4 ms·

I'm aware that tether's reserves are a little doubtful, but could you elaborate on why Bitfinex is sketchy?

yla92 9y ago
I believe the main concern is whether 1 tether is actually backed by 1 USD. There is a series of articles[0] about why tether and Bitfinex are scary [0]: https://medium.com/@bitfinexed https://medium.com/@bitfinexed
spookthesunset 9y ago
For starters, they don't deal in USD at all. They deal in "USDT", which isn't at all USD but a token called a tether that is somehow magically supposed to be pegged so 1 USDT == 1USD that you can... well... I dunno what you can do with a tether but one thing you can't do is turn it into actual fiat money on Bitfinex. You might be able to convert it to cold hard fiat on some other exchange though, but odds are good said exchange will be even more sketchy than Bitfinex. Better still, the "market cap" for tether is over 1.6 billion USD with 5.5 billion in volume today. What happens when people actually want to turn that 1.6 billion of outstanding tether into dirty fiat? Who is gonna buy all those sells into USD? The exchanges? You think those guys are holding 1.6 billion in actual fiat money? So if you like the idea that the most active "USD" exchange (bitfinex, according to coinmarketcap) isn't actually trading in "USD" but some kind of funny money that is supposed to always be pegged to the dollar but backed by absolutely nothing at all.... Consider what will happen when the crypto bubble collapse really starts to pick up and all those tether holders want back into filthy dirty American dollars. Good fucking luck. It's just another facet of what makes the crypto "space" so fascinating. It is just layer upon layer of scams. Scammers scamming scammers. And yet people, even some supposedly smart people here on HN, continue to fall for the crypto scam every day. PS: for a good time read the tether TOS: https://tether.to/legal/ https://tether.to/legal/
- bhouston 9y ago
  The dotcom bubble wiped out $5T of value. I think the cryptocurrency bubble is still smaller than $1T. I think that many are not falling for the scams but rather are "momentum investing" and hoping their timing is good.
  - brokensegue 9y ago
    i believe that counts as falling for it
- Pyxl101 9y ago
  The fact that Tether does not guarantee in their terms and conditions that they'll exchange Tether back into equivalent reserve currency makes it _super_ sketchy from my point of view. The only way that Tether should be considered backed by and equivalent to USD (risk-reduced) is if Tether is contractually obligated to convert it back into USD. Instead, this is what their TOS says: > Tethers are not money and are not monetary instruments. They are also not stored value or currency. There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. > We make no representations, warranties, or guarantees to you of any kind, including with respect to any right of redemption or exchange of Tethers for any property. For more on this, see my previous comment exploring the idea of "Tether being worthless": https://news.ycombinator.com/item?id=15997658 https://news.ycombinator.com/item?id=15997658
  - arethuza 9y ago
    So basically the only thing you could do with Tether is try and offload it to someone else? Are all tokens issued as part of ICOs like that?
    - shawabawa3 9y ago
      Yes, and yes Some ICO's may claim other uses for their tokens but I don't think any are really usable at this point
  - dom96 9y ago
    I'm by no means an expert, but I'm wondering why the people responsible behind Tether do this? Why don't they ask people for a dollar for each Tether coin and then store those dollars indefinitely, wouldn't that guarantee that the currency is pegged? They would always be able to exchange the Tether back to a dollar.
    - Nursie 9y ago
      >> Why don't they ask people for a dollar for each Tether coin AFAICT they cannot bank in dollars at the moment, which is where the origins of the tether currency lie in the first place. They say that theey have the money to back it... but given they minted a quarter billion over the last three days seems a little less than credible.
- glenneroo 9y ago
  Poloniex and Binance let you convert to/from Tether (USDT). Do you consider Poloniex or Binance to be sketchy?
  - Yizahi 9y ago
    You forgot Bittrex.
    - mancerayder 9y ago
      How bad is Bittrex compared to the others?
  - banderman 9y ago
    Absolutely. Is there any information available on the ownership of Poloniex? Do they provide any proof of reserves?
    - oil7abibi 9y ago
      My friend has met some of Poloniex’s engineers. I think they’re based out of SF.
      - jandrese 9y ago
        Nothing can be more legit about a half remembered third hand account from an anonymous Internet source. My default assumption when I see a cryptocurrency exchange is that it is either fraudulent or incompetently run, because that has been the case overwhelmingly in the past. It takes extraordinary evidence to make me trust one.
frakr 9y ago
"Bitfinex’s CEO is also the CEO of a company called Tether Limited" http://fortune.com/2017/12/05/bitcoin-btc-price-usd-tether-limited-bitfinex/ http://fortune.com/2017/12/05/bitcoin-btc-price-usd-tether-l...

