Publishing an order book and the resulting trades is the entire point of an exchange.
And there is no way to manipulate this "order book", right? Just using my imagination here, but how about this:
Any offer to sell USDT for less than $1USD, the exchange itself buys it under whatever name they choose and then immediately lists it for sale at --- you guessed it $1USD.
Any order to sell USDT for more than $1USD just sits there unexecuted until a suitable idiot is found or the order is cancelled.
Meanwhile, any offer to buy/sell USDT at $1USD gets executed almost immediately.
By doing this they are manipulating the market and making money by fixing the price of USDT at $1USD. As long as all (or most) of the exchanges follow suit --- USDT stays pegged at $1USD --- even though it may only be worth $0.30 at maybe nothing at all --- you really have no way to *know*.
You have placed all your trust and blind faith in these unregulated exchanges that no one ever audits. You *assume* that they operate just like similar regulated markets but no one ever verifies this.
You know what happens when you ass-u-me too much, right?
What you described isn't even manipulation, it's exactly equivalent to the exchange keeping a big limit buy order on the book at all times. If the exchange decides to take the other side of your trade, and they offer you a better price then you asked for, great! Your costs were reduced. Do they let you withdraw? If yes then they have no more ability to "manipulate" via this mechanism than anyone else. They are paying for it with their finite funds. It's no different than anyone else putting big orders at 1$. The exchange could discount their own fees, but that's just a disadvantage for other traders, not anything guaranteed to keep a price.
There's no trust or blind faith here, just knowledge of how order books and exchanges actually work.
> You have placed all your trust and blind faith in these unregulated exchanges that no one ever audits.
As I mentioned in the other comment thread, Coinbase and Kraken trade USDT, are highly regulated under US law, and are audited regularly. Gemini is also highly regulated under US law and audited regularly, though they don't trade USDT. I don't know where you're getting this idea that most exchanges are unregulated and never audited, or that it even matters as long as the particular exchange you are using is regulated and audited.
It would be really hard for me to believe that both Coinbase and Kraken are colluding to trade USDT at a rate other than fair market value as determined by their order books.
... both Coinbase and Kraken are colluding to trade USDT at a rate other than fair market value
They may not be a party to any collusion. They may simply be powerless to prevent or affect it in any material way.
As the crypto market stands, the largest exchange in the world has access to unlimited crypto funds simply by minting more Tethers. At the same time, their trading volume alone gives them significant price influence over these same Tethers.
If they collude with enough other exchanges to control a substantial majority of the Tether market volume, any outlier exchanges (like Coinbase and Kraken) would just be along for the ride.
And there is no way to manipulate this "order book", right? Just using my imagination here, but how about this:
By doing this they are manipulating the market and making money by fixing the price of USDT at $1USD. As long as all (or most) of the exchanges follow suit --- USDT stays pegged at $1USD --- even though it may only be worth $0.30 at maybe nothing at all --- you really have no way to *know*.You have placed all your trust and blind faith in these unregulated exchanges that no one ever audits. You *assume* that they operate just like similar regulated markets but no one ever verifies this.
You know what happens when you ass-u-me too much, right?