A note from the writer:
Following the viral blog post and the subsequent, moderated debate on the use of bitcoin in Tether (USDT) schemes, I took the opportunity to revisit my years of notes on the topic. Having followed Tether since its 2012 origins in Mastercoin, I have always had healthy skepticism of its claims.
Whether or not Tethers are actually backed by unencumbered net assets, however, is no longer particularly interesting to me. Instead, I will continue to watch the New York Attorney General investigation with great interest for other, more important details that its investigation will reveal.
What is very interesting is how dozens of exchanges donate Tether in promotions, and then obfuscate off-blockchain Tether transactions within their hot wallets ⏤ reported to the world only by exchange-controlled APIs.
Any vig on tens of billions in daily transactions is far more meaningful than the current market capitalization of Tether itself. The Rule of 72 reminds us that earning just 1% per day means quadrupling one's money every year.
Off-blockchain, Tether-denominated transactions on the world's cryptocurrency exchanges ⏤ not the assets backing Tether itself ⏤ are hopefully the focus of a regulatory inquiry somewhere.
As Nic Carter concluded, "Tether is definitely a black cloud hanging over the industry, and I would love to see it resolved."
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