This is going to sound absurd, why is the cryptocurrency market not reacting negatively? In fact prices are green and well
https://www.coingecko.com/en
There is some premium on the BTCUSDT pair, compared to BTC/USD pair. You can still, for a relatively small premium buy BTC with your USDT and change them back to fiat USD. And it seems that plenty of traders are ready to accept that premium and accept the risk of holding tether. This effectively solves any liquidity issues that Tether might have. And as other have noticed, 74% coverage is a lot more than many were fearing, particularly compared to other Tether news of the last 12 months. Also, this 74% would imply that if Tether had access to those 850 millions that went missing (leaving out the issue of wether Tether may or may not be responsible for the missing), then the coverage would be full and had been full during the peak of the crypto bull-run in 2017 (which was speculated to be supported by printing tether without any fiat backing).
Remember it’s simply Bitfinex saying they have 74% reserves, just like they used to say they had 100% reserves. There has still never been an audit. Nobody has seen their books. They don’t recognize the jurisdiction of the NY AG.
Bitfinex is the only one who can give a number, and a company in that position usually places themselves in the most generous light, and they still only claimed 74%.
They claimed this 74% in filings to the NY Supreme Court, so, while I agree it is not as strong as an auditors' report, it is also a bit stronger than a PR release or a Twitter burst.
Before you get too excited about that phrase, the courts in New York State have funny names. The words "Supreme Court" have a much different meaning than they do in any other state.
I’d strongly disagree, seeing as that filing was in a court they see as a joke
> Bitfinex and Tether dispute that the court has jurisdiction over the companies because, among other reasons, they do not operate in the U.S., and because both companies bar New York residents from doing business on their platforms.
According to other comments I've seen, they don't redeem tethers for dollars in the first place, so the amount of reserves they have doesn't matter, does it? Liquidity is beside the point if they don't even offer redemption.
The market knows and has known that Tether is a scam and not fully backed. This is not what is causing the price to be what it is. Price arbitrage is one major factor keeping it up, as well as pure old fashion faith. Plenty of currencies operate that way. Including, perhaps, the paper in your wallet right now.
This doesn't make it right, or viable, or stable, or anything else. It's just a known phenomenon.
Another option is that 74% would be positive compared to what quite a few people believed might come out. "It's 74%, that's great news, we thought it's closer to 25%".
Of course, it's hard to trust this news, it might still be 25% or 2.5%.
Seasoned cryptocurrency traders are used to Tether breaking its dollar peg from time to time, its reputation is infamous. Honestly it's a relief that it's not a complete scam, 74% is better than most people expected.
IMO, if USDT actually turns out to be a scam, prices will go up for bitcoin. People will rush to buy back in since money sitting in USDT is money that is waiting for a good entry. If USDT becomes worthless everyone will buy back into actual cryptocurrencies.
Did you honestly believe they were 100% backed? If not, why would you assume Tether users believed it?
What matters is that when someone cashes out their Tether, as people do from time to time, that there is enough money there to do so. The risk is that there is a run on Tether and they exhaust their available funds.
So the degree to which a trader is willing to trust tether is based on their judgement as to whether such a run will happen and that they will end up at the tail end of it and be one of the ones that loses out. But traders make those sorts of calculations and take those sorts of risks all the time. Of course every now and then some of them lose.
Uninformed? Most sane traders know about the Tether issues (have been warning for years as well) and will only try to take advantage. They are not ignorant.