7 ms·

Tether has issued $450M USDT in past 4 days

91 points by ActsJuvenile 9y ago

brianpgordon 9y ago
And I'm sure every single one is backed by legitimate USD deposits...
- 6nf 9y ago
  So supposedly someone somewhere has, what, 2-3 Billion USD in a bank account?
  - FireBeyond 9y ago
    Yeah. But not Wells Fargo. And they won't tell you unless you sign an NDA. Meanwhile this bank is supposedly receiving upwards of $100MM/day in deposits for this account and blissfully unaware... One born every minute.
StavrosK 9y ago
Doesn't "issued" mean sold? Didn't they get $450M in dollars for them? Or did they just give the USDT to themselves or something?
- ufo 9y ago
  The most likely explanation is that no one is purchasing those Tethers and that they have been printed out of thin air. * Tether purchases are "temporarily disabled" for regular customers. https://wallet.tether.to/app/#!/signup https://wallet.tether.to/app/#!/signup * Tether claims that these large purchases are being made by nameless "institutional investors" but didn't name who those investors would be. * Why would large institutional investors be stupid enough to purchase billions of dollars of useless cryptotokens from a shady company anyway?
  - StavrosK 9y ago
    Oh man... That means the tether isn't even pegged any more! If I can't buy them from the issuer for one dollar each and I really need a billion of them for some reason, then they're worth more, no? Conversely, if I can't sell them, they're worthless.
    - ufo 9y ago
      It gets better! From their terms of service: "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. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers." Apparently they changed this text earlier this month to make it sound less like a total scam but the original text is still available on archive.org: https://web.archive.org/web/20171224172135/https://tether.to/legal/ https://web.archive.org/web/20171224172135/https://tether.to...
      - deleted 9y ago
        [deleted]
mancerayder 9y ago
How are the big players in cryptocurrency not pushing back on this? It has potential to take down the entire ecosystem.
- adamnemecek 9y ago
  How?
  - Shank 9y ago
    A lot of exchanges only change between USDT and other crypto currencies. If tether is insolvent, the 1:1 backing ratio of USDT to USD doesn't exist, which means that USDT is worthless. Promised USD just evaporates. The few exchanges that offer USD to crypto and back are probably pretty safe, but if the entire ecosystem crashes, it stands to reason that's not going to stand up for long.
    - deleted 9y ago
      [deleted]
  - jameskilton 9y ago
    Fake 450 million USD being used to buy up Bitcoin, artificially inflating the value. Then when people want to sell, there isn't actually the underlying USD available, so you can't actually turn your BTC back into USD, leading to a mass sell panic rush and the price craters.
  - hendzen 9y ago
    Imagine the New York Stock exchange decided to print counterfeit dollars (electronically) and use them to buy up shares of all the stocks on the exchange. There would be a huge rally, all the stock prices would go through the roof. But if enough shareholders started selling their shares and asking for real dollars back, the exchange would eventually collapse because they wouldn't have enough money to settle all the trades. With Tether its basically the same situation, just more convoluted. Rather than counterfeiting dollars, they are rapidly printing USDT that the community, apparently on faith alone, believes are redeemable for $1 per Tether. Curiously Tethers have only been created, never destroyed, which would indicate that none have been redeemed back to USD. Many other (complicit) exchanges are also accepting these "tethered dollars" - the "USD" volume at exchanges like Bitfinex, Poloniex, Binance, Huobi, Bittrex, OkEX, etc is actually USDT based. The endgame is the same as the simplified example with counterfeit dollars. The only thing keeping it going is the rising cryptocurrency price, which is keeping people hoarding coins instead of selling back to USD. This is also why the rate of tether issuance has been increasing - they need to keep the price high so people continue to hold. Eventually the selling pressure will increase (on the few exchanges that actually handle real USD), and as people attempt to convert their crypto holdings to real dollars the fraud will become readily apparent. There will be huge distortions as the price of Bitcoin and Ethereum rockets on Bitfinex and other Tether exchanges as people try to get their money out, and simultaneously craters on GDAX & Gemeni as they try to get back in to fiat. In the end the massively decreased GDAX/Gemeni prices will be the only ones that matter since all faith will have been lost in the former tether-based exchanges. If you're reading this, you have been warned.
aviv 9y ago
Tether will end up being the pretext US authorities use to raid various exchangers. It's coming folks. Do not leave your coins at an exchange wallet, ever.
- matthewbauer 9y ago
  I think better advice is to not have coins period. Once it goes to 0 it’s not coming back up.
- ActsJuvenile 9y ago
  Tether is a foreign company, so the raid has to be from international authorities... but boy that raid story will rival Silk Road or Megaupload stories.
  - aviv 9y ago
    This is not going to matter one single bit. US authorities will claim they have evidence or reasonable suspicion that Tether funds were converted to coins that were later sent to addresses believed to be under the control of US-based exchangers. Money laundering raids 101.
blhack 9y ago
