Check out these two threads by Theymos (he runs the forum). There's some really good discussion on the topic. Basically Tether is supported by nothing and if there's a run on it they can't honour their agreement to peg it to USD.
Wow I am shocked a forum administrator voiced his opinion about Tether possibly being a scam.
Doesn't this threaten BTC's legitamacy quite a bit?
If tether is exposed as being fraudulent, this (to me) seems to be the #1 threat to bitcoin valuation. Assuming there is in fact fraudulent activity, how long can this be suppressed from the public? I suppose three scenarios:
- Has a case been opened with the local securities commission in the country where tether was created to investigate?
- If there's a run on tether, Bitfinex might have to default.
- If a competitor to tether is adopted by other exchanges, it might cause a run (and then default) on tether.