What are the risks of using Tether (USDT)?

Tether (USDT) is a stablecoin, which means it is designed to have a stable value. However, there are some risks associated with using Tether. These risks include:

  • Tether Limited has been accused of misleading investors about its reserves. In 2017, the New York Attorney General’s office filed a lawsuit against Tether Limited, alleging that the company had lied about its reserves. The lawsuit was settled in 2021, with Tether Limited agreeing to pay a $18.5 million fine and to provide more transparency about its reserves.
  • Tether’s reserves may not be fully backed by US dollars. Tether Limited has never released an independent audit of its reserves. This means that it is possible that Tether’s reserves are not fully backed by US dollars, or that they are not held in the form of cash.
  • Tether is a centralized asset. Tether Limited is a company that controls Tether. This means that Tether is not as decentralized as other cryptocurrencies. If Tether Limited were to go bankrupt, it is possible that Tether holders would lose their funds.
  • Tether has been accused of manipulating the price of Bitcoin. Tether Limited was accused of selling large amounts of USDT in order to artificially drive down the price of Bitcoin. The accusations were never proven, but they raised concerns about Tether’s financial stability.
  • Tether has been hacked in the past. In 2017, Tether Limited was hacked and $30 million worth of USDT was stolen. The hacker was able to exploit a vulnerability in Tether’s code to mint new USDT tokens without having the corresponding funds in reserve. Tether Limited was able to recover the stolen funds, but the incident raised concerns about the security of Tether’s reserves.

Overall, Tether is a stablecoin that has been accused of misleading investors about its reserves. It is important to do your own research before using Tether.