Can somebody explain, in detail, the conspiracy theory here? Preferably in a way that doesn't emotionally assume some nefarious action? $450M is a lot of money. Why do you assume that tether is lying about this? If tether aren't actually backed by anything, isn't that just about the worst ponzi scheme imaginable? Like some sort of reverse ponzi scheme, actually? They give you "fake" tethers, and you get to buy "real" bitcoins with them.
- Shank 9y ago
  > Can somebody explain, in detail, the conspiracy theory here? For tether to maintain a 1:1 ratio of 1 USDT to 1 USD, they have to have a backing of $450M from some company or bank that has USD to give them. As of now, they have no US based banks even doing transfers with them, let alone working with them on being solvent. Tether promised to be open to auditing, and none of the latest issuings have been audited as having actual backing currency.
  - StavrosK 9y ago
    I'm far from knowledgeable on this, but, as I understand it, for tether to maintain that ratio, the issuer of tether must both be willing to buy and sell one tether for one dollar, to and from anyone, at any time. The moment that stops, you're operating on faith, and you're no longer pegged to anything.
    - FireBeyond 9y ago
      Well, it's a good thing they don't have anything like this in their Terms: > "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. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers." Oh, wait, that's exactly what is in their Terms...
  - mrb 9y ago
    Tether the company (Tether Limited) claims that non-US exchanges buy tethers directly from them. At least it seems plausible.
6d6b73 9y ago
Sometimes I wish I could forget all about integrity and honesty and just use my knowledge to make a quick buck by scamming people like all these cryptoscammers do..
- tluyben2 9y ago
  Or do not do that but use your tech knowledge to make money from the market in a non scammy way. Past 1.5 month including the 'crash' of the past days were a party without scamming people. That is a quick buck.
chx 9y ago
https://www.reddit.com/r/Buttcoin/comments/7rad7q/a_reminder_every_time_that_tether_starts_a/dsvghqm/ https://www.reddit.com/r/Buttcoin/comments/7rad7q/a_reminder... > What if the crypto community is simply too stupid to ever let the bubble burst? > Like. Literally nobody has ever been able to trade their tethers back into dollars, and they've been around for over a year at this point. How the fuck do people have imaginary money and simply not want to get real money from it, not even once, in over a year? > Maybe the buttcoiners were right, and we are witnessing the birth of something completely new here: The market that was too dumb to even realise that it should crash.
- goldenkey 9y ago
  "We are backed by US dollars." "Can I redeem my Tether for them?" "No." "Can I get some proof?" "No." "Uhm..yeah..hmm..ehhhhh"
- gfodor 9y ago
  I've felt for a while that the main thing to ask yourself wrt crypto speculation is when does a pessimistic narrative dominate an optimistic narrative. I've argued that crypto, being software based, is inherently optimistic since any present day deficiencies can arguably fixed with "more code." This doesn't have to be true it just needs to be convincing enough to generate enough demand for the next wave of speculators. In the limit, either the concept is fundamentally flawed or it will inductively work after many iterations and rollovers to new models/coins/etc. But if it's flawed that could be a long time before the market collectively throws its hands up and says "there is no hope for this ever working" and drives the price to literally zero -- I mean, what would the catalyst be? In short term periods, market momentum can drive sentiment, but in longer periods there needs to be some kind of pure capitulation event that causes the market to resolve that crypto is doomed. Your guess is as good as mine as to what that is -- the long term trend seems to be that the last generation of holders cash out, causing a price drop, and new optimists pile in, driving the price higher than previous highs, sometimes in the form of new systems like ether or ICOs. It's hard to imagine what will break this cycle. Maybe the crypto engineering community tries a bunch of stuff and "these X problems cannot be solved in less than Y" years enters the crypto engineering zeiguist?
- 9y ago
barbegal 9y ago
As far as I can tell it has mostly issued Tethers to itself [1](as Bitfinex). Bitfinex/Tether are hoping that they can entice customers to use their platforms for arbitrage with other exchanges such that they can cream off a healthy margin without actually holding much currency themselves. [1] https://medium.com/@bitfinexed/spoiler-alert-the-institution-buying-tethers-is-bitfinex-themselves-f56af29ce60c https://medium.com/@bitfinexed/spoiler-alert-the-institution...
KasianFranks 9y ago
A US public company can do the same thing in terms of their authorized stock vs their shares outstanding. You can print money without it being backed. This means increasing your 'authorized' as you see fit. Just get approval from the SEC/Finra and your buddies and you're good to go. Now lets talk about other organizations printing money that's not backed by anything e.g. the Fed, QE 1-4, countries with inflationary problems. Cryptocurrency offers far more transparency (as we can see here) and has true global reach. This FUD needs to stop and more effort needs to put into understanding financial engineering and it's importance and relation to software engineering.
- jhwang5 9y ago
  I think you should look up how stock dilution works, how that typically destroys share prices, etc. I would like to suggest learning how finance works, starting from Investopedia /s
  - davidbanham 9y ago
    It would destroy the issuing company in a similar way that Tether refusing to pay out would destroy them. The analogy holds.
    - jhwang5 9y ago
      Yeah - I agree it's a ticking bomb - hasn't exploded yet, though.
