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by Tesl
2948 days ago
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Its not the same thing because exchanges often trade only Tether/Bitcoin pairs, and don't allow people to withdraw into actual USD. If you can print as many tethers as you like, then you can massively pump the bitcoin price buying it with worthless tether. This only works as long as people selling Bitcoin have been happy to accept Tether instead of USD, which (inexplicably to me) they have been doing. If Tether is proven to be backed by nothing at all, then there could be a serious crash as people try to get real money out and dump Tether. Your bitcoin being worth 7350 USDT isn't very exciting if your USDT are worth 0 USD. |
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And the alleged fraud is that they're creating USDT out of thin air, and spending them to buy BTC, in order to manipulate the price of Bitcoin upward. If you're a Bitcoin bull, then that's almost a selling point. I don't think any of this ends well, but I see the short-term appeal.
People don't appreciate how slowly government works, especially on financial crimes. Liberty Reserve was blatantly illegal and technically simple, without even the blockchain fig leaf. It operated openly for seven years. Then the government arrested the founder, and sentenced him to twenty years in prison.