USDT, also known as Tether, is a cryptocurrency issued using the Omni Layer Protocol. Every Tether printed is supposed to be equivalent to one US dollar, and is meant to serve as a safe haven to store your money out of other cryptos when the market becomes extremely volatile, or cryptos are down across the board in order to prevent further loss. In order to ensure that people who want to cash their tether to usd out will get paid in full, every tether minted is supposed to be backed up by one real US dollar held in a bank account. Currently, the bank account sits at $594,000,000.
The fact is that no one can really know if there even is that much money in their bank account. If that proves to be the case, it could mean various cryptos have been flooded with counterfeited money essentially, creating a bubble that may very well pop one day.
On Tether's own website, they state, "There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money." Now, this seems plain and simple: Tether does not have any legal obligation for Tether holders to pay them out. This is a very, very bad sign.
Essentially what it boils down to, is that Tether can print as many tethers as they want, which will all be valued at one dollar. They then sell those tethers off and make money off of selling something that is not even backed up by anything. And they can do it at any time.
If you are currently holding tethers, I would advise being extremely cautious. In addition, the markets could very well correct, considering how many tethers have been printed that may be propping up the prices of certain cryptos. Leave a comment below on what you think about the tether situation, and if it is worrying.
Sources: coinmarketcap.com
tether.to
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