From the Tether FAQ:

> The Tether Platform is fully reserved when the sum of all tethers in circulation is less than or equal to the balance of fiat currency held in our reserve.

That is to say, they offer no guarantee that 100% of USDT in circulation are backed by USD at any given moment.

On the home page at https://tether.to/, it states:

> Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.

> That is to say, they offer no guarantee that 100% of USDT in circulation are backed by USD at any given moment.

It's right there on the front page, a claim that they have 1 to 1 backing.

This seems to me like a blatant lie, along with their claims to audit.

Not that I would trust them, but literally the next sentence;

Through our Transparency [1] page, anyone can view both of these numbers in near real-time.

[1] - https://wallet.tether.to/transparency

And right beneath that,

"Our reserve account is regularly audited".

By whom? Where can anyone see these audits, for transparency's sake?

Tether fired their auditor for asking too many questions.[1]

[1] https://www.coindesk.com/tether-confirms-relationship-audito...

Tether fired their auditor for _wanting to conduct an audit_, and not being willing to "rubber stamp these bank statements for us and call it good".

okay, then for your case only the ELSE IF is important.

For my case?

Do you not mean "for the claims made by tether on their homepage to be true"?

no, not really

Tether can already exist and be in circulation and people can be willing to buy it at a higher price from existing holders. In this event, Bitfinex/Tether needs to be willing to create more Tether, diluting the current supply to offset the greater demand and keep the peg.

To me, it isn't important that "each Tether is backed by USD [in their bank account]", but they may accomplish it that way for consistency anyway. Each Tether is still backed by a notional value and was exchanged for such.

Their willingness to do this could help arbitrageurs try to front run and sell their own Tether when a premium exists.

> diluting the current supply to offset the greater demand and keep the peg.

Their peg is created explicitly by being 1:1, not by manipulating their supply. This is how they create trust that they aren't subject to market conditions or threatened by a run on redeeming their tokens.

To you it may not be important, but it's right there as a bold claim on their home page, and it's why they've been used.

Note that I did not say that their peg could not conceivably work without 1:1 backing, I said that their claims would be a lie. As are their claims to have been subject to frequent audits - they've never completed a single one.