I thought Tether sounded like a dumb idea in the first place even if it was honest (and it sounded kinda scammy). Why the hell would I want to peg my crypto to a fiat currency?

Well, now the company’s claim to have 100% reserves — that is, for every supposed fiat-unit-worth of crypto, an actual fiat unit in the bank available for redemption on demand — look like they may be moonshine:

Critics on Twitter, Reddit, in blog posts, and at a recent bitcoin conference have been demanding that the company prove its reserves through external audits. Not only has Tether failed to do so, last week it confirmed rumors that it had severed ties with Friedman LLP, the accounting firm on tap to perform those audits. On Tuesday, Bloomberg reported that the US Commodity Futures Trading Commission had sent subpoenas to Tether.

As the linked story indicates, this could end up in the crypto equivalent of “bank runs” as people try to get out of Tether and into real crypto ASAP.

But the line about it “potentially undoing much of the public’s growing interest in new technologies like bitcoin” reminds me of how the Office of National Drug Control Policy used to pay the television networks to slip anti-drug messaging into their programs. Crypto is here to stay, even if Tether breaks some banks. The concept is solid enough that bad ideas and scams are inevitably going to rise and fall on top of it.

Imported from the original KN@PPSTER