Tether

{{bronze}}
[[File:Tether Logo.svg|thumb|right|165px|Tether's logo.]]
{{scam}}
{{cquote|That's as good as money, sir. Those are Tethers.|||[https://old.reddit.com/r/Buttcoin/comments/uqciql/thats_as_good_as_money_sir_those_are_tethers/ u/TamponSmoothie]}}
{{cquote|We could abscond with the reserve funds.|||from a Tether legal disclaimer notice<ref name=faux>''Number Go Up: Inside Crypto's Wild Rise and Staggering Fall'' by Zeke Faux (2023) Crown Currency. ISBN 0593443810.</ref>{{rp|11-12}}}}
'''Tether''' is a [[Hong Kong]]-based company known for issuing, among others, USDT, a centralized<ref>[https://www.ledger.com/academy/what-is-tether-usdt What is Tether (USDT)?] by Mohammad Musharraf (Dec 6, 2023) ''Ledger Academy''.</ref> [[cryptocurrency]] whose value is supposed to be backed by [[United States dollar|US dollars]].<ref name=whitepaper>[https://assets.ctfassets.net/vyse88cgwfbl/5UWgHMvz071t2Cq5yTw5vi/c9798ea8db99311bf90ebe0810938b01/TetherWhitePaper.pdf Tether: Fiat currencies on the Bitcoin blockchain] (c. 2022)</ref> USDT is part of a family of cryptocurrencies called ''stablecoins''. As of 2025, 88% of all stablecoin capitalization was held by Tether.<ref>[https://media-publications.bcg.com/Stablecoins-five-killer-tests-to-gauge-their-potential.pdf Stablecoins] by Kunal Jhanji et al. (May 2025) ''BCG''.</ref>

Run by executives who avoid making public appearances and just somewhere between 11 to 50 employees supposedly managing more than 60 billion USD, they are perhaps the most important company in the cryptocurrency space.

==Origins==
[[File:Brock Pierce in Midway, Utah, in 2018 (cropped).jpg|thumb|right|165px|Pierce in 2018]]
J. R. Willett wrote something called "The Second Bitcoin Whitepaper" in 2012.<ref>[https://cryptochainuni.com/wp-content/uploads/Mastercoin-2nd-Bitcoin-Whitepaper.pdf The Second Bitcoin Whitepaper, vs. 0.5 (Draft for Public Comment)] by J. R. Willett (2012) ''Crypto Chain University''.</ref> This whitepaper described the MasterCoin idea that would keep track of ownership of all the disparate cryptocurrencies in one place, and eventually resulted in the creation of a functional MasterCoin.<ref name=faux/>{{rp|35}} Willett received the equivalent of $500,000 in investments by selling MasterCoins starting in 2013 based on the promise that it would launch as a tradable coin. This was as it happened illegal, being an "unregistered securities offering". He never was charged for a crime however presumably because the US Securities and Exchange was not yet on the lookout for this type of cryptocurrency activity.<ref name=faux/>{{rp|35-36}}

