Tether has sustained a low key rumor of being a high end crypto Ponzi scheme for a few years now.
A quick reminder: Tether (USDC) is one of the main stablecoins, and serves as a trusted currency in the cryptocurrency space. As a stablecoin it helps provide trust and liquidity to the blockchain technology system that makes bits and bytes worth dollars.
Ok, your next question is how does all that mean Ponzi scheme?
Quick Refresher: Ponzi Scheme
Remember this guy? (Dirt Bag - But also possibly had severe mental problems according to Bobby De Niro's portrayal)
Basically, it's a pyramid scheme where the top guy takes "investments" from three, they each borrow money from three, so on and so forth, the money all goes up the pyramid to the guy(s) at the top with a few sporadic high return payouts but in reality there is never any money going back, and these "investors" at the bottom are being scammed.
Tether's critics allege this because Tether's model demands they back dollar for dollar every coin that exists or is issued and they claim this is not so nor has there ever been sufficient proof for this.
With the utter collapse of Terra/Luna in May, Tether briefly was pushed down to $0.96 per token, which is concerning when its existence is predicated upon price stability and trust.
The latest news is potentially more spicy, as a slow-burn lawsuit from 2019 leveled by large holders of Tether against the company demanding proof of their holdings recently heated up. A US Judge ordered Tether to provide proof that its currency holdings back up the near 70$ billion in Tether it has issued.
The question on everyone's mind: Is the money there??
You don't know. I don't know. And I'm not sure if most of the people working at Tether know. But I sure hope we find out.
If it isn't, buckle up, because there could be another Luna-Level meltdown.
As always,
Hope your time was wellspent,
-Romulus
