Tether



That's as good as money, sir. Those are Tethers. Tether is a Hong Kong-based company known for issuing, among others, USDT, a decentralized cryptocurrency whose value is supposed to be backed by US dollars. USDT is part of a family of cryptocurrencies called stablecoins.

Run by executives who avoid making public appearances and just somewhere between 11 to 50 employees supposedly managing more than 60 billion USD, they are perhaps the most important company in the cryptocurrency space.

Company executives
Tether's C-suite, excluding the CTO, is notorious for being secretive and not appearing in the media, which is strange for a company managing such a large amount of money as they say they manage.

Paolo Ardoino
I have been open about the attempts from some hedge funds that were trying to cause further panic on the market after TERRA/LUNA collapse. It really seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns etc. The company's CTO is Paolo Ardoino (Twitter, Nitter), who is also the CTO for the cryptocurrency exchange Bitfinex. He's the public face of Tether and the one who shows up in Tether's media appearances.

In July 2021, he appeared in a interview in CNBC. He dodged every important question, such as what companies make up their holdings, who their intermediares are and inquiries about the  statement that "Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie".

Like any proper cryptocurrency user, he's a fan of El Salvador accepting Bitcoin as legal tender, having much of the same views you would come to expect, despite the fact that Bitcoin has none of the properties that would allow itself to be suitable for currency use in El Salvador, like a stable price with stable inflation over time and being actually usable in a country where Internet penetration and amount of people actually able to use Bitcoin securely is low.

Giancarlo Devasini
Devasini is the company's CFO, as well as Bitfinex's CFO. Not much is known about him, and what little is out there seems unreliable. He previously had careers as a plastic surgeon, computer hardware trader and owner of a food delivery service. Regarding his career as a surgeon he said, "All my work seemed like a scam, the exploitation of a whim." His computer hardware trading involved several instances of shady practices.

Jean-Louis Van Der Velde
He's the company's CEO as well as Bitfinex's CEO. Like the CFO, he's surrounded in mystery. He has a Bitfinex blog post about him making some vague claims, however. His puff-piece biography lists him as a "technologist and serial entrepreneur". He attended National Taiwan Normal University, but presumably did not obtain a degree.

Auditing
In order for USDT's value to remain at 1 USD people need to know that (1) there's indeed 1 US dollar somewhere for every USDT issued and (2) they can cash out whenever they want. A way for people to be assured that this is indeed the case is to have Tether's reserves be audited by a trusted, independent third party, something they are not good at.

Tether's former auditor from May 2017 to January 2018, Friedman LLP, settled charges with the U.S. Securities and Exchange Commission that it had engaged in "serial violations of the federal securities laws" and numerous instances of "improper professional conduct".

In 2021, they appear not to have had a functional auditor, but they do publish attestations, in which a third party, Moore Cayman, based in the Cayman Islands (!), says they indeed have X when they did the attestation and doesn't go any further than that. To get an idea of how worthless these are there's no better way than reading one of them. If you can't stand the legalese, David Gerard has a blog post about one published in 28 February 2021, explaining why these attestations are not a substitute for a proper audit.

By 2022, Tether obtained the auditing services of a reputable accounting company, BDO Global, which did at least certify Tether's assets for a single day (30 June 2022): "Our opinion is limited solely to the CRR [Consolidated Reserves Report] and the corresponding consolidated total assets and consolidated total liabilities as of 30 June 2022. Activity prior to and after this time and date was not considered when testing the balances and information described above. In addition, we have not performed any procedures or provided any level of assurance on the financial or non-financial activity on dates or times other than that noted within this report." But Tether's auditing problems appear to be ongoing, and more likely a feature than a bug.

Redeeming USDT
Cashing out or redeeming USDT is a whole different story entirely. Theoretically, Tether themselves will allow you to redeem their stablecoins with them directly.🇱🇮 In order to do that, you will need an account with them. However, in order for your account to be able to redeem cryptocurrencies, you will need to verify (also known as completing a KYC process) your account, which includes having to pay for this process to be completed.

Of course, in reality, redeeming Tether's cryptocurrency with Tether isn't that easy. In the "Redeem TETHER tokens to fiat currency" page, there's this:

Note the use of the word request. In Tether's legal page, the following clause can be seen:

Indeed, there are many stories about not being able to redeem USDT in Tether's official website. For most people, the way to get back fiat from USDT is finding a buyer willing to exchange real money for USDT in the ever-so-trustworthy cryptocurrency exchanges.

Unbacked USDT speculation
Because of Tether's failure to produce a credible audit, there's a fair amount of speculation that USDT may not be backed after all, and that they are lying through their teeth.

Most speculation centers around the fact that commercial paper from companies whose identities are not disclosed is part of Tether's reserves.

Crimes
In 2019, Bitfinex was accused by the New York State Attorney General of covering up a $1 billion loss of Tether's fiat assets to a shady Panamanian company with whom no contract had been signed. In 2021, Bitfinex agreed to pay a $18.5 million penalty without admitting guilt, and Bitfinex and Tether have been barred from operating in New York.

In October 2021, Tether agreed to pay a $41 million penalty for making false statements about its financial holdings (violating the Commodity Exchange Act). The Commodity Futures Trading Commission investigation began in 2017, and as the investigation proceeded, so did Tether's statements about financial backing:
 * Before February 25, 2019: Tether tokens are "100% Backed: Every tether [token] is always backed 1-to-1 by traditional currency held in our reserves. So 1 USDT is always equivalent to 1 USD."
 * February 25, 2019: "Tether Tokens are 100% backed by Tether’s Reserves,” defined as “traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.
 * After the October 2021: "All Tether tokens are pegged at 1-to-1 with a matching fiat currency and are backed 100% by Tether’s reserves. The value of our reserves is published daily and updated at least once per day."

Irony overload
Considering the ideology of a sizeable portion of butters cryptocurrency users, the irony that coins backed by statist USD are so widely used seems to be completely lost on them. Part of the idea of cryptocurrencies was to establish a decentralized economy out of reach from governments, yet, Tether has become a vital part of the cryptocurrency economy.

Centralization fans
Nothing about Tether indicates they are fans of decentralization, a concept that cryptocurrency users like to pretend they care about.
 * Their website is hosted by Cloudflare, which is very much not decentralized by any stretch of the word and hated by those that care about decentralization and privacy.
 * They can freeze wallets and reverse transactions. Satoshi wept, so much for censorship-resistance.