Three people joined together to create Tether in 2014:<ref name=faux/>{{rp|34,36}}
#{{wpl|Brock Pierce}} is best known as a former-child actor; he made some moolah selling a gaming company he founded, {{wpl|IGE||,}} which was pioneering in the concept of selling game-based virtual currency that had been 'farmed' by low-wage foreign workers.
#Craig Sellars, who was a computer programmer who had worked on developing MasterCoin
#Phil Potter, who was then an executive at the '''Bitfinex''' Bitcoin exchange
[[File:Bernard Von NotHaus.jpg|thumb|right|165px|Von NotHaus]]
Both Pierce and Potter have claimed credit for the idea of Tether.<ref name=faux/>{{rp|36}} Contrary to Pierce and Potter's [[great man theory]] of Tether creation, several similar attempts at creating stablecoins had already taken place:<ref name=faux/>{{rp|37}} 
*{{wpl|Bernard Von NotHaus}} created a physical "Liberty Dollar" in 2005 with [[Ron Paul]]'s face on it, intended to compete with the US dollar.<ref>[https://www.motherjones.com/politics/2011/03/maker-gold-ron-paul-currency-goes-prison/ Ron Paul Coin Minter, Pot Priest, Faces 15 Years in Prison] by Tim Murphy (March 21, 2011) ''Mother Jones''.</ref> Von NotHaus was convicted of counterfeiting but only served probation.
*Arthur Budovsky created the {{wpl|Gold Age||,}} a digital non-cryptographic currency in 2001. After Budovsky was convicted of violating the New York State banking law in 2006 in connection with Gold Age, he fled to [[Costa Rica]] where he created the {{wpl|Liberty Reserve}} digital currency that same year. In 2013, the Liberty Reserve was seized by the US government and Budovsky was sentenced to 20 years in prison in 2018.<ref>[https://www.justice.gov/usao-sdny/pr/liberty-reserve-founder-arthur-budovsky-sentenced-manhattan-federal-court-20-years Liberty Reserve Founder Arthur Budovsky Sentenced In Manhattan Federal Court To 20 Years For Laundering Hundreds Of Millions Of Dollars Through His Global Digital Currency Business] (May 6, 2016) ''United States Department of Justice''.</ref>

==Company executives==
{{cquote|We’ve never been shady.|||Ardoino<ref>[https://www.theguardian.com/technology/2025/mar/07/tether-crypto-trump-interview Crypto giant Tether CEO on cooperating with Trump administration: ‘We’ve never been shady’] by George Chidi (7 Mar 2025 11.21 EST) ''The Guardian''.</ref>}}
Tether's C-suite (i.e., the senior executives), excluding the Chief Technology Officer (CTO), is notorious for being secretive and not appearing in the [[media]], which is strange for a company managing such a large amount of money as they claim.

===Paolo Ardoino===
[[File:Paoloardoino.png|thumb|right|165px|Paolo Ardoino]]
{{cquote|I have been open about the attempts from some hedge funds that were trying to cause further panic on the market after TERRA/LUNA collapse. It really seemed from the beginning a coordinated attack, with a new wave of [[FUD]], [[troll]] armies, clowns etc.|||Ardoino<ref>[https://web.archive.org/web/20220904075748/https://twitter.com/paoloardoino/status/1541418818664292355 1/ I have been open about the attempts from some hedge funds that were trying to cause further panic on the market after TERRA/LUNA collapse. It really seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns etc. …] by Paolo Ardoino (1:50 PM · Jun 27, 2022) ''Twitter'' (archived from September 4, 2022).</ref>}}
Ardoino was the company's CTO from about 2019-2023<ref>[https://web.archive.org/web/20191116023657/https://twitter.com/paoloardoino Paolo Ardoino] ''Twitter'' (archived from November 16, 2019).</ref> He became CEO in October 2023.<ref name=ardoino2024>[https://web.archive.org/web/20240217180556/https://twitter.com/paoloardoino Paolo Ardoino] ''Twitter'' (archived from February 17, 2024).</ref><ref>[https://www.cnbc.com/2023/10/13/tether-promotes-cto-to-ceo-taking-over-from-mysterious-crypto-boss.html Stablecoin Tether promotes tech chief to CEO, taking over from mysterious crypto leader] by Ryan Browne (Oct 13 202310:10 AM EDT) ''CNBC''.</ref> He is also the CTO for the cryptocurrency exchange Bitfinex.<ref name=ardoino2024/> He's the public face of Tether and the one who shows up in Tether's media appearances.

In July 2021, he appeared in a interview in CNBC.<ref name=paolocnbc>[https://youtube.com/watch?v=ZBEqyiO35cQ CNBC TechCheck with Tether's CTO and general counsel] by CNBC Television (21 Jul, 2021) ''YouTube''.</ref> He dodged every important question, such as what companies make up their {{wpl|commercial paper}} holdings, who their intermediaries are and inquiries about the {{wpl|New York Attorney General|NYAG}} statement that "Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie."<ref>[https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal Attorney General James Ends Virtual Currency Trading Platform Bitfinex's Illegal Activities in New York] (23 Feb, 2021) ''New York State Office of the Attorney General''.</ref>

