[hluska]

There is basically no problem here?? There is an organization that claims its security is backed by an equivalent number of American dollars (thus promising relatively stable liquidity). Yet, this organization can't get through an audit and it's looking rather unlikely that that security is actually backed by anything more than website copy. And there is basically no problem here?

Tether has a special place in the cryptocurrency ecosystem that makes it completely unlike Dogecoin. This special place means that the types of sketchy things that Tether is doing could ripple through the entire ecosystem.

[random_rr]

Clearly there may be a massive problem for Tether. Outside of Tether - I'm not seeing the ramifications, other than exchanges are going to have to use different stable coins. I remember when LTC and FTC used to be legit trading pairs on exchange websites. Whether or not Tether is legit seems pretty uninteresting to me - my trading bots regularly go through thousands of USDT, and I've never once thought to myself "Oh, I can redeem this for 1USD." It's just a utility token, and if it dies, something will fill the void after a brief panic.

To me, this just seems very overblown.

[Nursie]

>> Outside of Tether - I'm not seeing the ramifications

Total liquidity in the market is probably a very small fraction of the market cap. If Tether has been pumping in fake liquidity, in effect creating fake demand, there could be a relative demand crash as that leaves the market, and there would be a relative fall in the (apparent) availability of USD.

That would add to the effect of people desperately trying to flee tether to the comparative safety of real US dollars, which is likely to mean the tether/BTC, tether/ETH tether/whatever rates rocket as people try to get out of positions on tether exchanges. Then a fall in the coin prices as said folks transfer to other exchanges and try to cash out to dollars. And given there are now fewer dollars in circulation than was thought, it could be a bloodbath.

If other exchanges are above board in their dealings, and the coins and cash are where they should be, and withdrawals don't grind to a halt, then that could be as far as it goes. If they aren't, and if they have trouble paying out, it could take exchanges down.

[pavlov]

Did the Lehman Brothers collapse affect anyone who wasn't their customer or employee?

Tether is big enough that it could send similar shockwaves.