Ben McKenzie on Tether, the potential danger at the center of the crypto economy.

Many things that are terrible for you in high doses are pretty fun in low ones. But it’s hard to know for sure: The company has never produced an audit, though earlier this year, Tether released an “attestation” from a Cayman Islands firm that said the company had about 3 percent of its reserves in cash; subsequent releases have claimed that the company has about 10 percent in “cash & bank deposits.” The reason this matters is that Tether is one of the primary engines driving the crypto economy, enabling all kinds of transactions and arbitrage opportunities. Based on this dim history, regulators and industry observers have repeatedly voiced concern that Tether’s shaky financial footing could lead to the crypto equivalent of a bank run, potentially causing a cascade of market instability—not just in the crypto world but in the mainstream, regulated financial sector. When an industry CEO recently asked why people don’t seem to redeem Tethers for dollars, Tether chief technology officer Paolo Ardoino, the company’s most vocal public representative, spun it as a positive. Swanson has written about the role of stablecoins in the crypto economy and thinks that the market would probably weather a Tether crash: “If you ever met some of these people, they just don’t care what the ethical implications of trading are.” I was never into betting on crypto for the same reason I was never into online poker: There’s no human interaction involved, and drinking at my desk while watching numbers flicker by on a screen is not my thing.