Like any proper cryptocurrency user, he was thrilled with [[El Salvador]] accepting [[Bitcoin]] as legal tender, having much of the same views that one would come to expect,<ref>[https://archive.is/wip/guB5v El Salvador #bitcoin law 1st anniversary 🇸🇻 1/ El Salvador has been extremely brave in adding Bitcoin as legal tender.] by Paolo Ardoino (2:38 PM · Sep 7, 2022) ''Twitter'' (archived from 29 Mar 2024 07:32:15 UTC).</ref> despite the fact that Bitcoin has none of the properties that would allow itself to be suitable for currency use in El Salvador, like a stable price with stable [[inflation]] over time and being actually usable in a country where Internet penetration and amount of people actually able to use Bitcoin securely{{efn|Bitcoin, or any cryptocurrency for that matter, is not easy to use by any means, your average person that only knows how to use phones for calls, social media and reading emails stands no chance. No refunds!}} is low.

===Giancarlo Devasini===
[[File:Giancarlo-devasini.png|thumb|right|165px|Giancarlo Devasini]]
Devasini {{lived|1964}} is the company's CFO, as well as Bitfinex's CFO. Not much is known about him, and what little is out there seems unreliable.<ref>[https://old.reddit.com/r/Buttcoin/comments/usfs7o/giancarlo_devasini_is_the_father_of_tether_and/ Giancarlo Devasini is the father of Tether and barely anybody talks about this scammer] r/buttcoin (18 May 2022) ''Reddit''.</ref><ref name=faux/>{{rp|40-46}} He previously had careers as a plastic surgeon, computer hardware trader and owner of a food delivery service.<ref name=shubber>[https://www.ft.com/content/4da3060c-8e1a-439f-a1d7-a6a4688ad6ca Tether: the former plastic surgeon behind the crypto reserve currency] by Kadhim Shubber & Siddharth Venkataramakrishnan (Jul 14, 2021) ''Financial Times''.</ref> Regarding his career as a surgeon he said, "All my work seemed like a scam, the exploitation of a whim."<ref name=shubber/> His computer hardware trading involved several instances of shady practices, including counterfeiting [[Microsoft]] software for which he paid a US$65,000 fine in 2007 in exchange for cooperating with criminal investigators.<ref name=shubber/><ref name=faux/>{{rp|41-42}} In a 2008 blog post deduced to be by Devasini, he expressed admiration for the great [[Ponzi scheme]]r [[Bernie Madoff]] and how he had gotten away with the scheme for so long.<ref name=faux/>{{rp|45}}

Devasini is clearly the nexus in the incestuous relationship between Tether and Bitfinex, since he is able to transfer funds at will between the two companies by signing off as the CFO of both companies on the same document.<ref name=faux/>{{rp|63}}

===Jean-Louis Van Der Velde===
[[File:JL van der Velde.jpg|thumb|right|165px|Jean-Louis Van Der Velde]]
Van Der Velde was the company's CEO until October 2023, as well as Bitfinex's CEO. Like the CFO, he's surrounded in mystery. He has a Bitfinex blog post about him making some [[vague]] claims, however.<ref name=velde>[https://web.archive.org/web/20220617034653/https://blog.bitfinex.com/profiles/bitfinex-leadership-jl-van-der-velde/ Bitfinex Leadership – Jean-Louis van der Velde, Chief Executive Officer] (12 March 2018) ''Bitfinex''.</ref> His puff-piece biography lists him as a "technologist and serial entrepreneur".<ref name=velde/><ref>[https://www.linkedin.com/in/jlvdv/ J. L. van der Velde] ''Linkedin''.</ref> He attended National Taiwan Normal University, but presumably did not obtain a degree.<ref name=velde/> His title of CEO purportedly carries little weight, and Devasini is the actual person in charge of Tether.<ref name=faux/>{{rp|136}} As of 2021, Van Der Velde was still the owner of record of Huashun Electronics, a Chinese-based company that is on a Chinese government list of companies that are "seriously untrustworthy and law violating".<ref>[https://www.ft.com/content/4576f34f-fcd6-4bef-bef4-d4a7ad49c5fc Tether’s CEO: from IT sales to calling the shots in crypto land: Jean-Louis van der Velde’s career offered few clues that he would become a key figure in fast-growing industry] by Kadhim Shubber et al. (December 17, 2021) ''Financial Times''.</ref>

