News » Tether – Cryptocurrency or Ponzi Scheme?

Tether – Cryptocurrency or Ponzi Scheme?


May 25, 2021

The Single Lunch Blog has a detailed takedown of Tether, a company that manages a cryptocurrency called USDT that is supposed to be pegged to the U.S. dollar. The blog alleges that the claim that each USDT is backed by a dollar in a bank account is false. Tether’s general counsel posted a blog defending his company. Single Lunch says it is full of inconsistencies, which are easy to pick out given the magnitude of the numbers. The GC claims that Tether doesn’t hold T Bills because the interest rate is effectively zero (true), but Single Lunch wonders why, if they hold risky debt as reserves because it pays higher interest, does tether only have 0.36 percent more assets than liabilities? “Either Tether’s management is looting the interest rates on the assets and leaving USDT holders with the debt’s risk, or we’re being lied to.” It also notes that respected accounting firms won’t attest to the quality of the financial assets that the company holds in reserve.

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