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Wow, an actor of the crypto-verse doing something unethical, almost unheard of.

The reason why those other exchanges had a USD problem was because they didn’t want to do enough KYC/AML to gain access to legitimate banking. Providing an entrance and exit ramp for exchanges that are enabling money laundering probably put them in legal risk from day 1.

> Now they never actually delivered any of that.

Yes they did, they delivered exactly this for years, ever since US banks shut them down. A whole ecosystem was built on top of this which to this day seems to run smooth (poloniex, bittrex, binance).

> And I suspect they did actually make a stack of profit by printing tether and selling them on exchanges. But that makes it a scam because they weren't following their own rules that they laid down at the start.

The only thing that has come to light after numerous of subpoenas and investigations is the Crypto Capital mess. Your claim is very much unsubstantiated. Yes, Bitfinex&Tether did some things against their original promises, but clearly to keep the system running. And clearly with the intention to resolve everything once they got their money from CC back (I'm not saying that was ever going to work).

No, they didn't. Their original proposition was that you could buy and sell tether from them at exactly 1 USD.

What happened was that website for doing that was only ever available for very short periods and instead tether was traded on exchanges. Poloniex/bitfinex etc are exchanges, not the promised single source of tether. Exchange trading with a market set price and a bid/offer spread is not the same as a direct purchase website from the creator. It means the price moves. The original promise was for a fixed price set buy the sole supplier.

> Their original proposition was that you could buy and sell tether from them at exactly 1 USD.

That depends on who "you" is, as far as I know this was possible for retail until a few years back. But I wouldn't say it was "promised" at all (or are you referring to the whietpaper?). It's still possible for trading firms right this very moment. Active OTC markets for tether right now as well.

Note that even though it's possible for some to redeem a Tethers 1:1, that doesn't mean the price is always exactly worth 1 USD. Just like how USD stored in Coinbase is not worth exactly the same as USD stored in Bitstamp. Of course you can transfer them between each other, but that takes days - after which certain price spreads caused by temporary offer/demand discrepancies have ceased to exist.

Also, thanks for the downvote!

(BTW, not me doing the downvoting)

I don't think that only allowing the purchase of tether to retail really meets their original plan.

The whole point was meant to be that anyone could take their coins and go to tether and get exactly 1 USD for each one. It was designed to solve the problems people were having cashing out from exchanges. The idea was that you sold your bitcoin on poleniex or wherever for USDT the then took that to the tether website and got your USD. Safe in the knowledge that your USDT would be exchanged exactly 1-1, with no bid/offer spread or moving price. The reason this was needed was because most exchanges were really struggling to get their banks to allow the USD processing.

In reality, you could never really do that. And now exchanges have been able to get the USD payments working, so the USDT<->USD exchange market has picked up the slack and now serves the purpose that the tether website never realised. Although it's now not quite 1-1, there is a market and a spread and prices move.

As others have mentioned, the likely reason they never have is that they would hit exactly the same challenge all the exchanges did with their bank and the KYC rules.

I think we're kind of on the same line.

> It was designed to solve the problems people were having cashing out from exchanges.

Tether technically predates the legal trouble between Wells Fargo and Bitfinex, but imo Tether as we know it got to it's current size specifically to allow American residents to get their non crypto money out of Bitfinex after no American bank wanted to work with Bitfinex.

> The idea was that you sold your bitcoin on poleniex or wherever for USDT the then took that to the tether website and got your USD. Safe in the knowledge that your USDT would be exchanged exactly 1-1, with no bid/offer spread or moving price.

Whose idea was this? Most big exchanges that trade tether don't support any fiat. Only recently most added support for competing stablecoins and Binance is playing with fiat. But it was never the idea from the beginning.

> In reality, you could never really do that.

I really don't agree that the plan was all along that everyone could do that. Tether would simply face exactly the same problems as Bitfinex. Instead Tether allows you to trade on many different exchanges and big traders can directly convert tether into dollar. But definitely not everyone, in the beginning retailers could create a tether account but that's about it.

> As others have mentioned, the likely reason they never have is that they would hit exactly the same challenge all the exchanges did with their bank and the KYC rules.

Yes exactly, as such it was never (or since the Wells Fargo suit) supposed to work like this. I'm not sure why you think this was the plan or design?

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To sum up:

- We both agree it's hard for every day traders to convert tether into USD. They have to use public crypto markets to achieve this. Though I don't agree this is against any design or plan (ever since Wells Fargo anyway).

- This has worked fine for years since the biggest traders are able to convert tether into USD (and the other way around). The second they can't you'll see price divergence (a lot bigger than what we see right now - since firms will be trading out of millions in tether exposure).

- The risks of Tether are well documented, most retail is aware of the danger.