Tether teetering on the precipice... and how it might all end at Kraken

For those who haven't seen Today's Crypto Anonymous required reading on Tether. This man has traced the Tether fraud better than anyone thus far, and he found the weak link in the entire Tether fraud: Tether->fiat redemptions on Kraken.

Kraken is the biggest USD-banked crypto exchange on which Tether and US dollars trade freely against each other. The market in that trading pair on Kraken is fairly modest — about $16M worth of daily volume — and Tether Ltd. surely needs to keep a very close eye on its movements. In fact, whenever someone sells Tether for USD on Kraken, Tether Ltd. has no choice but to buy it — to do otherwise would risk letting the peg slip, and unmask the whole charade.

My guess is that maintaining the Tether peg on Kraken represents the single biggest ongoing capital expense of this entire fraud. If the crooks can’t scrape together enough USD to prop up the Tether peg on Kraken, then it’s game over, and the whole shambles collapses. And that makes it the fraud’s weak point.

To be crystal clear: every time you sell Tethers on Kraken, you are forcing Tether Ltd. to pay you in US dollars. If you can manage to sell enough Tethers for USD on Kraken, then Tether Ltd. will run out of dollars and this whole machine — which currently undergirds 70% of all crypto trading flows — will fall apart.

WATCH OUT BELOW, Today is also Tether's deadline with NYAG.