- goldenkey 9y ago
  The later authorized and issued shares are NOT considered equal to the initial class A shares. Here's a tutorial on the difference between class A shares, class B shares, and so on... https://www.delawareinc.com/blog/change-your-companys-number-of-authorized-shares/ https://www.delawareinc.com/blog/change-your-companys-number...
  - KasianFranks 9y ago
throwaray122 9y ago
Finally people are waking up to this. Summary of Tether for the uninformed: 1. Their terms state that they owe you nothing in exchange for Tethers you hold 2. This effectively means Tether is backed by nothing. The 1:1 peg with USD is a total farce Tether must and does at all times reserve the right to refuse to issue or redeem Tether Tokens... No Representations & Warranties by Tether: Tether makes no representations, warranties, or guarantees to you of any kind. The Site and the Services are offered strictly on an as-is, where-is basis and, without limiting the generality of the foregoing, are offered without any representation as to merchantability or fitness for any particular purpose. What this means: Tether can print 1 billion Tethers, buy up 1 billion Bitcoin, and then cash out into dollars. In other words, they have engineered a way to more or less counterfeit U.S. dollars by counterfeiting cryptocurrency. I hope they go down hard.
- catbird 9y ago
  Why would anyone buy a Tether? Are people getting into cryptocurrencies really that clueless? I can see the idea behind bitcoin, that somehow it can hold value due to its inherent scarcity and high demand. But if the Tether supply is unlimited and controlled by a single company, how could anyone possibly believe it would hold its value?
  - ttul 9y ago
    Yes, they are THAT clueless. This is “Boiler Room” x 1,000
  - clark-kent 9y ago
    Most exchanges that trade Tether display it in a way that makes users think its actual fiat USD.
  - lingben 9y ago
    > Are people getting into cryptocurrencies really that clueless? short answer is YES, people getting into cryptocurrencies really are that clueless. take for example that the vast majority who opened new accounts at coinbase didn't realize that you could buy fractional shares of bitcoin and therefore assumed since they couldn't afford bitcoin at 1BTC at around $15k they opted for altcoins https://www.reddit.com/r/Bitcoin/comments/7femm2/many_people_dont_realize_that_you_can_buy_a/ https://www.reddit.com/r/Bitcoin/comments/7femm2/many_people...
js2 9y ago
Their terms of service currently has this clause: Beginning on January 1, 2018, Tether Tokens will no longer be issued to U.S. Persons. https://tether.to/legal/ https://tether.to/legal/ So these USDT are being issued to non-U.S. Persons. How does that work? A non-U.S. Person wires funds in their local currency to tether who applies the current exchange rate for that currency to USD then issues an equivalent number of USDT? Why would anyone do that instead of just purchasing the tether for their own currency?
- Mandatum 9y ago
  It's so they're not caught out by laws pertaining to "USD-backed securities" enforced by the nice people at the SEC. This doesn't excuse them from previous transactions they've already made.. Which means likely they didn't start printing Tether until after 1st of Jan. It's likely they have loans out for the amount stuck in escrow since Taiwan froze their wire's in April. This is the heist of the century. They're 5% of the way to ENRON level shenanigans.
lvturner 9y ago
Shameless plug, I wrote a little telegram bot to send an alert whenever new Tether are created: http://t.me/TetherAlerterBot http://t.me/TetherAlerterBot
modeless 9y ago
Disclaimer: I think Tether is shady, likely illegal, and would never use it myself. However, I think there is a perfectly reasonable explanation for where this Tether is coming from and why no existing Tether has ever been redeemed for USD. First, understand that Tether and Bitfinex are the same people. Bitfinex has hundreds of millions of dollars in their accounts. It is likely that most or all of the Tether is bought directly by Bitfinex in order to satisfy Tether withdrawal requests. The money comes from USD deposits to Bitfinex. When people want to convert Tether to USD, rather than redeeming from Tether.to directly, they send Tether back to Bitfinex, which credits it to their USD balance at a 1:1 rate. The USD can then be withdrawn as a wire transfer. Crucially, this process does not require that Tether be redeemed, because Bitfinex maintains a large balance of both USD and Tether. As long as Tether demand keeps increasing, Bitfinex can simply sit on the Tether they receive until it's time to hand it out to someone else doing a Tether withdrawal. The only situation in which Tether would ever be redeemed is if there was a bank run on Bitfinex. As Bitfinex's USD reserves fell they would need to redeem the Tether that they hold for USD. So far, Bitfinex has not faced this situation and so no Tether has ever been redeemed. So, I've described a way in which Tether could be relatively legitimate. Is that actually what's going on? Nobody knows except the management of Bitfinex. Personally, I don't trust them. The incentives for fraud are astronomical, and even if it's been entirely legit up to this point it's unlikely to remain so forever.
- FireBeyond 9y ago
  > First, understand that Tether and Bitfinex are the same people. > Nobody knows except the management of Bitfinex. The management of Bitfinex, who as you say, are the management of Tether still claim, hand on heart, that there is no relation or interaction between the two.
- hendzen 9y ago
  If that was true, why would Bitfinex not agree to an audit to prove the funds were held? And do you really believe 450m was transferred to Bitfinex in the last 3-4 days?
  - dhoulb 9y ago

