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Todd Carlisle avatar
Todd Carlisle
@tcardizzle
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So this isn't my first rodeo. I know how this post will be received by some. "FUD." This warning (number 4 by my count) isn't for those people, it's for the people who realize we live in the real world where bad things happen. If you follow me at all then you're familiar with USDT. I posted after the NY District Attorney findings in February and again earlier this month when the CFTC revealed similar findings resulting in an additional fine. For those unfamiliar I'd like to sum up the findings of these investigations with two quotes. "Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” said Attorney General James. “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system." "For years, Tether told customers and the broader cryptocurrency market that it had US$1 in reserve to back every token," the Commodity Futures Trading Commission said. "That claim was wildly misleading, For instance, from June to September 2017, there was never more than US$61.5 million backing Tether, even as more 442 million coins were circulating at one point." Summary: Tether has been found to be totally lying about their holdings twice. Now activist short seller Hindenburg Research, responsible for taking down all time frauds $NKLA last year, has USDT in their sights. On October 19 they tweeted out "We have doubts about the legitimacy of Tether, so today we announce the Hindenburg Tether Bounty Program, a reward of up to $1,000,000 for details on Tether’s backing. (1/x) https://t.co/DP5dWDcYmJ" It is also important to note that Hindenburg specifically notates that they have no positions in crypto either long or short. They're not benefiting from this information. In fact, if USDT was legit they could fulfill the terms and collect $1 million. Their response was anything but transparency. This is following a detailed article by Bloomberg (link at the end) who uncovered a list of unsettling charges against Tether. Last week the SEC was granted authority to begin to rein in stablecoins hinting that they may be forced to comply with regulations similar to what banks must undergo. These regulations would include a reserve requirement. Reserve requirements are what make it so that when you go to withdraw money you're able to do so. Even if there's a run on the banks these reserve requirements should maintain your ability to withdraw your money. Currently stablecoins have literally no requirements. See the issue is this: When you acquire USDT you are paying them $1 to get 1 USDT. That means literally every one of the 70 billion tethers (an astonishing 49 billion created this year alone) should be backed by $1. The NY district attorney found that instead of this, the people behind tether were using this money to speculate on cryptocurrencies. This resulted in over $800 million in losses. In order to cover these losses they simply created more tethers which they used to purchase Bitcoin. A research paper from 2018 details how tether was responsible for the bull run and eventual crash of Bitcoin in 2017. This crash wasn't recovered until late last year. This was during a period when tethers were measured in hundreds of millions. They are currently measured in tens of billions. I seen a lot of people confused about how this affects them. You don't have to own USDT for this to be a huge problem for you. Why? Upwards of 70% of all Bitcoin trading volume is carried out using Tether. If you go to almost any exchange right now you will see trading pairs between a cryptocurrency and USDT. Currently the entire system is built around tethers. Although two investigations are already finished they are not the only ones by any stretch. The people behind tether are currently under investigation by the justice department facing criminal charges. They are also under investigation by the SEC and have been targeted by Treasury as a "systemic risk to the financial system." So we're not just talking about a risk to people that are holding USDT. With 70 billion in circulation we're talking about a risk to the entire financial system. I'm posting this information because we're nearing the climax of this multi year saga. Last week the SEC was granted powers to begin to deal with stablecoins. They mentioned Tether by name. Hindenburg is also solely focused on exposing Tether right now. The party is over. The only question is are you going to heed the warning or ignore it? Before making any decisions I strongly encourage you to take the time to read through the SUBSTANTIAL evidence provided below. That's not even half of it. This isn't about bulls vs bears. It isn't about loving or hating crypto. It's quite simply about an all time fraud, bigger than Bernie Madoff, and the journey to stop them. People ignored warnings about Madoff as well. #tether #usdt #tcardizzle Sources https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether ////// https://www.bloomberg.com/news/articles/2021-07-27/tether-facebook-coin-spur-worry-at-yellen-s-closed-door-meeting ////// https://cointelegraph.com/news/tether-volume-hits-600b-as-it-attempts-to-take-on-bitcoin-as-crypto-s-benchmark ///// https://wccftech.com/is-hindenburg-researchs-1-million-bounty-for-dirt-on-tether-usdt-about-to-break-the-proverbial-back-of-the-ongoing-crypto-rally/amp/ ////// https://bitfinexed.medium.com/tether-is-setting-a-new-standard-for-transparency-that-is-untethered-from-facts-deec42c473bb ///// SEC Gets Path to Rein In Stablecoins as U.S. Weighs New Rules https://www.bloomberg.com/news/articles/2021-10-25/sec-gets-path-to-rein-in-stablecoins-as-u-s-weighs-new-rules /////// https://financialpost.com/fp-finance/cryptocurrency/tether-executives-said-to-face-criminal-probe-into-bank-fraud
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