Just because an exchange trades tether doesn't mean their reputation is staked on it. Exchanges do not vouch for the instruments that are being traded on them.
Tether is issued by Tether Limited, which is a shell corporation wholly owned and controlled by one exchange - Bitfinex. Not 'dozens of exchanges.'
Allegedly, when someone gives Tether Limited $1 USD, they give that person 1 USDT. In reality, Tether has never actually been audited, and for all we know, they just give themselves 1 USDT, and sell it on the market... Without keeping a 1:1 reserve.
Tether is a huge red flag to me..Enron level.
It's really not hard to believe when you consider how many millions of people are on these exchanges. Binance touts 3 million users, and has 425,819,642 tethers. 141$ average a user is completely believable.
Let's suppose I buy 100 USDT on an exchange.
What Tether claims happens:
0. Bob and I own $100. Tether and Bittrex own nothing.
1. Bob sends $100 to Tether Limited.
2. Tether limited sends Bob 100 USDT. They now have $100 in their bank account.
3. Bob transfers 100 USDT to bittrex.
4. I send $100 to bittrex. I buy 100 USDT using that $100 from Bob.
5. Bob withdraws his $100 from Bittrex. I withdraw my 100 USDT from Bittrex.
6. Now, I own 100 USDT, Bob owns $100, Bittrex owns nothing.
7. Tether Limited has to hold $100 in reserve. It's not their money - it's supposed to be backing USDT. In addition to having assets of $100, they also have $100 of liabilities.
The reality:
Steps 0-6 are the same.
Step 7: Tether Limited buys a vacation to the Bahamas with their $100, and ignores the $100 liability. They are actually insolvent, and I have no recourse against them, because the Tether TOS make it very clear that I cannot redeem my USDT for USD from them.
The whole point of tether is that it is supposed to be backed 1:1 with USD in Tether Limited's accounts. They have not proven to anyone that this is actually the case. For all we know, all that money went to the Bahamas, or a Swiss bank account, and they are just issuing USDT, pocketing what people pay them for it, and keeping none of it in reserve.
https://medium.com/@bitfinexed/spoiler-alert-the-institution...
https://www.coindesk.com/bitfinex-tether-break-silence-go-me...
The suspicion is they're siphoning it off to their personal accounts, and that they're claiming to have received way more USD than they actually have so they can issue USDT that aren't actually backed to manipulate the market.
You seem to have changed what you're suspicious about.
If I claim to have $50k, you'll probably assume it comes from my job. If I claim to have $2B, as Tether does, you'll probably want some proof. Tether's promised regular audits, but they've released none and their supposed auditor has now scrubbed any mention of them off their site.