Isn't trade volume much more important than market cap, though? Over the last days, for every 4$ in Bitcoin, roughly 1$ in Tether was traded. I don't know how easy it is to manipulate the market but my armchair guess is that you can get pretty far with a few percent of the volume.
If a major exchange is taking in $ and spitting out tether, the volume of tether will be high. I agree - it's fucking retarded. But I disagree that there's something nefarious going on : they're saying in no uncertain terms that they're playing the ponies with your money. Here’s the dumb thing: they could front-run the trades and we'd never know. They can guarantee gains. The fact that they're doing this shit as naked as they are mostly demonstrates how heinous the stuff they're hiding must be.
If you send BTC to Bitfinex, and buy USDT, they can always supply as much as you need. But if it were backed by USD, then they should have supply issues during high demand, at least temporarily. It actually appears they are creating USDT at the market price of BTC. Oddly, when BTC drops in price, you'd expect them to destroy USDT to keep the peg as BTC value that lead to the creation of USDT was lost. But, they actually printed more as BTC fell. I didn't see if they quarantined more however, perhaps that's how they are propping up the price?: https://wallet.tether.to/transparency They don't do this. An audit would be easy. That's what stinks the most. If they could audit, I am sure they would. I definitely wouldn't hold any.All tethers are pegged at one-to-one with matching fiat currency (e.g., 1 USD₮ = 1 USD) and are backed 100% by actual assets in our reserve account. As a fully transparent company, we publish a real-time record of all value held and transferred in and out of our reserve account.
So Tether claims to have thirty million bucks in reserve. They have a market cap of like a billion dollars. That's a 3% fractional reserve - if they were a legit US thrift they'd need a hundred million but that's probably new to them because until you're at $110m your reserve requirement is 3%. Look - I wouldn't buy any. The whole idea is dumb. But all they're doing is pretending to be a bank while also playing the ponies with other peoples' money. Sure - they claim to be 100% backed but they obviously aren't because if they were their currency would inflate and defeat the whole goddamn point and everything blows up. I'm fully willing to believe that they claim they're "100% backed" the full reserve requirements which would have been 3% because that's the sort of stupid shit the crypto sphere is doing these days. Which, yeah, is bullshit. Audit? Yeah, I have as little faith in that as you do. I guess I'm so jaded that I wouldn't trade with anyone who wanted to trade my dollars for coupons period. You can solve that one by inspection.
The CMC volume numbers show around 3% of all USDT trades in USD/USDT markets today, so that would be $0.03 in the analogy above. Do people understand they're being played? There's plenty of ignorance to go around. (cough bitconnect cough)But I disagree that there's something nefarious going on : they're saying in no uncertain terms that they're playing the ponies with your money.
They don't. They are babes in the woods. Of the six or so people I've recently talked to with interest or holdings in crypto, zero of them had heard of Mt. Gox. I'm pro regulation. I think the exchanges should fall under the same regulations and laws as securities exchanges. And the sooner that happens the fewer naifs will be skinned by the wolves. Americans in particular are vulnerable; we're used to consumer laws that give us back our money 99% of the time. And in the US, even "accredited investors" - that class of entrepreneur classified as educated and wealthy enough to take real risks - has orders of magnitude more protection than the idiots buying Litecoin with PayPal.