Why Does Tether Deserve the Benefit of the Doubt?
I have been told that I am prone to seeing plots in the mundane, and in trying to make mountains out of molehills when it comes to Tether. I have been told that I do not give them the benefit of the doubt or try to find charitable explanations for their behaviors. I am left wondering, why does Tether deserve the benefit of the doubt?
Tether was founded in 2014, and was almost immediately owned and controlled by the same principals as Bitfinex. This was not fully brought to light until the Panama Papers were leaked and it was also mentioned in Bitfinex’s lawsuit against Wells Fargo. Does this level of transparency deserve the benefit of the doubt?
Tether originally claimed to be backed solely by the currency represented. So USDT would be backed solely by USD. However, early on they also advertised exchanging Bitcoin for Tether through Tether. This was also advertised as a way to get Tethers without going through Know Your Customer regulations and processes. Does that also deserve the benefit of the doubt? Coincidentally, Tether’s lawyer said in the recent NYAG case that part of their reserves were invested in Bitcoin. I’m sure that is nothing though.
Tether loaned 100’s of millions of dollars to another business well knowing that the funds that business was going to give in return were currently not able to be withdrawn. Does that deserve the benefit of the doubt?
Tether was once hacked for ~$30m. Their response was to never explain what happened and force a hard fork of the Omni protocol to freeze those tokens. Does that deserve the benefit of the doubt? Luckily for Tether the Omni devs added in the ability for them to freeze any Tether at will.
Tether was supposed to be regularly audited for transparency. They eventually released monthly attestations from an accounting firm in Taiwan, and then those stopped. Then they released a statement from an auditing firm, and then there was nothing for a long time, and then they released a statement from a law firm, and since then nothing.
Perhaps the reason they are having so much trouble getting audited is because they’re incompetent at record keeping. They admitted during the proceedings of the NYAG case that they commingled corporate and client funds. Furthermore, Tether has a transparency page that has been incorrect for months. They claim that they have $31,304,655.00 Tether on Omni. Let’s go to the blockchain quick and check their math: $ 354,645.00 + $3,100,000.00 + $ 30,950,000.00 + $ 940,000.00 + $ 2,039,980.00 = $37,384,625. So they are unable to even add, yet we are supposed to give them the benefit of the doubt?
Originally published at http://bennettftomlin.com on May 14, 2020.