Tether Once Again Pulls a Sneaky Update

Tether used to claim that 1 USDT was backed by 1 USD in reserves. This has now been silently changed to

Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.

They openly admit they send funds to bitfinex.

USDT is now officially not backed 100% by USD.

I guess we're back to trusting 3rd parties, running fractional reserves, to run the market.

https://tether.to/

Proof of funds link also leads to a dead page.


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30 comments

  1. LBJSandwich

    |Author

    Loans made by Tether to 3rd parties…wtf…so they’re taking people’s money, lending it to people to earn interest, and then counting it as an asset!? Guess what? Third parties default on loans all the time and the lender can’t collect full value. Terrifying.

  2. dj-shortcut

    |Author

    This is a clear indication it never was ‘backed’. Many made good money with Tether so i bet they are hesitant to put aside the presupposition. but oh boy does it look flimsy from this side.

  3. kneli

    |Author

    Loans made by Tether to third parties, aka fractional banking. I wouldn’t put my funds in tether either, but I think Tether “imploding” is very unlikely to happen (at least for now) as some are suggesting here.

  4. faintingoat

    |Author

    nice finding. i d like to know the total amount of their reserve. they probably have much less than the number of usdt in circulation… the lesson to learn is that you cannot avoid the development of fractional reserves in economies. tether may trigger a new recession at some point.

  5. cumulus_nimbus

    |Author

    So, they made a hardfork in a very critical part of the monetary rules and nobody cared nor need to willfully change their nodes to the new rules?

    What strange kind of cryptocurrency is this?!

  6. Spiritual-Abyss

    |Author

    If Tether really is an issue for us, than perhaps tether will be the final bottom we all are waiting for. There’s no way tether would try and push a scam through another bull run. Way to risky for them. But I also still have some faith that it isn’t a scam. I don’t trust them but I also don’t like making assumptions

  7. Krazy500

    |Author

    Once Tether collapses on itself it will bring the market down worse than ever before. Ideally people slowly start using other stable coins to make the impact less severe. For a while it looked like that was the trend, but now all of a sudden Tether is king of stabletown again, unfortunately.

  8. s1gmoid

    |Author

    “Back to?” How was it ever any different?

    I’m quite certain that it’s never been any other way, after all look at their whole brouhaha with the “audit”… In fact, it was probably worse.

  9. PaloAltcoin

    |Author

    If I read this correctly, they are actually backed by cryptocurrency. So, when the price drops and people flock to Tether, it increases the amount of Tether and it decreases the funds it’s backed by.

    This is just Bitconnect with extra steps.

  10. vectortrader

    |Author

    Was it ever “officially” backed 100% by USD, though? Just because they said that it was, never really meant that it was. And a sketchy one-time “audit” in place of a quarterly audit doesn’t cut in proving their reserves. People in the space would be much better off using something like DAI.

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