==Controversies==
===Auditing===
In order for USDT's value to remain at 1 USD, people need to know that (1) there's indeed 1 US dollar somewhere in the company's possession for every USDT issued and (2) they can cash out whenever they want. A way for people to be assured that this is indeed the case is to have Tether's reserves be regularly audited by a trusted, independent third party, something they are not good at.

Tether's former auditor from May 2017 to January 2018, Friedman LLP, settled charges with the U.S. Securities and Exchange Commission that it had engaged in "serial violations of the federal securities laws" and numerous instances of "improper professional conduct".<ref>[https://www.coindesk.com/policy/2022/09/26/tethers-former-auditor-fined-1m-by-sec-for-sloppy-accounting/ Tether's Former Auditor Fined $1M by SEC for Sloppy Accounting] by Cheyenne Ligon (Sep 26, 2022) ''CoinDesk''.</ref>

In 2021, Tether appears not to have had a functional auditor,<ref>[https://www.coindesk.com/markets/2021/07/21/tether-general-counsel-tells-cnbc-audit-is-months-away/ Tether General Counsel Tells CNBC Audit Is 'Months' Away] by Frances Yue (Jul 21, 2021 at 10:34 a.m. PDT; Updated Sep 14, 2021 at 6:29 a.m. PDT) ''CoinDesk''.</ref> but they do publish [[Testimonial|attestations]], in which a third party, Moore Cayman, based in the [[Cayman Islands]] (!), says that they indeed have $X when they did the attestation and doesn't go any further than that.<ref>[https://web.archive.org/web/20220920150121/https://tether.to/en/transparency/#reports Transparency] ''Tether'' (archived from September 17, 2022).</ref> In 2022, all of Moore Cayman's clients were taken over by MHA MacIntyre Hudson, which as of 2023 was under investigation by the UK Financial Reporting Council.<ref>[https://www.coindesk.com/markets/2022/01/26/tethers-new-accounting-firm-is-the-old-one-with-baggage/ Tether's New Accounting Firm Is the Old One, With Baggage: Moore Cayman is now operating under the MHA Cayman name, but the firm's parent is under investigation in the U.K.] by Helene Braun (Jan 26, 2022 at 8:37 a.m. PST; Updated May 11, 2023 at 9:59 a.m. PDT) ''Coin Desk''.</ref> To get an idea of how worthless these assurances are, there's no better way than reading one of them. If you can't stand the legalese, [[:User:David Gerard|David Gerard]] has a blog post about one published in 28 February 2021, explaining why these attestations are not a substitute for a proper audit.<ref>[https://davidgerard.co.uk/blockchain/2021/03/30/tether-produces-a-new-attestation-it-says-nothing-useful/ Tether produces a new attestation — it says nothing useful] (20 March 2021) ''David Gerard''</ref>

By 2022, Tether obtained the auditing services of a reputable accounting company, BDO Global, which did at least certify Tether's assets for a single day (30 June 2022):<ref>[https://assets.ctfassets.net/vyse88cgwfbl/2xJyKdUKicdRUWpC9buRWR/544a579335ae65ed0e08c162c5a2c5d9/Std_ISAE_3000R_Opinion_30-6-2022_RC134792022BD0303.pdf Tether Holdings Limited] (10 August 2022) ''BDO''.</ref>
{{blockquote|Our opinion is limited solely to the CRR [Consolidated Reserves Report] and the corresponding consolidated total assets and consolidated total liabilities as of 30 June 2022. Activity prior to and after this time and date was not considered when testing the balances and information described above. In addition, we have not performed any procedures or provided any level of assurance on the financial or non-financial activity on dates or times other than that noted within this report.}}
But Tether's auditing problems appear to be ongoing, and more likely a feature than a bug.<ref>[https://www.pymnts.com/cryptocurrency/2022/tether-audit-promised-for-5-years-still-months-away-cto-says/ Tether Audit, Promised for 5 Years, Still Months Away, CTO Says] (August 28, 2022) ''PYMNTS''.</ref>