91 points by ActsJuvenile 9y ago

brianpgordon 9y ago

And I'm sure every single one is backed by legitimate USD deposits...

6nf 9y ago
So supposedly someone somewhere has, what, 2-3 Billion USD in a bank account?
- FireBeyond 9y ago
  Yeah. But not Wells Fargo. And they won't tell you unless you sign an NDA. Meanwhile this bank is supposedly receiving upwards of $100MM/day in deposits for this account and blissfully unaware... One born every minute.

StavrosK 9y ago

Doesn't "issued" mean sold? Didn't they get $450M in dollars for them? Or did they just give the USDT to themselves or something?

ufo 9y ago
The most likely explanation is that no one is purchasing those Tethers and that they have been printed out of thin air. * Tether purchases are "temporarily disabled" for regular customers. https://wallet.tether.to/app/#!/signup https://wallet.tether.to/app/#!/signup * Tether claims that these large purchases are being made by nameless "institutional investors" but didn't name who those investors would be. * Why would large institutional investors be stupid enough to purchase billions of dollars of useless cryptotokens from a shady company anyway?
- StavrosK 9y ago
  Oh man... That means the tether isn't even pegged any more! If I can't buy them from the issuer for one dollar each and I really need a billion of them for some reason, then they're worth more, no? Conversely, if I can't sell them, they're worthless.
  - ufo 9y ago
    It gets better! From their terms of service: "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. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers." Apparently they changed this text earlier this month to make it sound less like a total scam but the original text is still available on archive.org: https://web.archive.org/web/20171224172135/https://tether.to/legal/ https://web.archive.org/web/20171224172135/https://tether.to...
    - deleted 9y ago
      [deleted]

mancerayder 9y ago

How are the big players in cryptocurrency not pushing back on this? It has potential to take down the entire ecosystem.

