I don't know what percent of Tether's funds are actually backed by USD. And I don't trust them as a company. But lets look at the economic game theory of it:

I don't know what percent of Tether's funds are actually backed by USD. And I don't trust them as a company. But lets look at the economic game theory of it: - There is currently no premium on Bitcoin prices on Tether exchanges vs non-tether exchanges (http://www.untether.space/ http://www.untether.space/) - USD/USDT pairs can be traded on legit exchanges like Kraken and are currently trading evenly If the theory is that unbacked Tethers drive up Bitcoin prices, then we should see a premium on Bitfinex/Binance, because that's where buying demand should prop up first. A premium doesn't exist at the moment. And further, lets say Tether is exposed and crashes. We would expect that users race to buy Bitcoin with their bad USDT and withdraw. The only bag-holder is whoever is using USDT. Bitcoin holders would suffer in the short term as speculators become cautious, but technically should not be affected other than a couple of albeit large crypto gateways potentially going under.