No, the crypto sky (probably) won’t fall


A few days ago, an anonymous whale proclaimed that they had exited their position and outlined their reasons for doing so. You can read their – lengthy – write up here. I agree with almost everything that the writer outlines, especially the revelation that people are so nonchalant when it comes to otherwise ridiculous processes required to get onto some of these exchanges. Where I disagree with the writer is in their allegations against Tether and the proof that they used, which was the apparently basis for their hurried exit from cryptocurrency.

While I have many issues with Tether, I believe the writer had missed something really important when it comes to tether. It’s been almost 2 years since Tether publicly confirmed that they were no longer 1:1 when it came to USDT:$USD reserves. Instead, they held cash like alternatives, loans, and select cryptocurrencies. At the time, this was widely reported and people even proclaimed the end was nigh.

 The debt issuance and their allocation of cryptocurrency reserves, are highly problematic given how much correlation there is between the market cap of Tether and the price of Bitcoin – and by proxy the price of all cryptocurrencies. Whether the actions taken by Tether et al is criminal is ultimately up to the courts to decide, but for the most part none of this is ‘new news’.

By offering Tether loans to exchanges, Tether is able to issue their stablecoin within a direct reserve in place. Instead it is the contractual agreement to future payment (‘The Debt’) that is actually backing the issuance. This can get very complicated, but it is really no different to how a bank operates. Tether, however, is not a bank. It is also not clear how, when, or why, these loans are issued – further muddying the waters.

So, when the writer outlines that there has been no significant change in $USD being held in the Bahamas; it’s not a good look for Tether – however it is far from evidence that there is something ‘wrong’ happening. Again, it will be up to the courts to decide whether or not a crime has been committed here.


Until such a time when the Tether case progresses, nothing on their end is going to change. Whether you think that Tether should even exist at all is a different issue. Nearly every exchange is using Tether as their backing, so the horse as well and truly bolted on that argument.

So no, the sky is probably not falling.