===Redeeming USDT===
Cashing out or redeeming USDT is a whole different story entirely. Theoretically, Tether themselves will allow you to redeem their stablecoins with them directly.{{lie}} In order to do that, you will need an account with them.<ref name=redeem>[https://web.archive.org/web/20220512151421/https://tether.to/en/redeem-tethers-to-your-bank-account Knowledge Base | Redeem TETHER tokens to fiat currency] ''Tether'' (archived from May 12, 2022).</ref> However, in order for your account to be able to redeem cryptocurrencies, you will need to ''verify'' your account (also known as completing a Know Your Customer or KYC process), which includes having to pay for this process to be completed.<ref>[https://web.archive.org/web/20220512151421/https://tether.to/en/verify-your-account Knowledge Base | Verify an account on Tether] ''Tether'' (archived from May 12, 2022).</ref>{{efn|Most legitimate financial institutions will ask for completion of a KYC process to prevent fraud and money laundering, they by-and-large to not ask for payment to do so.}}

Of course, in [[reality]], redeeming Tether's cryptocurrency with Tether isn't that easy. In the "Redeem TETHER tokens to [[fiat currency]]" page, there's this:<ref name=redeem/>
{{quotebox|5. Finally, you will now receive an email confirming receipt of your redemption request.}}

Note the use of the word '''request'''. In Tether's legal page,<ref>[https://web.archive.org/web/20220512151406mp_/https://tether.to/en/legal/ Legal] ''Tether'' (archived from May 12, 2022).</ref> the following clause can be seen:
{{quotebox|The right to have Tether Tokens redeemed or issued is a contractual right personal to you. Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all.}}

Indeed, there are many stories about not being able to redeem USDT in Tether's official website.<ref>[https://old.reddit.com/r/Buttcoin/comments/9oxrlk/time_for_bitcoinmarkets_quarterly_has_anyone_ever/ Time for bitcoinmarket's quarterly "Has anyone ever _actually_ redeemed tethers"-thread (spoiler: No)] by u/temporarymctempton (17 Oct 2018) ''Reddit''.</ref> For most people, the way to get back fiat from USDT is finding a buyer willing to exchange real money for USDT in the ever-so-trustworthy cryptocurrency exchanges.

===Unbacked USDT speculation===
Because of Tether's failure to produce a credible audit, there's a fair amount of speculation that USDT may not be backed after all, and that they are lying through their teeth.<ref>[https://old.reddit.com/r/Buttcoin/comments/smdaus/tether_new_reserves_breakdown/ Tether - New Reserves Breakdown] by u/2Panik (07 February 2022) ''Reddit''.</ref>{{efn|{{quotebox|33.35% of the 84.25% of "Cash Equivalents" is Treasury Bills.

That's close to 22 Billion USD in T-bills.
Even at 1% yield (which isn't an impossible return, US T-bill yields are slightly under that for 52 week coupons at 0.75% while other countries such as Canada are slightly above that) they'd be earning close to 220 million USD a year on those.

Note how they don't say which countries T-bills they're holding and what the maturity is for them because if we look too hard at them they might just disappear into thin air.<ref>[https://old.reddit.com/r/Buttcoin/comments/smdaus/tether_new_reserves_breakdown/hvz9s0j/?context=3 u/Malibu-Stacey] by u/Malibu-Stacey (07 Feb 2022) ''Reddit''.</ref>}}}}{{efn|{{quotebox|Hold up, so that's saying 84% cash equivalents, of which 52% is held in commercial paper.

Tether market cap is currently around $78 billion USD. That means they're holding roughly $35 billion in commercial paper.