adamnemecek 9y ago
How?
- Shank 9y ago
  A lot of exchanges only change between USDT and other crypto currencies. If tether is insolvent, the 1:1 backing ratio of USDT to USD doesn't exist, which means that USDT is worthless. Promised USD just evaporates. The few exchanges that offer USD to crypto and back are probably pretty safe, but if the entire ecosystem crashes, it stands to reason that's not going to stand up for long.
  - deleted 9y ago
    [deleted]
- jameskilton 9y ago
  Fake 450 million USD being used to buy up Bitcoin, artificially inflating the value. Then when people want to sell, there isn't actually the underlying USD available, so you can't actually turn your BTC back into USD, leading to a mass sell panic rush and the price craters.
- hendzen 9y ago
  Imagine the New York Stock exchange decided to print counterfeit dollars (electronically) and use them to buy up shares of all the stocks on the exchange. There would be a huge rally, all the stock prices would go through the roof. But if enough shareholders started selling their shares and asking for real dollars back, the exchange would eventually collapse because they wouldn't have enough money to settle all the trades. With Tether its basically the same situation, just more convoluted. Rather than counterfeiting dollars, they are rapidly printing USDT that the community, apparently on faith alone, believes are redeemable for $1 per Tether. Curiously Tethers have only been created, never destroyed, which would indicate that none have been redeemed back to USD. Many other (complicit) exchanges are also accepting these "tethered dollars" - the "USD" volume at exchanges like Bitfinex, Poloniex, Binance, Huobi, Bittrex, OkEX, etc is actually USDT based. The endgame is the same as the simplified example with counterfeit dollars. The only thing keeping it going is the rising cryptocurrency price, which is keeping people hoarding coins instead of selling back to USD. This is also why the rate of tether issuance has been increasing - they need to keep the price high so people continue to hold. Eventually the selling pressure will increase (on the few exchanges that actually handle real USD), and as people attempt to convert their crypto holdings to real dollars the fraud will become readily apparent. There will be huge distortions as the price of Bitcoin and Ethereum rockets on Bitfinex and other Tether exchanges as people try to get their money out, and simultaneously craters on GDAX & Gemeni as they try to get back in to fiat. In the end the massively decreased GDAX/Gemeni prices will be the only ones that matter since all faith will have been lost in the former tether-based exchanges. If you're reading this, you have been warned.

aviv 9y ago

Tether will end up being the pretext US authorities use to raid various exchangers. It's coming folks. Do not leave your coins at an exchange wallet, ever.

matthewbauer 9y ago
I think better advice is to not have coins period. Once it goes to 0 it’s not coming back up.
ActsJuvenile 9y ago
Tether is a foreign company, so the raid has to be from international authorities... but boy that raid story will rival Silk Road or Megaupload stories.
- aviv 9y ago
  This is not going to matter one single bit. US authorities will claim they have evidence or reasonable suspicion that Tether funds were converted to coins that were later sent to addresses believed to be under the control of US-based exchangers. Money laundering raids 101.

blhack 9y ago

Can somebody explain, in detail, the conspiracy theory here? Preferably in a way that doesn't emotionally assume some nefarious action? $450M is a lot of money. Why do you assume that tether is lying about this? If tether aren't actually backed by anything, isn't that just about the worst ponzi scheme imaginable? Like some sort of reverse ponzi scheme, actually? They give you "fake" tethers, and you get to buy "real" bitcoins with them.

