> They can print Tether for free and use it to buy crypto. This pumps the price and then they can sell.
I've never understood this theory. It implies that the market moves when they buy, but not when they sell?
If you're unscrupulous and you have a money printer, you don't need to resort to market manipulation to print money, you just... print money. And you can offer a 20% APR to people who are willing to pay real USD for your money, to keep the music from stopping too early.
> I've never understood this theory. It implies that the market moves when they buy, but not when they sell?
That's not an unreasonable assumption when the asset isn't held and bought mostly by professionals trading based on its fundamentals, but by people that get very excited by "line goes up" and diehard HODLers. This isn't specific to Tether, it's standard pump and dump behaviour. Printing money is great, but getting further gains on your printed money (and a plausible "massive growth in crypto interest" story to make your printed money seem more real) is better still.
Plus chances are Bitfinex did the pump bit but actually holds onto a lot of the crypto it bought anyway.
Successful pump-and-dumps usually involve spreading a narrative (e.g. false rumors) in addition to the price action, though.
> Plus chances are Bitfinex did the pump bit but actually holds onto a lot of the crypto it bought anyway.
Yeah, this is a theory that makes more sense to me. Tether may have driven up the price over time by buying and holding bitcoin. The more they bought, the more they drove up the price, reinforcing their decision to buy. Similar to Archegos, but with bitcoin instead of equities.
You can do the same if you have a lot of USD in the first place or alternatively with reserves. Printing Tether isn't required and it is questionable if a pump and dump at quite this basic of a level is profitable on average.
It's not 'other scams'. It's that printing - the only thing Tether can do which others can't and seemingly the main reason why they suggest Tether is the one doing it - doesn't add much of anything to the scam.
The mechanism of a pump-and-dump like this is to spend your company's assets to boost the price of your personal (crypto) holdings. The exchange and the coin don't profit from the scheme; they lose money, while the owners of Tether/Bitfinex win big with their personal assets.
Also, Tether is owned by Bitfinex, which enables them to print Tether to cover their own losses.