How does tethering work... I thought this shit was decentralized ... who's deciding to print more money?
So this company (largely believed to be owned by bitfinex - which is under investigation right now) came up with the idea of a 'stable currency' kinda similar to the US bond market.. So when theres a lot of volatility, you buy this stable currency as a shelter from the storm type... The premise was that this currency was going to be tied to the us dollar on a 1:1 ratio. So basically every dollar they took in allowed them to print a tether, and i suppose they get their income from just collecting interest on the $$ sitting in the bank account.
At first, tether said they'd have auditing and full transparency, but that went away rather quick (albeit not to their fault fully, they were transparent in the beginning but the government had the banks shut their accounts down - so then they kinda had to play sneaky on that part.. but they still could have had independent auditors come in)
Anyway... All of a sudden, this one guy on twitter (twitter.com/bitfinexed) started tweeting about the massive amounts of printing going on with tethers, and a few exchanges were receiving these tethers (and assumed to have been placing orders with tether foundation for these tethers)... the thing is, the largest exchange at the time that was doing this - was believed to actually own tether foundation.
Here's the problem with tether. They are printing incredible amounts of tether, and it seems to coincide when bitcoin is going down (people are accusing it of it being used to prop up the price)... And the fact that it's a black hole as far as transparency goes, and the exchanges have a motive to be complicit in this fraud... leads one to believe that this whole thing is a massive trick.
Did you read about mt. gox running a fake buy bot on their exchange, which was responsible for driving the price of btc up from $100 to $1000? Just one fake bot on one exchange did this.