Let's use the 90-Day AA Financial Commercial Paper Interest Rate benchmark as a proxy for the return they could potentially be making. Which as the start of Feb is 0.29%. In reality, they could potentially be investing further out the yield curve at longer maturities, or in lower quality, higher yielding non-financial paper. But let's be conservative…

If that's the case, their commercial paper portfolio is currently yielding $100m USD a year. This is insane. That's also ignoring the returns they're making on their bond fund, T-bills and "secured loan" investments. Or the capital gains on their crypto holdings. This is absolutely insane.

It's a bank treasurer's dream come true, to take non-interest bearing deposits and invest it out the yield curve. It's actually incredible what they've done. But it's more incredible that people are willing to hand over their USD to these guys who have no regulatory oversight, and seemingly no key management personnel with experience running a bank treasury or a liquidity book. Wild West type shit really.<ref>[https://old.reddit.com/r/Buttcoin/comments/smdaus/tether_new_reserves_breakdown/hvwbc2v/?context=3 Tether - New Reserves Breakdown] by u/diamondgrin (07 Feb 2022) ''Reddit''.</ref>}}}}<ref>[https://old.reddit.com/r/Buttcoin/comments/r9nfyi/tethers_reserves_fully_backed_tether_continues_to/ Tether’s Reserves Fully Backed; Tether Continues to Lead the Industry with Transparency] by u/Visible-Coach (05 December 2021) ''Reddit''.</ref>

Most speculation centers around the fact that commercial paper from companies whose identities are not disclosed is part of Tether's reserves.

===Crimes===
{{cquote|Also, if you think bitcoin has a reputation problem for money laundering now, just wait until you can store USDCoins in the block chain! At last, [[drug]] dealers and [[Human trafficking|human traffickers]] will have the perfect currency to enable their work.|||R. J. Willett<ref>[https://web.archive.org/web/20210725125456/https://www.scribd.com/document/157454619/MasterCoin-Specification MasterCoin Complete Specification, vs. 1.0 (First Complete Specification)] (Jul 29, 2013) ''Scribd'' (archived from July 25, 2021).</ref>}}
{{cquote|I think criminals (like the rest of us) will prefer to deal with stable currencies rather than unstable ones. Also, betting on data streams will likely be a breeding ground for insider trading. (Note: I'm writing this protocol, but I'll be very careful not to use it for anything like that myself&nbsp;– I would prefer to stay out of jail!)|||R. J. Willett<ref>[https://www.coindesk.com/markets/2013/08/25/mastercoin-to-create-new-altcoins-in-bitcoins-block-chain/ MasterCoin to create new altcoins in Bitcoin's block chain] by David Gilson (Aug 25, 2013 at 2:45 a.m. PDT; Updated Sep 10, 2021 at 4:30 a.m. PDT) ''Coin Desk''.</ref>}}

In 2017, Bitfinex was the only exchange that traded Tether. At that time Bitfinex's assets were held only in a few [[Taiwan]]ese banks. Non-Taiwanese banks became increasingly worried that if they accepted transfers from the Bitfinex accounts they could potentially be held liable for money laundering. This functionally deprived Tether of owning any USD assets. Despite this, Tether continued to issue $200 million in new coins.<ref name=faux/>{{rp|52-53}}

By 2018, Bitfinex had transferred its assets to a loosely-regulated Puerto Rican bank called Noble Bank International (NBI). According to the bank's founder, Tether did have 1-to-1 dollar assets in the bank when the account was opened, but that same Devasini wanted to invest the assets in corporate bonds (which carry varying levels of risk) rather than USD. Due to a dispute with the other Tether owners over this issue, Devasini received a cashout of $300 million USD that year and NBI failed shortly after that.<ref name=faux/>{{rp|56-57}} A blockchain analysis for cryptocurrency trades from March 2017 to the end of March 2018 found that someone was using Tether to [[Pump and dump|manipulate Bitcoin prices]] and that these manipulations indicated that Tether was not fully backed by USD.<ref>[https://onlinelibrary.wiley.com/doi/10.1111/jofi.12903 Is Bitcoin Really Untethered?] by John M. Griffin & Amin Shams (2020) ''The Journal of Finance'' 75(4):1913-1964.</ref>

In 2019, Bitfinex was accused by the New York State Attorney General of [[Coverup|covering up]] a $1 billion loss of Tether's fiat assets to a shady [[Panama]]nian company with whom no contract had been signed.<ref>[https://www.ft.com/content/1d3b5027-ce7e-470f-8d7a-866746f8079d Tether and Bitfinex agree to pay $18.5m penalty after New York probe: State’s attorney-general accused groups of covering up ‘massive’ financial losses] by Adam Samson (February 23, 2021) ''Financial Times''.</ref> In 2021, Bitfinex agreed to pay a $18.5 million penalty without admitting guilt, and Bitfinex and Tether have been barred from operating in [[New York]].

