There has been much written about the Tether situation and as of now, most people already have their opinion on whether Tethers are backed by real money or not, so this article with have nothing to do with that. Instead I will focus on what has been happening in the last few weeks and how it may give us new insight as to how the whole Tether situation may or may not resolve itself.
As we know, in late 2017 and early 2018, Tethers were being printed at a pretty brisk pace, as many as $500 million in about a weeks times. But for the past several weeks they have not printed any new US Tethers and this is an interesting development. It possibly shows that Bitfinex/Tether is trying to reel in the problem of Tethers and get it somewhat under control.
Why would they do this? Well, the Tether situation has gained a lot of global media attention in the last month, which seems to coincide with them putting a stop to Tether printing. But not only have they received media attention, government regulators around the world are starting to ask questions, and in the case of the CFTC, to even issue a subpoena asking for evidence.
In the Dutch parliament, Henk Nijboer of the opposition Labour Party asked Finance Minister Wopke Hoekstra to look into Bitfinex and it’s banking relationship with ING. It was recently published that Bitfinex has a banking arrangement with ING, possibly under a shell corporation. This was brought up during a Dutch news outlet called Follow the Money (Link here but is not in English).
So as regulators around the world start to set their sights on Bitfinex and ask questions, it is very possible they have finally decided to slowly clean up their act. First by stopping the insane Tether printing that was on track to reach $1 billion per month. But I also believe it is possible they are in the process of putting actual USD in an account so they can finally show they do have the reserves behind USDT.
Now all this still won’t allow for a proper audit to be performed as any audit not only shows how much money is available, it also shows where the money came from, and when it was deposited. All things which Bitfinex/Tether do not ever want made public. So my guess is they will simply show a bank account with the amount in it and get some signed affidavit or other sketchy stand in for a real audit and present that as evidence all is well with Tethers. It won’t be a true audit, but it should allow some confidence in the market and the fud over Tethers to subside.
Regulators are often careful not to crash markets, so it is very possible if the people behind Tethers simply show that they are now making a serious effort to back USDT, that regulators will simply fine Bitfinex, place some sort of monitoring on them, and let them keep running their business. There is a lot of precedent for this type of action, as many banks have been caught laundering money, and usually they are just fined. Regulators generally don’t want to crash markets or destroy entire corporations, this is either due to corruption or because they don’t want angry consumers asking why they lost their money due to regulators.
So overall, for whatever reason, it appears as though Bitfinex/Tether has changed their strategy. This change seems to coincide with global government attention as well as media attention. So one could guess they are trying to clean up their act. If this is the case, it’s possible the Tether situation could be heading for a soft landing instead of a crash, but only time will tell.