This article
https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3 is stoking fears.
Tether is not under investigation for "pumping bitcoin" or "printing fake dollars" but for making untrue claims about reserves backing tether. They allegedly co-mingled client funds, losing $850 million of co-mingled client and corporate funds in 2018, thus tether was not fully backed by cash reserves at that time.
The New York Attorney General does not seem interested in taking tether down. Tether will most likely get a heavy fine just as banks get fined when they break the law.
But in the unlikely event they did take tether down, there is the regulated stablecoin USDC which serves as a substitute and has already grown considerably, thus makes for a good backstop. While bitcoin may drop sharply in price on the unlikely news of a tether takedown, bitcoin would likely rebound in a hurry as capital rushed from USDT into both USDC and bitcoin.
Update: NY AG’s $850M Probe of Bitfinex, Tether Ends in an $18.5M Settlement. An agreement was reached that Tether must provide all records going forward every quarter. Tether has been able to account for all tether created since 2018 and more recently has provided reports satisfying the requirements of the AG since they reached an agreement.
Update as of Sept 11, 2021: The US government could be cracking down on stablecoins as a digital currency of their own could make such stablecoins obsolete:
https://www.bloomberg.com/news/articles/2021-09-11/stablecoins-face-crackdown-as-u-s-discusses-risk-council-review This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
