Link: https://www.icij.org/investigations/coin-laundry/crypto-giant-tether-promised-careful-vetting-some-early-customers-were-later-implicated-in-financial-crimes/

During a two-month period in 2020, a Russian man named Nikita Krasnov purchased about $1.16 million worth of newly minted USDT — the widely used stablecoin made by the cryptocurrency company Tether. A little more than four years later, Krasnov was sanctioned by U.S. authorities for his role in an expansive sanctions evasion scheme catering to Russian elites.

It’s a story that repeats itself across Tether’s customer base. Tether’s USDT token, whose value is pegged 1-to-1 to the U.S. dollar, has become one of the most widely used types of cryptocurrency in illicit finance. But the 12-year-old company has long claimed that it does thorough due diligence on its primary customers — that is, the people and institutions who purchase USDT directly from Tether, rather than from secondary sources once the tokens are in general circulation. In a 2023 letter, Tether CEO Paolo Ardoino assured members of Congress that the company uses vetting practices that “you would see at sophisticated financial institutions,” such as reviewing customers’ sources of funds, sanctions lists and any other information that links them to illicit activity.

Tether does not "back" their coin 1:1. It's a sham that crypto holders agree to participate in so they have a place that is not taxed to temporarily stash gains while the market momentarily downturns. Otherwise they would be taxed every time they convert to USD.

Tether is one the most audacious, overt financial scams ever to come out of the entire crypto space. Which is saying a lot.