Extremely interesting read, thanks for linking it.

The last nail in the coffin was when I found out about the lack of visible reserves. If Tether Ltd. really was taking in 1 USD for each Tether it issued, then it should have as many dollars in its bank account as there are issued Tethers. And it turns out we can check if that’s true! Tether Ltd.’s bank is Deltec bank in the Bahamas, and the Bahamas discloses how much foreign currency its domestic banks hold each month.
The answer was — at least up to the end of September 2020 — not nearly enough:
From January 2020 to September 2020, the amount of all foreign currencies held by all the domestic banks in the Bahamas increases by only $600 million — going from $4.7B to $5.3B. (The table is in Bahamian dollars, but the Bahamian dollar is pegged to the US dollar, so 1 BSD = 1 USD.)
But during the same period, total issued Tethers increased by almost $5.4 billion — going from $4.6B to $10B!
The implication was shocking: there weren’t nearly enough dollars in all the domestic banks in the Bahamas to back the Tethers that were floating around in the crypto market.
So this was crypto’s big short: Tether Ltd. was short of US dollars — to the tune of about $25 billion.

This is pretty wild, I'm interested to see what comes out of that court case against tether.

I like this though:

but allowing a USD-equivalent pseudo-currency to be minted without backing or restriction puts the nation’s ability to regulate its own currency flows in jeopardy.
To be clear, US authorities should be extremely concerned about this. To a good approximation, there is currently an unregulated, foreign entity printing dollars with impunity. There’s a case to be made that this constitutes a direct, adversarial attack on the USD — and the longer it goes on, the more it risks impugning the integrity of the entire US financial system.

:sicko-yes: