If El Chapo seized 30% of the MXN in existence I'd suggest the currency would in fact fluctuate lol.

AFAIK MXN never claimed to be backed by USD, but Tether claimed that USDT are backed 1:1 by USD in a bank account. We now know that there aren't $6B in that account but people still choose to trade USDT near par with USD; I guess this is analogous to how the value of the USD didn't fall when it became no longer gold-backed.

Printing new money is generally understood to devalue existing money, why wouldn't the opposite be true? I don't understand your El Chapo point or know what sort of assets were confiscated. Even if it was all cash, I'm guessing it wasn't just incinerated.

Because Tether claims to hold $1 for every $USDT.

But they obviously don't, they hold, at most, 70 cents.

It'll be a bank run.

> Meanwhile they presumably turn a profit, so just because they lost some of their assets, how do you even know they don't still have enough?

How do you know they have any? In order to have any semblance of legitimacy Tether needs to complete and publish the audit they promised every 6 months for 5 years.

Currently, based on their own website, the limiting factor is that their auditors only publish their reports in Mandarin, so there's literally nothing they could possibly do to release them. Even though those same auditors happily published attestations in English [1]. Before they were fired, and replaced with Friedman LLP, who quit.

All very cool, and very legal.

[1] https://tether.to/tether-update/

The problem isn't the fact that the exchange rate remained 1:1, it's that they stuck by their claim that every USDT is backed 1:1 by USD. What replaced the seized reserves?

BoA doesn't claim to back every deposit 1:1 with physical cash. Far from it. The whole basis of fractional reserve banking is that they lend most of those deposits out to other customers. This is fine though, because the deposits are insured by a government-backed protection scheme.

Bad example. BofA besides having the federal government to prop it up works on fractional reserve explicitly.

Tether works on explicitly the opposite principle. One banked dollar for every minted Tether. Since they have no government propping them up, the certainty of those dollars is the only thing you can hold onto as far as Tether’s reality. Once they’re gone, the music stops.

They flat-out denied they shared executives until it came out in the paradise papers. [1]

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