Remember the good old days in which Tether would tell us that it was 100% backed by USD and we would actually believe it?
Granted, it was only for a short amount of time, but it was cool when it was supposed to be working as intended.
Well, we know that the NYAG’s investigation made Tether change that statement and we also have been exposed to their recent report on how they only have 2.94% cash, which isn’t surprising.
Of course, even this report of theirs was very suspicious…
No Third-Party Reports: Lies, Deception, Deceit
One of the shadiest moves they recently made was that declaration where they “demonstrated” the backing USDT had.
Well, there were no third-party audits, which is shady by itself, but the way Tether handles this communication just throws kindle to the fires.
You see, since USDT is backed by 74% “cash equivalents” and from those only 2.9% are cash, there isn’t any stability to the stable coin, and the word “stable” is just a word.
The markets know this and as such have begun to increase the rate in which they pose questions… questions Tether feels aren’t proper, of course.
Well, each time the skeptics start questioning, there is always a new Podcast or Medium article supposedly showing some transparency.
Of course these “moves” have one purpose and one purpose alone, which is to give something for the people defending USDT to start fighting on social media calling all of the sensible arguments “Tether FUD”.
The truth is, every good fundamental analyst and crypto veteran knows this “transparency” narrative is just sand on our eyes.
The sad thing is that even people defending USDT know this, but they have too many vested interests.
But here’s the kicker…
…Tether has been caught lying several times, and I do mean downright lying!
When the NYAG investigation was running ink, Tether wrote:
“After an extensive investigation for more than two years and reviewing more than 2.5M documents provided by Tether and Bitfinex, the New York Attorney General’s Office made no negative findings whatsoever that tethers were not fully backed, nor were ever issued without backing.”
This is downright lying and, again, Tether trying to floodlight us. In truth, this was what happened, and I quote the investigation’s conclusion:
“Because of Tether’s inability to conduct significant banking activity during this time, it could not itself hold dollars sufficient to back the hundreds of millions of new tethers that had entered the market. Until September 15, 2017, the only U.S. dollars held by Tether ostensibly backing the approximately 442 million tethers in circulation was the approximately $61 million on deposit at the Bank of Montreal.
(...)
As of November 2, 2018, tethers were again no longer backed 1-to-1 by U.S. dollars in a Tether bank account, because a substantial portion of the backing… had been transferred to Bitfinex to make up for the funds taken by Crypto Capital.”
These moves set a precedent which I like to call Goal-Post Moving.
Goal-Post Moving: Tether Evading Capture
First, the narrative was that USDT was backed by 1 USD. It was all cash.
Then, they were forced to say that they were backing Tether with Cash Equivalents.
Finally, it now shows that only a fraction of each USDT is backed by Cash Equivalents.
So the goal-posts are being moved and they were moved A LOT so far… where do they go next?
The field is running out of space and the goals cannot be moved much further.
The master at directing narratives, or one of them, is Hoegner – you may know him by the fact he is the one in charge of maintaining the “Transparency” narrative.
Well, his past connects him to a casino scandal involving manipulation if you are to trust the keyboard investigators on Reddit, Twitter, and so on… which is ironic.
Speculation apart, this is all stinking by now, and it is taking a really frightening dimension…
BCH Is $556, But BTC Would Be $23 Without Tether:
The more Tether prints, the more time it is allowed to expand, the more crypto projects, tokens, and blockchains it infests, the more entities, systems, exchanges, tokens, and so on will it bring down in its inevitable demise.
USDT is constantly pumping BTC for example, as I wrote about already countless times, and experts, crypto skeptics, and so on keep on banging the key that “BTC would trade in low teens if not for USDT”… and they are right!
The tokens immune to this are crypto not pumped by Tether, BCH being one of them.
CoinGeek also writes quite a bit about USDT, and here’s what they write on this particular topic:
"Following periods of negative returns, Tether flows from Bitfinex to Poloniex and Bittrex, and in exchange, Bitcoin is sent back to Bitfinex… When there are positive net hourly flows from Bitfinex to Poloniex and Bittrex, Bitcoin prices move up over the next three hours, resulting in predictably high Bitcoin returns. The price impact is present after periods of negative returns and periods following the printing of Tether, that is, when there is likely an oversupply of Tether in the system.”
“This phenomenon strongly suggests that the price effect is driven by Tether issuances. Additionally, the price impact is strongly linked to trading of the one large player and not to other accounts on Poloniex, Bittrex, or other Tether exchanges.”
If you have been reading my blog posts, you know I’m always writing about this and on how dependant on this printing machine BTC is.
On the other hand, the crash coming from Tether’s flames will be catastrofic, it will be a bear market that will remind us all of the destruction of the black death – or even worse!
Exchanges collapse, taking the majority of people with them. Poloniex, Bittrex, Binance, Bitfinex, FTX, BSC, and so on… all in shambles.
By reading a recent study on the Journal of Finance you can even see USDT is being minted to purchase BTC for ages now, and that USDT has more trading volume than XRP, ETH, and BTC… COMBINED!
Of course, BTC would be traded in the low teens if it wasn’t for the printer going BRRR…
I shudder to think about this time-bomb going off, and when it happens… the whole of crypto, and yes it will affect everyone, will have a HUGE liquidity problem.
Nobody will like it, not even I, though I know it will happen and it SHOULD HAVE HAPPENED ALREADY.
It’s our fault this has gone too far, and we aren’t doing ourselves any favors delaying the inevitable.
Just the other day, Tether was supposed to flip $3 Billion TRON to ETH.
They added the $3 Billion to ETH and only revoked $2 Billion to TRON… the net result was that $1 Billion in USDT entered circulation… am I supposed to think they added $1 Billion in assets?
This is crazy!
But do you know why Tether does these things?
Because it is feeding a lot of very influential players, and it knows these players will all flock to its defense.
Two of the pocketed individuals are Mow and Beck, Blockstream executives… surprisingly, Tether is a Blockstream Seed investor, one of the 4.
Tether Won El Salvador, Not BTC: BTC “El Salvadorian” Fallacy
Did you stop to analyze how the El Salvador deal works?
Well, let me tell you…
What the recent “El Salvador” adoption means is that El Salvadorians are going to be adopting Strike.
Strike is Blockstream’s version of LN and it works in an interesting way.
For example, the “millions in BTC” they will have are in fact millions in Tether. The people there will use Strike’s QR Codes to withdraw money, which will work this way:
People Scan Codes with Strike;
Strike converts Tether to BTC;
BTC is Sent to ATM;
ATM dispenses Salvadorian FIAT.
You see, this whole ordeal was a victory for Tether and Blockstream, not BTC.
Of course, BTC Maxis don’t even question or analyze things critically, they just scream victory!
Then, there’s a very interesting point being made by reporter David Gerard, who writes:
“Bukele appears to be setting the country up to inject bitcoins into the economy, mark them as ‘dollars’ to make up his deficit, and grab the actual dollars to pay foreign debts.”
Interesting.
In conclusion and once again, Tether is expanding its influence and reach in a never-ending journey to avoid crashing.
This is done by pocketing more and more influential people and institutions thanks to the super-power Tether has… the green card for printing money.
Ironic that BTC Maxis used to care about inflation…
…not anymore.
Cheers!
Follow Me!
Main Sponsors: @Pantera @MicroReylatos , @Macronald
Good article. Thank you!