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Everyone thinks Bitcoin's biggest risk is regulation, governments

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or hacks. It's not. The biggest risk

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is one company, Tether. Right now Tether controls $100 billion.

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It's the largest stable coin on earth, supposedly backed

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by US dollars. But here's the problem. Tether

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has never had a full independent audit. They've been fined

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by regulators, they've admitted to pass reserve misrepresentations, you

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know, it's confidence drops even slightly, it's going to

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be like a bank run. Instant panic, total liquidity freeze, forced

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liquidations, cascading across every exchange. And

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Bitcoin just gets obliterated, right? So I'm going

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to show you exactly why Tether is cryptos and

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particularly Bitcoin's biggest ticking time bomb, and

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what happens when it breaks and why you should really be

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considering closely what you own. So here is

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the first section I want to discuss with you. It's what is Tether, right?

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So let's start out simply. Tether, USDT, is

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what's called a stable coin. It's supposed to be backed by

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one to one on a US dollar basis. So one US dollar equals

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one Tether, yeah? So that's what it's

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supposed to be like. So it's stable. It's pegged to the US dollar.

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Stability is what allows traders to move in and out of

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crypto, avoid volatility, store value inside exchanges and

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provide liquidity through this thing called DeFi and so forth. Tether's

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market cap sits roughly at about $100 billion. That

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makes it the largest stable coin on Earth. But

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if the biggest dollar substitute is in crypto, and

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it's not solid, what does that say about everything else built on top of

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it? It's like an unordered to bank, right? So here's where

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it gets uncomfortable. Tether has never undergone a

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full independent top tier audit of its reserves. They

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publish attestations, they publish summaries, they

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publish breakdowns of holdings, but a full forensic audit

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has never been done. So historically, Tether has been fined by

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regulators. It's admitted misrepresentations in the past

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and shifted its composition. It talks about different

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reserves being commercial paper of unknown entities. They

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even claim their own portions of US treasuries, right? But here's the

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real key question. If you were running the largest, basically quasi-bank in

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crypto, wouldn't you want to remove all of

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the debt and do a transparent audit. So if it's clean,

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why not prove it, right? And here's where it gets messy. There's

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contagion risk. This is where it starts to escalate. It's

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very scary. Crypto runs on liquidity. That's how

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it runs. And liquidity runs on stablecoins. And

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stablecoins run on trust. If confidence in Tether

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drops, this is what happens. One, traders

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rush to redeem all their USDT, their Tether coins, for real actual

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dollars. Step two, exchanges start to halt withdrawals. And

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step three, panic starts to spread across every single exchange, it starts to

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spread, and then it forces liquidations, and it

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starts to cascade. Prices then collapse massively. Liquidity basically

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disappears and dries up. And we've seen kind of similar versions of this with The

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FTX collapse and Terra Lunar and Celsius and all these other things. And

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the markets basically freeze, right? And each time liquidity just basically evaporates.

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Each time there's like force selling and accelerated collapse. It's just

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wild. But here's the difference. FTX was a major exchange. Tether

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is the plumbing of the entire ecosystem. So

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if the plumbing breaks, How does the house stand? Just

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quickly, if you're ready to take control of your finances but feel stuck on

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where to start, I have a solution. My book, Money Buys Happiness,

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simplifies investing and wealth building with practical steps to help

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you achieve financial peace. Get your copy via the

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link in the show notes and let's get your money working for you. Now back

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to the episode. So if we look back in history, which is all we can do, it

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doesn't repeat, as I said before, but it rhymes. So in 2008, confidence evaporated

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in mortgage-backed securities. The CDOs basically grouped

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bonds that were just poisonous, right? And Lehman's, as a

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result of that, collapsed. Lehman Rise, 100-year-old bank lending froze. Iceland

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went bankrupt. Liquidity crisis. Banks didn't fail

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because they were worthless, they failed because confidence vanished. And that's what

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happened in the past in 1929 with bank runs. It's a psychology of

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fear. And even when there's bank runs on solvent institutions, and

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everyone withdraws, it collapses. And right now, as I'm recording this, I've said before in

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just a previous episode, Binance is in trouble because people are

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repealing and ripping out their crypto holdings out of Binance, and

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that company, while solvent, can collapse. So crypto is very fragile

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because it has no safe switches. It's

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got no lender of Last resort, there's no deposit guarantees

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like banks. There's no central bank backstop. There's

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no coordinated rescue mechanism. If Tether faced

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a true redemption crisis, who steps in? The Federal

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Reserve. They're not going to do that. Not like they did in 2008 with the

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GFC. So when trust disappears in a market built entirely on

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trust, what's left? It's kind of like the

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final domino. So Bitcoin's value proposition is

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all about decentralization. But it's really a trading ecosystem.

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It's actually highly centralized as most liquidity pairs against USDT,

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right? So it's actually very centralized thing. It's just the

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narrative is decentralized, because it gets more pundits into play, which

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actually props up. or the price because there's no value in it. Most exchanges

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use it as like USDT is a currency, so to speak. And

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most of the arbitrage flows actually depend on

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it, right? So if USDT tether breaks it significantly, all

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the liquidity depends on vanishes. And when liquidity vanishes, vroom!

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It starts to widen, buyers start to disappear, force selling, Bitcoin

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technically could go to zero, right? Practically, it would mean total ecosystem

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failure, and totally possible, right? This is one of the long tail risks no

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one's talking about. And this is the one scenario that permanently destroys trust

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in an asset class. Because it's not about a hack

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or a rogue CEO or a bad algorithm or whatever happened

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with Enron, you know, like poor accounting. It would mean that

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dollars propping up the entire system weren't actually real. It's

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like one big fraud, right? And once the trust is gone, it's

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hard to rebuild it. And this is a real possibility. Now, to

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be fair, Tether has survived multiple market crashes, it's

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processed billions of redemptions, it's done that before, it's increased transparency over

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time, it's done all these things. There's been Tether scares before, but

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the risk is not about what has happened already, but it's more

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about what could happen under stress, real stress, like a proper

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recession, a proper redemption. an unwinding of

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the entire system. It's not hysterical, but

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it could be controlled. So here's an example. It's not really a prediction, it's more

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of a black swan, okay? Something we can't see. But

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it's the single most structurally dangerous point

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in the entire world of crypto. If Tether holds, the system

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survives. If Tether breaks, it won't just be

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another crash, it'll be systemic, right? It'll be very much

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the same as what happened in 2008 with mortgage bonds, but you won't have

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a bailout. That would be the way I could explain it the most, and totally

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possible, right? If the GFC could happen in 2008, this could definitely happen in

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the world of crypto, right? And that's why you need to understand where liquidity truly

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comes from. So I want to know, do you think

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Tether is solid? Do you know much about it? Or is this a ticking time bomb that

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no one's talking about? So if you want deeper dive breakdowns like this

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without the hype and a BS straightforward show, without

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tribalism and cult-like tendencies and

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spruiking, except for my book, because you can buy for nine bucks, it's

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just a read, go do it, then hit the subscribe button. Stay smart

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and stay sharp. See you in the next episode. Thanks for listening to Money Grows

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on Trees. If you enjoyed the episode, leave a five-star review on Apple

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Podcasts and Spotify and subscribe to us on

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YouTube so you never miss an episode. And if you're serious about building wealth,

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make sure to check out the links in the show notes and follow me on all

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social media platforms at LloydJamesRoss for