Why so many people really want Tether to be a fraud

I’m not going to waste too much energy dispelling the latest round of nonsensical Tether conspiracy theories. Been there, done that. Instead I want to make a few observations, then pose a question.

At least 7 different people have asked me about this long and rambling post pushing a conspiracy theory consisting of mostly recycled and disproven drivel, written by an unknown author who admits they’d only gotten into crypto less than a year ago and started paying attention to Tether less than a week ago.

The anonymous (cowardly?) author then spews 6000 words on how the whole thing, along with a Bahamian private bank that predates Bitcoin by 60 years, a regulated American crypto exchange that just got a banking license, and the now trillion-dollar crypto industry, are a fraud.

In what other context is something like this remotely credible? Imagine you came across a blog post that claimed the following:

“I had never driven a car until 9 months ago. Last week I learned there’s a company called Tesla. Here’s my proof that Tesla’s are not electric after all, and the entire global auto industry is a scam. I’m so certain of my argument that I won’t tell you my name.”

And yet, countless otherwise balanced, intelligent and successful people read the Tether post and assumed it must all be true. They were convinced that somehow — despite the brutal crypto bear market, countless investigations, millions of prying eyes and the laws of financial gravity — the people behind Tether continue to pull off of one the greatest financial scams in history, right under our noses, on public blockchains, where the creation, redemption and transfer of every single unit are transparent and verifiable.

Give me a break.

Like most nonsensical conspiracy theories (9/11 was an ingenious government plot executed right under our noses!) the best rebuttal is common sense (have you ever been to the DMV?). If Tether was a scam, why would the comic-book-like masterminds behind it use their fake money to prop up Bitcoin? Lex Lutether doesn’t own most of the Bitcoins out there, rich people and institutions do. What kind of criminal risks going to jail to help make Chamath Palihapitiya and Tudor Investments better off?

So why did that post go viral, and why did so many otherwise intelligent people fall for it? Because deep down inside, they want this to be true. They want Tether to be a scam, and for crypto to be a Ponzi, and for blockchain to be a fad. That way, they don’t have to know about it. They don’t have to open their minds to a new way of storing and transferring value, one that may someday impact their day job. To paraphrase Upton Sinclair, they’d rather not understand something that their paycheck requires them to not understand.

But it won’t work. Tether may or may not be shady, but it will eventually either become more transparent and regulated, or be replaced by something that is. Stablecoins are the most disruptive thing to hit the payments industry since PayPal and are growing parabolically. Regulators and lawmakers already accept them. Eventually they’ll embrace them.

Crypto itself has crossed the Rubicon of institutional adoption and is now well underway to being “just another asset class.” Hoping that something crazy comes along and makes it all go away is not an effective strategy. Time to get on with it.