms what me and others have been saying about Tether all along.
January 15th Deadline — Document Dump
The New York Attorney General (NYAG) called for the handover of loan documents relating to an $850 million cover-up to be completed on January 15th, 2021.
Tether’s Paolo Ardoino confirmed they had produced over 2.5 million document pages to NYAG, which is known as a “Document Dump” in law terminology. It’s commonly used by fraudsters looking to prolong their scheme by producing an unreasonably high amount of pages, that would take investigators too long to read.
This action from Tether makes them even more suspicious. Why would they intentionally produce millions of likely useless documents that would take years to read? It’s a shady tactic that is used by corrupt governments, politicians, and fraudsters.
Crypto Influencers Defending Tether: But Why?
Many verified and “trusted” pro-bitcoin figures have been calling all of these accusations against Tether nothing but FUD. They claim that Tether is fully backed, doesn’t need any audits, and has sufficient reserves.
Despite all of the undeniable evidence supporting the fact that Tether is running one of the largest schemes in history, and zero evidence of them doing as they claim, why have these pages decide to blindly defend it?
After doing research into many of these people, I’ve concluded that they all have deep ties with Tether, and are directly benefiting from the scam, hence why they want it to continue for longer.
Adam Back is a British cryptographer and cypherpunk. He is also the CEO of Blockstream, which he co-founded in 2014.
He has been a long-time defender of Tether, and has dozens of tweets expressing how it’s nothing but FUD, and everyone should ignore it.
Have you ever wondered why Adam Black is so defensive for Tether? After all, Tether has nothing to do with his company, Blockstream, right?
Tether has strong ties to Adam Black, and Blockstream.
In this soundcloud audio recording, Bitfinex executive Zane Tackett admits that Tether was 1 of 4 seed investors into Blockstream (and ShapeShift).
This Twitter Thread by the user Librehash also goes in-depth into Adam’s connections with Tether. Full credits to him.
Samson Mow is Blockstream’s CSO and Pixelmatic’s CEO.
He works alongside Adam Black, and has many of the same connections to Tether, which explains his constant defence for them.
Samson Mow has dozens of tweets defending Tether, and constantly shows his strong support for Paolo Ardoino. Despite not having any counter arguments, he continues to gaslight anyone that talks about Tether in a negative way.
He only supports Tether because Tether has invested millions into his company, Blockstream, and Liquid Network. If that wasn’t the case, he wouldn’t be defending them at all.
Peter McCormack is the host of the ‘What Bitcoin Did’ podcast, and has been a long-time Bitcoin supporter, and self proclaimed journalist.
Peter McCormack has been supporting Tether for years now, and has recently interviewed Bitfinex + Tether CTO Paolo Ardoino on his podcast.
The podcast episode avoided any questions pertaining to Tether’s audits, and controversies, but rather was a “marketing’ opportunity to help calm the heightened speculation going around.
Peter McCormack has close ties with Tether limited, and has done their bidding for years now. Following a legal dispute, McCormack has been in a years-long court battle with Craig Wright, known for claims of being Satoshi Nakamoto. While I won’t comment on Craig Wright’s legitimacy, or lack thereof, I think It’s odd that a stable coin issuer has decided to fund McCormack, and assist him with a lawsuit.
In addition, Kraken exchange is a large sponsor of Peter McCormack’s podcast, and Kraken happens to be funded by Tether Limited.
While I wouldn’t go as far as saying Pomp has been a hardcore “Tether Defender”, It’s clear that he’s had doubts about it early on, even calling it “the biggest racket/scam ever”.
After BTC dropped nearly 85% when Tether stopped printing in 2018, he switches his tune, and says ‘Tether news doesn’t matter”, and urged his followers to not read or fall for the Tether “FUD”.
This here shows the danger of Tether, and why it has lasted so long. Those enriched by the scam are willfully ignorant to it, and refuse to do any real research because it will disrupt the narrative they’ve been told, and are actively shilling.
As Anthony Pompliano once said, “People will ignore, dismiss, ridicule & question ideas that they do not understand.”, I think this tweet perfectly encapsulates the issues surrounding Tether, and the willful ignorance, dismissal, and ridicule towards those exposing the Tether fraud.
Justin Sun is a controversial tech entrepreneur, the founder of the cryptocurrency platform TRON and current CEO of Rainberry, Inc.
I could write an entire article on how this man is a con-artist, but thats for another day. To no surprise, Tether has strongly connected itself with Justin Sun through massive strategic partnerships with TRON.
Justin Sun has been one of the latest “popular” crypto-twitter users to defend Tether, and brush it off as FUD. He claims that “Tether is 100% backing every USDT”, which has been proven to be false, even by Tether itself.
There’s dozens of other pages, and journalists that have also shared misinformation about Tether, and supported it. I won’t mention each and every one of them, but the majority have some type of connections to Tether, and are helping them continue their fraud.
Tether has many popular crypto influencers and media sites in its back pocket. Those who are defending it are playing a risky game, and once they are shut down for fraud, price manipulation, money laundering, and tax evasion, those who offered their full support should be questioned.
Tethers Fate, and Its Impact on the Crypto Markets.
In recent news, Members of the US Congress announced the proposal of a new consumer protection bill to increase the oversight and regulation of existing stablecoin issuers, and stablecoin-related service providers.
The Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act, seeks to provide protection to unbanked and underbanked communities from fair lending risk and other consumer protection challenges such as disparate impact, predatory lending, and digital redlining.
In short, US regulators are considering new legislation that will define stable-coins as securities. If the bill is adopted, Tether might face a lawsuit from the U.S. Securities and Exchange Commission, which could be another nail in the coffin.
The big question is, what happens when Tether is gone?
No one can predict the future, but we can make calculated assumptions based on the data we have. I think Tether’s insolvency will result in an immediate crypto-liquidity crisis, and will produce extreme levels of panic and fear amongst investors.
The money won’t just flow to other stable coins, but rather destabilize the entire market. Seeing how dependant top exchanges are on USDT, It also highlights how much of the market is dependant on fake volume, and fake demand.
If the crypto community isn’t sufficiently preparing themselves for Tether’s insolvency, we could see a doomsday like event in the markets.
- Exchanges will stop withdrawals
- Trading will be paused
- Investors will panic
- Prices for Bitcoin, and Alt coins will crash as people try to sell.
- Introduction of new government regulations
- Banks will freeze BTC deposits
Response to the Criticism.
Following my last Tether thread, I received lots of criticism. Many have falsely accused me, and others of only writing about Tether to spread FUD — I assure you, that isn’t true. My goal is to share insight, financial data, market opinions, and help explain rather difficult topics, including Tether. I’ve been investing in Bitcoin for years now, and support everything it stands for, but I’m not blinded by the lies, manipulation, and deception, that is Tether.
Tether’s insolvency will have consequential impacts on the crypto markets in the long term. Once they are shut down, a swarm of government regulations will be introduced, which could put an end to the crypto markets we know today, and open a breeding ground of government and bank controlled stable coins, and cryptocurrencies — the opposite of what we want.
I know this article will be swarmed with hate by people who were too lazy to read it in full, and brush it off as FUD, and that’s alright. Ignorance shouldn’t be rewarded, and I urge those people to NOT listen to me.
“Facts do not cease to exist because they are ignored.” — Aldous Huxley
Thank you for reading!
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