Tether: Rubber Will Soon Meet The Road

ph1l · Apr 24, 2025 at 5:19 PM

GlobalMacro90 said:
TO GET USDT, YOU HAVE TO PAY USD! Why is this so hard to understand?
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Why is this so hard for Tether to understand?
https://www.perplexity.ai/search/what-evidence-exists-that-teth-Fm9XXdEeTrWoDozegtD7zQ

Evidence That Tether Created USDT Not Fully Backed by USD
Regulatory Investigations and Settlements

The New York Attorney General (NYAG) concluded after an investigation that, starting no later than mid-2017, Tether did not have access to banking and, for certain periods, held no reserves to back tethers in circulation at a 1:1 rate with the US dollar, contrary to its public claims. The NYAG found that Tether published a purported verification of its cash reserves in 2017, but the cash was only placed in Tether’s account on the morning of the verification, not representative of ongoing backing7.

The investigation led to an $18.5 million settlement with the NYAG in February 2021. As part of the settlement, Tether was required to submit quarterly reports on its reserves2 7.

Admissions and Legal Filings

In April 2019, Tether’s parent company iFinex issued an affidavit stating that USDT was only 74% backed by cash and cash equivalents at that time, with the remaining 26% backed by other assets, not US dollars11.

In October 2021, Tether paid a $41.6 million fine to the U.S. Commodity Futures Trading Commission (CFTC) for inaccurately claiming that all USDT was fully backed by fiat USD. The CFTC found that Tether only held sufficient fiat reserves in its accounts to back issued USDT for about 27.6% of the days in a 26-month period between 2016 and 201811.

Recent Controversies

In April 2024, Tether minted $1 billion USDT on the Tron blockchain that was not immediately backed by USD reserves. Tether’s CEO stated these tokens were not in circulation and would be used for future issuance requests and chain swaps, but critics argued this practice raises transparency and stability concerns6.

Court Orders and Ongoing Lawsuits

Multiple lawsuits allege that Tether issued unbacked USDT to manipulate crypto markets. In 2022, a U.S. judge ordered Tether to produce detailed financial documents to substantiate the backing of USDT, noting allegations that Tether issued “completely unbacked” tokens “printed out of thin air”1 2 10.

Attestations vs. Audits

Tether has released attestations from third-party firms regarding its reserves, but these are not full audits and rely on information provided by Tether itself. For example, BDO Italia, which attested to Tether’s reserves in 2024, clarified it did not perform procedures or provide assurance beyond the reported date9.

Summary Table
Evidence Type Key Findings
NYAG Investigation Tether not fully backed at all times; periods with no reserves7.
iFinex Affidavit Only 74% of USDT backed by cash/cash equivalents in April 201911.
CFTC Settlement Tether only fully backed USDT for ~28% of days (2016–2018); fined $41.6 million11.
2024 Tron Minting $1B USDT minted unbacked for future issuance; transparency concerns raised6.
Court Orders Tether ordered to produce documents amid allegations of unbacked issuance1 2 10.
Attestations No full audits; attestations rely on Tether’s own data9.
Conclusion
There is substantial regulatory and legal evidence, including findings from the NYAG, admissions by Tether’s parent company, and a CFTC settlement, that Tether has issued USDT that were not fully backed by US dollars at all times. While Tether now claims all tokens are fully backed by reserves, ongoing lawsuits, lack of full audits, and continued controversies keep questions about its backing unresolved2 6 7 11.

Citations:

https://www.coindesk.com/markets/20...-to-produce-documents-showing-backing-of-usdt

https://blockworks.co/news/us-judge-orders-tether-to-prove-what-backs-usdt

https://tether.to/transparency/

https://coingeek.com/crypto-crime-cartel-tether-using-its-stablecoin-scam-to-exploit-el-salvador/

https://www.cryptonite.ae/global/tether-unbacked-usdt-tron-controversy

https://ag.ny.gov/press-release/202...l-currency-trading-platform-bitfinexs-illegal

https://www.justice.gov/usao-ndoh/p...0000-tether-usdt-cryptocurrency-valued-200000

https://coingeek.com/tether-celebrates-profits-but-market-manipulation-lawsuit-wont-go-away/

https://capital.com/usdt-tether-stablecoin-backing-documents-judge

https://en.wikipedia.org/wiki/Tether_(cryptocurrency)

Answer from Perplexity: https://www.perplexity.ai/search/wh...Fm9XXdEeTrWoDozegtD7zQ?utm_source=copy_output
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Tether: Rubber Will Soon Meet The Road

ph1l