Because Tether is LEVERAGED on Bitfinex and other Exchanges.

I've been warning about this for a while, and now, the news has become public they are under investigation. Bitfinex and Tether are complete scams and they are going to be brought down in the coming weeks and months.

There is NO MONEY backing Tether. None. Zero. Zilch. The "leadership" at Bitfinex/Tether will blame regulations rather than accept responsibility for their crime. Whoever has money in Tether right now will accept a wash - exchange your coins out for something "real" while you can.

"Investigation" by authorities is never a boon for business...but in this case, they deserve it.

I've written a lot of articles regarding the problems at Tether/Bitfinex over the last few months, but let's quickly examine why this is causing such a market shock...

The Leverage Game

Here's how the cycle works...

1.) Tether Team prints more Tether using the Omni Blockchain.
2.) Tether Team sends their Tether to Bitfinex (which are owned by the same people.)
3.) Tether Team places huge "USD" (Tether) buy walls/orders using margin trading on Bitfinex.
4.) Price of Bitcoin in USD shoots up temporarily on Bitfinex.
5.) The price increase on Bitfinex causes a ripple effect across other exchanges, where price goes up.
6.) After the price increase, the buy walls are taken down on Bitfinex and Tether is exchanged into BTC.
7.) WOW!! Magic! Now the Tether they just issued is "backed" by Bitcoin.

Can you see how "only" a couple billion USD have such a huge effect on the market, when LEVERAGE is involved?

What happens next is the mystery. Do they convert that Bitcoin to cash? Probably not, because there aren't many banks on the planet that would allow that transfer of money. That amount of money transferred in single transactions (100 million plus per day) isn't easily transferred in the conventional banking system.

So, more likely than not...Tether/Bitfinex owners, operators, and management are sitting on a HUGE goldmine of Bitcoin. Tether and Bitfinex will get shut down...then they'll just cash out (overtime, and where they can), driving the price of Bitcoin down further.

Things are about to get rocky in the world of crypto. Be careful.

Here is an archive of articles related to the Bitfinex and Tether regulator crackdown just released today:

https://www.bloomberg.com/news/articles/2018-01-30/crypto-exchange-bitfinex-tether-said-to-get-subpoenaed-by-cftc

http://www.forexlive.com/news/!/bitfinex-and-tether-said-to-be-subpoenaed-by-cftc-20180130

http://www.businessinsider.com/cryptocurrency-exchange-bitfinex-reportedly-subpoenaed-by-cftc-2018-1

https://www.macrobusiness.com.au/2018/01/bitcoin-crashes-bitfinex-tether-probed/

https://mashable.com/2018/01/30/tether-bitfinex-cftc-subpoenaed/

https://www.coindesk.com/report-cftc-sends-subpoenas-bitfinex-tether/

https://www.wired.com/story/why-tethers-collapse-would-be-bad-for-cryptocurrencies/

http://thehill.com/policy/technology/371432-financial-regulators-subpoena-major-cryptocurrency-exchange-and-token

https://cointelegraph.com/news/bitfinex-tether-get-subpoenas-from-us-regulators

https://www.investopedia.com/news/tether-and-bitfinex-subpoenaed-us-regulators/