Tether released a statement of assets. They said nothing at all about liabilities.

No idea if this is worth the paper it is written on but Stuart Hoegner posted this on Twitter:

https://tether.to/wp-content/uploads/2021/04/tether-assuranc...

>"Our opinion is limited solely to the CRR and the corresponding consolidated total assets and consolidated total liabilities as of 31 March 2021"

IOW, "They have the total amount of CP, loans, and bonds they say they have. Whether or not the issuers of those IOUs is Bitfinex or some shell company connected to the owners of Tether we have no opinion on"

Tether has repeatedly lied about their reserves. There is zero reason to take any claim they make at face value.

Yes, that is the scenario I am describing. I have a billion dollars of liabilities in the ScamStableCoins I issued and a billion dollar in "Assets" from the IOU I wrote myself.

THus I am perfectly fully backed.

Yeah, technically correct I guess. Is there any realistic scenario where this would fly? This would be plain and clear fraud and not something allowed to go on for two years after multiple audits.

The NYAG said they were liars who had comitted multiple acts of fraud and fined them.

There have been precisely 0 (zero, none) completed audits of Tether's holdings

What audits? The point is that there hasn’t been anything like an actual audit.

This is likely very similar to how USDT works.

So the answer to your question is it would happen in crypto where there is no regulator and people trust ‘audits’ which verify nothing.