1. Bitfinex processes a USD deposit and dispenses USDT
2. USDT holder purchases BTC with it
3. Bitfinex purchases crypto (mostly BTC) with the USD, instead of holding it as promised
Thus the original USD of the person buying BTC at the exchange has effectively double the buying pressure on the BTC market because Bitfinex is actively investing all their USD holdings that "back" Tether into the market as well.
2. USDT holder purchases BTC with it
3. Bitfinex purchases crypto (mostly BTC) with the USD, instead of holding it as promised
Thus the original USD of the person buying BTC at the exchange has effectively double the buying pressure on the BTC market because Bitfinex is actively investing all their USD holdings that "back" Tether into the market as well.