I believe the main concern is whether 1 tether is actually backed by 1 USD. There is a series of articles[0] about why tether and Bitfinex are scary [0]: https://medium.com/@bitfinexed https://medium.com/@bitfinexed

spookthesunset 9y ago

For starters, they don't deal in USD at all. They deal in "USDT", which isn't at all USD but a token called a tether that is somehow magically supposed to be pegged so 1 USDT == 1USD that you can... well... I dunno what you can do with a tether but one thing you can't do is turn it into actual fiat money on Bitfinex. You might be able to convert it to cold hard fiat on some other exchange though, but odds are good said exchange will be even more sketchy than Bitfinex. Better still, the "market cap" for tether is over 1.6 billion USD with 5.5 billion in volume today. What happens when people actually want to turn that 1.6 billion of outstanding tether into dirty fiat? Who is gonna buy all those sells into USD? The exchanges? You think those guys are holding 1.6 billion in actual fiat money? So if you like the idea that the most active "USD" exchange (bitfinex, according to coinmarketcap) isn't actually trading in "USD" but some kind of funny money that is supposed to always be pegged to the dollar but backed by absolutely nothing at all.... Consider what will happen when the crypto bubble collapse really starts to pick up and all those tether holders want back into filthy dirty American dollars. Good fucking luck. It's just another facet of what makes the crypto "space" so fascinating. It is just layer upon layer of scams. Scammers scamming scammers. And yet people, even some supposedly smart people here on HN, continue to fall for the crypto scam every day. PS: for a good time read the tether TOS: https://tether.to/legal/ https://tether.to/legal/

bhouston 9y ago
The dotcom bubble wiped out $5T of value. I think the cryptocurrency bubble is still smaller than $1T. I think that many are not falling for the scams but rather are "momentum investing" and hoping their timing is good.
- brokensegue 9y ago
  i believe that counts as falling for it
Pyxl101 9y ago
The fact that Tether does not guarantee in their terms and conditions that they'll exchange Tether back into equivalent reserve currency makes it _super_ sketchy from my point of view. The only way that Tether should be considered backed by and equivalent to USD (risk-reduced) is if Tether is contractually obligated to convert it back into USD. Instead, this is what their TOS says: > Tethers are not money and are not monetary instruments. They are also not stored value or currency. There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. > We make no representations, warranties, or guarantees to you of any kind, including with respect to any right of redemption or exchange of Tethers for any property. For more on this, see my previous comment exploring the idea of "Tether being worthless": https://news.ycombinator.com/item?id=15997658 https://news.ycombinator.com/item?id=15997658
- arethuza 9y ago
  So basically the only thing you could do with Tether is try and offload it to someone else? Are all tokens issued as part of ICOs like that?
  - shawabawa3 9y ago
    Yes, and yes Some ICO's may claim other uses for their tokens but I don't think any are really usable at this point
- dom96 9y ago
  I'm by no means an expert, but I'm wondering why the people responsible behind Tether do this? Why don't they ask people for a dollar for each Tether coin and then store those dollars indefinitely, wouldn't that guarantee that the currency is pegged? They would always be able to exchange the Tether back to a dollar.
  - Nursie 9y ago
    >> Why don't they ask people for a dollar for each Tether coin AFAICT they cannot bank in dollars at the moment, which is where the origins of the tether currency lie in the first place. They say that theey have the money to back it... but given they minted a quarter billion over the last three days seems a little less than credible.
glenneroo 9y ago
Poloniex and Binance let you convert to/from Tether (USDT). Do you consider Poloniex or Binance to be sketchy?
- Yizahi 9y ago
  You forgot Bittrex.
  - mancerayder 9y ago
    How bad is Bittrex compared to the others?
- banderman 9y ago
  Absolutely. Is there any information available on the ownership of Poloniex? Do they provide any proof of reserves?
  - oil7abibi 9y ago
    My friend has met some of Poloniex’s engineers. I think they’re based out of SF.
    - jandrese 9y ago
      Nothing can be more legit about a half remembered third hand account from an anonymous Internet source. My default assumption when I see a cryptocurrency exchange is that it is either fraudulent or incompetently run, because that has been the case overwhelmingly in the past. It takes extraordinary evidence to make me trust one.

frakr 9y ago

"Bitfinex’s CEO is also the CEO of a company called Tether Limited" http://fortune.com/2017/12/05/bitcoin-btc-price-usd-tether-limited-bitfinex/ http://fortune.com/2017/12/05/bitcoin-btc-price-usd-tether-l...