[jcranmer]

> I'm pretty sure if they had damning evidence, a single hedge fund could single-handedly force the market to collapse in a couple weeks.

How would you do that? If you knew that Tether had, say, only $10 billion of assets backing it, you'd need to get 10 billion USDT and demand conversion to USD. If you bought those tether, well, it now has $20 billion of assets thanks to you and you lose. Borrowing seems risky, because the people you're borrowing from likely have a vested interest in Tether not collapsing and are going to work against you. So the only safe option is to convince people who hold 10 billion of USDT to cash out for USD pronto.

I will point out that the current drawdown of Tether is consistent with the scenario where liquid fiat assets are fast disappearing from the cryptocurrency ecosystems, and the cryptocurrency companies are fighting among themselves to claim as much of those assets as they can. (NB: There are likely other scenarios that are consistent with available evidence).

[projektfu]

You could purchase millions in Bitcoin and other crypto, then sell it to a tether-based exchange for USDT. Then demand it as a withdrawal to USD. Rinse, repeat.

No idea how that would end up panning out but you don't necessarily have to accept new tether in exchange for your USD.

[jcranmer]

The Bitcoin is still an asset they could sell for USD at a similar rate for what you acquired it for.

[projektfu]

Ah, but tether foundation would have to buy it, but more likely a third party buys it with already existing tether.

They would have to liquidate a lot of Bitcoin into USD at once to satisfy a big request for withdrawal, which is a problem since tether's raison d'etre is to provide that liquidity because the dollars weren't there.