cross-posted from: https://exploding-heads.com/post/61660
The story you’re about to hear concerns the third-largest crypto-currency on the planet. It is a story of how a former Disney child-actor — a Jeffrey Epstein associate who was embroiled in an under-age sex scandal — bizarrely emerged as one of the world’s strangest crypto-currency moguls. It is the story that raises serious questions as to whether an entire cryptocurrency is a scam — effectively a private money-printer.
And to top it all off, there is reason to believe that if this cryptocurrency is the scam that it appears to be, it will nonetheless be allowed to continue because of this particular cryptocurrency’s usefulness to intelligence agencies in funneling money to foreign rebel groups and jihadis with plausible deniability.
USDT, or Tether, is what is known as a “stablecoin.” A stablecoin is a cryptocurrency that, instead of fluctuating in value, is intended to hold to a consistent price. Tether is a USD stablecoin — each Tether is supposed to be equal in value to one U.S. dollar.
The inner workings of Tether remain remarkably opaque. New Tethers are supposed to only be minted, and added to the crypto ecosystem, when somebody gives Tether Limited dollars to create them. And if that’s how it all worked, Tether would be fine.
But there is no evidence Tether actually works this way. We repeat: There is no proof that Tether stablecoins are backed by the store of tangible assets that is supposed to justify their value.
Practically every crypto exchange supports USDT trade in some form. The makeup of Tether’s reserves and its inner workings are yet to be disclosed in clear detail.
Still, the question of who exactly buys Tether directly from its parent company Bitfinex has remained unanswered since its inception way back in 2014.
Earlier this year, Protos shed light on that mystery by reporting that just two companies, Alameda Research and Cumberland Global, were responsible for seeping roughly two-thirds of all Tether into the crypto ecosystem.
As Protos reported in August, market makers Alameda Research (spearheaded by crypto billionaire Sam Bankman-Fried of FTX fame) and Cumberland Global (a subsidiary of trading giant DRW) are still the biggest fish in Tether markets.
Together, Alameda and Cumberland received at least $60.3 billion in USDT across the time period analyzed, equal to around 55% of all outbound volume — ever.
$49.2 billion (71%) of Alameda and Cumberland’s USDT was acquired in the past year alone, equal to about 60% of all Tether issued in that time.
Tether sent almost $36.7 billion in USDT to Alameda Research.
The company has been promising an audit since at least 2017. An audit is “likely months” away, said Paolo Ardoino, chief technology officer of Tether Holdings Ltd., which issues the tether coin that recently carried a market value of $68 billion.
In 2017, when Tether’s total market cap was still under $1 billion, it needed a last-minute transfer of $382 million just to sly its way through a non-audit attestation of its assets.