If Tether were in fact receiving real USD to support the billions in USDT it keeps issuing, then why hasn't it handed over financial docs to NYAG, which is investigating it for fraud? Why has it not had a third-party audit? Why does it keep printing USDT in larger and larger numbers (a sign that the real $$ may be disappearing from the system)? Why don't we see a similar growth in other regulated stablecoins?

Because their banks keep shutting down their accounts. They've been playing whack-a-mole with regulators for a long time, and they probably view the NYAG's request as a backdoor way to find out where and how they're banking in order to shut them down.

So nobody knows if Tether is backed because:

* it isn't and Tether wants to keep people in the dark

* it is, but a hammer is ready to fall that probably involves OFAC freezing funds

Any other options I'm missing? Because neither of those look good.

People have been saying this for years now. Not only has nothing materialized, but the price has barely ever deviated from the 1:1 peg.

Danny you have that 100% backwards.

> This whole Tether speculation / hit piece is basically people thinking "It's implausible people want to buy bitcoin on the largest bitcoin exchanges".

This whole Tether speculation / hit piece is basically people thinking it's implausible that people are physically capable of redeeming Tether for USD, ever. Not a single audit has ever been conducted - except for one that was started and then the auditor literally quit half way through. If you begin there, the rest all falls into place.

Come on, you've got a super shady organization based somewhere between a virtual office in Hong Kong and a corporate entity in the BVI. [0] Who pretended not to be involved with Bitfinex until the Paradise Papers showed it to have the same principals. [1] Who lost banking access repeatedly - being cut off by Wells, before issuing a letter that they were now banked in Nassau, Bahamas with Deltec that Deltec then denied ("The bank previously declined to confirm any relationship with Tether when reached"). [2] For about as long as I can remember they promised to release an audit, but of course, their most recent auditor literally walked out once they got a peek under the covers [3]. Then when Bitfinex (care of Panamanian company CryptoCapital) had $850M seized they just transferred it from whatever mattress is keeping Tether funds and left Tether with an IOU [4]. And are now the subject of 5 or 6 ongoing investigations and lawsuits, most significantly by SDNY [5].

If I didn't have sources for all this you'd think this was the most absurd conspiracy theory ever. It's all true, though, and what sane person could possibly believe $2B of fresh new money is making its way to their big ol' Bahamian mattress?

Bitfinex is a massive fraud, and Tether is a massive fraud, it's plain to see for anyone willing to take a quick peek.

[0] https://craft.co/tether-holdings

[1] https://www.icij.org/investigations/paradise-papers/paradise...

[2] https://www.coindesk.com/tether-produces-letter-confirming-d...

[3] https://news.bitcoin.com/tether-severs-ties-with-its-auditor...

[4] https://www.wsj.com/articles/bitfinex-used-tether-reserves-t...

[5] https://cointelegraph.com/news/new-york-court-rejects-bitfin...

You could have $13B of inflow to BTC with only $1B of Tethers because they should be reused. Who is holding them and why?

Who is holding USDT? Likely traders who went onto Bitfinex (Tether's sister company) and sold their BTC there for what they thought was a good price. BTC, in this scenario, is a bridge to USD, because it can be moved to an OTC desk or a banked exchange and sold for cash.

So they're going to hold USDT until the crash, then re-buy BTC and move that out? Plausible, but it sure seems complicated.