I highly doubt they have given out Tethers for free, exchanges paid dollars for them. And even banks don't have all their money in stock. That is why it is illegal to incite bankruns.
Tether and Bitfinex (one of the biggest exchanges) are both owned by the same people: iFinex. They're effectively one in the same.
Not coincidentally, both of them have already been caught and fined for Tether not being fully backed and for commingling reserves and customer funds: https://www.cftc.gov/PressRoom/PressReleases/8450-21
Also, you can't assume that exchanges paid dollars for them. Tether could print a lot of Tethers, transfer them to exchanges, and exchange them for crypto. No dollars are involved in the transaction and it all relies on everyone believing that Tethers are worth $1 because Tether says they are.
Crypto is a scam. Nothing about it should be trusted.
Also, Tether is owned by Bitfinex, which enables them to print Tether to cover their own losses.
It's a way of cashing out company funds.
Ah yes, they can just operate a classic ponzi scheme!
They can use new investors money to cover for the ficticious assets that previous investers were told that they hold!
I've never understood this theory. It implies that the market moves when they buy, but not when they sell?
If you're unscrupulous and you have a money printer, you don't need to resort to market manipulation to print money, you just... print money. And you can offer a 20% APR to people who are willing to pay real USD for your money, to keep the music from stopping too early.
That's not an unreasonable assumption when the asset isn't held and bought mostly by professionals trading based on its fundamentals, but by people that get very excited by "line goes up" and diehard HODLers. This isn't specific to Tether, it's standard pump and dump behaviour. Printing money is great, but getting further gains on your printed money (and a plausible "massive growth in crypto interest" story to make your printed money seem more real) is better still.
Plus chances are Bitfinex did the pump bit but actually holds onto a lot of the crypto it bought anyway.
> Plus chances are Bitfinex did the pump bit but actually holds onto a lot of the crypto it bought anyway.
Yeah, this is a theory that makes more sense to me. Tether may have driven up the price over time by buying and holding bitcoin. The more they bought, the more they drove up the price, reinforcing their decision to buy. Similar to Archegos, but with bitcoin instead of equities.
Banks have losses too. But they raise money by selling stock, which provides a cushion against losses. The stockholders lose money first.
How does this work with credit unions? The one I joined I had to “buy a share” for 5$ and keep that minimum of one share (5$) to keep my account active. The credit union is not publicly traded so the shareholders are the account holders.
I don't understand how that can work as risk capital. Maybe it just isn't.
[1] https://www.investopedia.com/terms/s/share-draft.asp [2] https://www.ncua.gov/support-services/share-insurance-fund
Why do you doubt that? They have motive and opportunity, and they're obviously not on the level so any appeal to general assumptions of honesty go out the window.
Your source for that is what, blind trust that they're being honest? When they've already been caught in numerous lies?
You can also replace "crypto fund" by any crypto project that uses leverage to deliver extraordinary returns - as long as everything goes up.