[jcranmer]

> That is one thing I find so crazy about the entire thing — the fact that they are backed 1:1 is the simplest possible explanation and yet the conspiracy that they were created out of thin air to artificially prop up the price of bitcoin is more believable to many/most people here.

Tether concealed its relationship to Bitfinex, which is generally not a good sign. Their auditor also released a statement which, I am told, is auditor-speak for "they failed the audit."

If they are backed 1:1, it requires them to have received large dollops of USD at a time when many financial institutions were wary of giving cash to cryptocurrencies. Without more details on how that USD came about, there is reason to be skeptical of that claim.

[craigc]

Thank you for not ripping my head off. I too am skeptical. I just think the other way is also not super likely.

On Bitfinex tethers are not used for actually purchasing bitcoins. US dollars are. Tethers are only issued when you want to withdraw funds from the exchange to, for example, take advantage of arbitrage opportunities with other exchanges that offer Tether trading pairs.

Why is that idea so unlikely? Crypto was in a bull market last year and lots of people were trying to buy. If I saw the price was cheaper on an exchange that offered Tether pairs but not USD pairs I would probably convert some USD to Tether to buy there as well.