\ (3) Tether is fully backed by USD but they can't fully say they have the reserves because by making statements like that they could be exposing themselves to libertydollar type prosecution.
what is libertydollar type prosecution, and what would be the downside of having USD reserves?
the guy got 20 years.
usd reserves means centralisation which means the money can be frozen or seized.
that's the whole point of bitcoin. that can't happen.
Clearly there was a lot of shadiness going on by the company, independent of its core business. I imagine that it is possible to run a digital pegged business without running afoul of authorities (tether, eg, adheres to KYC/AML rules). If it would not be possible, then it would be bad for the underlying currency (USD, eg)
Bitfinex is not the company to run a legit business. They don't seem to care very much about ignoring the stuff any diligent people would pay attention to. Stuff like their token issuing might have got the job done but probably flouted a million laws.