In August 2021, journalist Zeke Faux was given a confidential partial accounting of where Tether's investments were located. The investments including billions of dollars in short-term loans to Chinese companies, something most foreign companies avoided due to China's opaque financial system and due to what was widely believed to be an ongoing crisis in overdevelopment of housing in China.<ref name=faux/>{{rp|68}} In October 2021, Tether agreed to pay a $41 million penalty for making false statements about its financial holdings (violating the Commodity Exchange Act).<ref name=cftc>[https://www.cftc.gov/media/6646 Order instituting proceedings pursuant to section 6(c) and (d) of the commodity exchange act, making findings, and imposing remedial sanctions against Tether Holdings Limited, et al, Docket CFTC No.22-04] (October 15, 2021) ''Commodity Futures Trading Commission''.</ref> The Commodity Futures Trading Commission investigation began in 2017, and as the investigation proceeded, so did Tether's statements about financial backing:<ref name=cftc/>
*Before February 25, 2019: Tether tokens are "100% Backed: Every tether [token] is always backed 1-to-1 by traditional currency held in our reserves. So 1 USDT is always equivalent to 1 USD."<ref name=cftc/>{{rp|4}}
*February 25, 2019: "Tether Tokens are 100% backed by Tether’s Reserves,” defined as “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.<ref name=cftc/>{{rp|7}}
*After the October 2021: "All Tether tokens are pegged at 1-to-1 with a matching fiat currency and are backed 100% by Tether’s reserves. The value of our reserves is published daily and updated at least once per day."<ref>[https://web.archive.org/web/20220123000315/https://tether.to/en/transparency/ Transparency] ''Tether (archived from January 23, 2022).</ref>

==Irony overload==
Considering [[Anarcho-capitalism|the ideology]] of a sizeable portion of cryptocurrency users, the [[irony]] that coins backed by statist USD are so widely used to keep crypto afloat seems to be completely lost on them. Part of the idea of cryptocurrencies was to establish a decentralized economy out of reach from [[government]]s, yet, Tether (and by extension USD or at least the pretense of USD) has become a vital part of the cryptocurrency economy.{{fact|joke}}

==Centralization fans==
Nothing about Tether indicates that they want decentralization, a concept that cryptocurrency users like to pretend they care about.
*Their website is hosted by [[Cloudflare]], which is very much not decentralized by any stretch of the imagination and hated by those who care about decentralization and privacy.{{efn|In order for Cloudflare to provide the services that they provide, they not only act as a reverse proxy, but are also a {{wpl|TLS termination proxy|TLS termination proxy|.}} They can read everything just as if you were connecting to an unencrypted site.}}
*They can freeze wallets and reverse transactions. Satoshi wept, so much for [[censorship]]-resistance.<ref>[https://www.marketwatch.com/story/stablecoin-issuer-tether-freezes-three-addresses-holding-160-million-of-assets-upon-law-enforcement-request-11642114717 Stablecoin issuer Tether freezes three addresses holding $160 million of assets upon law enforcement request] by Frances Yue (Jan 13, 2022) ''MarketWatch''.</ref>

==See also==
*[[Scam]]
*[[Liberty Dollar]]

==Notes== 
{{reflist|group=note|2}}

==References==
{{reflist|2|80%}}

[[Category:Cryptocurrency]]
[[Category:Economics]]
[[Category:Internet]]
[[Category:Libertarianism]]
[[Category:Scams]]

Categories: Cryptocurrency, Economics, Internet, Libertarianism, Scams