Ok, there's something I don't get,
Please, ELI5 here. Tether's utility within the crypto community is to provide safe-parking for your gains when the market is going red, right? Why does it matter whether or not you can cash out USDT if you could cash out changing to BTC and going to any fiat exchange?
I can see why Tether should have a 1:1 back up in some bank, ethically... But for market purposes, all they need to do is keep their value pegged to relative $USD within exchanges.
Idk, is there something I'm missing? Can't see what all the fuzz is about besides negative media attention...
Because they cannot control the "peg". The price is based on what people are willing to pay for it. That's why the value is not always $1 USD, it fluctuates up and down. If people lose confidence because they cannot exchange USDT for USD (because maybe they don't have the reserves), then the price of USDT will plummet.
So under this logic, all they really need is a reasonable fractional reserve and that would make them as "legitimate" as any bank. I guess my position now is that I'd appreciate clarity from them on these grounds. I don't see that it would hurt them to disclose this information, instead of claiming to actually own all that money in fiat, which I doubt.
Thanks for answering.