Shank 9y ago
> Can somebody explain, in detail, the conspiracy theory here? For tether to maintain a 1:1 ratio of 1 USDT to 1 USD, they have to have a backing of $450M from some company or bank that has USD to give them. As of now, they have no US based banks even doing transfers with them, let alone working with them on being solvent. Tether promised to be open to auditing, and none of the latest issuings have been audited as having actual backing currency.
- StavrosK 9y ago
  I'm far from knowledgeable on this, but, as I understand it, for tether to maintain that ratio, the issuer of tether must both be willing to buy and sell one tether for one dollar, to and from anyone, at any time. The moment that stops, you're operating on faith, and you're no longer pegged to anything.
  - FireBeyond 9y ago
    Well, it's a good thing they don't have anything like this in their Terms: > "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. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers." Oh, wait, that's exactly what is in their Terms...
- mrb 9y ago
  Tether the company (Tether Limited) claims that non-US exchanges buy tethers directly from them. At least it seems plausible.

6d6b73 9y ago

Sometimes I wish I could forget all about integrity and honesty and just use my knowledge to make a quick buck by scamming people like all these cryptoscammers do..

tluyben2 9y ago
Or do not do that but use your tech knowledge to make money from the market in a non scammy way. Past 1.5 month including the 'crash' of the past days were a party without scamming people. That is a quick buck.

chx 9y ago

https://www.reddit.com/r/Buttcoin/comments/7rad7q/a_reminder_every_time_that_tether_starts_a/dsvghqm/ https://www.reddit.com/r/Buttcoin/comments/7rad7q/a_reminder... > What if the crypto community is simply too stupid to ever let the bubble burst? > Like. Literally nobody has ever been able to trade their tethers back into dollars, and they've been around for over a year at this point. How the fuck do people have imaginary money and simply not want to get real money from it, not even once, in over a year? > Maybe the buttcoiners were right, and we are witnessing the birth of something completely new here: The market that was too dumb to even realise that it should crash.

goldenkey 9y ago
"We are backed by US dollars." "Can I redeem my Tether for them?" "No." "Can I get some proof?" "No." "Uhm..yeah..hmm..ehhhhh"
gfodor 9y ago
I've felt for a while that the main thing to ask yourself wrt crypto speculation is when does a pessimistic narrative dominate an optimistic narrative. I've argued that crypto, being software based, is inherently optimistic since any present day deficiencies can arguably fixed with "more code." This doesn't have to be true it just needs to be convincing enough to generate enough demand for the next wave of speculators. In the limit, either the concept is fundamentally flawed or it will inductively work after many iterations and rollovers to new models/coins/etc. But if it's flawed that could be a long time before the market collectively throws its hands up and says "there is no hope for this ever working" and drives the price to literally zero -- I mean, what would the catalyst be? In short term periods, market momentum can drive sentiment, but in longer periods there needs to be some kind of pure capitulation event that causes the market to resolve that crypto is doomed. Your guess is as good as mine as to what that is -- the long term trend seems to be that the last generation of holders cash out, causing a price drop, and new optimists pile in, driving the price higher than previous highs, sometimes in the form of new systems like ether or ICOs. It's hard to imagine what will break this cycle. Maybe the crypto engineering community tries a bunch of stuff and "these X problems cannot be solved in less than Y" years enters the crypto engineering zeiguist?
9y ago

barbegal 9y ago

As far as I can tell it has mostly issued Tethers to itself [1](as Bitfinex). Bitfinex/Tether are hoping that they can entice customers to use their platforms for arbitrage with other exchanges such that they can cream off a healthy margin without actually holding much currency themselves. [1] https://medium.com/@bitfinexed/spoiler-alert-the-institution-buying-tethers-is-bitfinex-themselves-f56af29ce60c https://medium.com/@bitfinexed/spoiler-alert-the-institution...

KasianFranks 9y ago

A US public company can do the same thing in terms of their authorized stock vs their shares outstanding. You can print money without it being backed. This means increasing your 'authorized' as you see fit. Just get approval from the SEC/Finra and your buddies and you're good to go. Now lets talk about other organizations printing money that's not backed by anything e.g. the Fed, QE 1-4, countries with inflationary problems. Cryptocurrency offers far more transparency (as we can see here) and has true global reach. This FUD needs to stop and more effort needs to put into understanding financial engineering and it's importance and relation to software engineering.

jhwang5 9y ago
I think you should look up how stock dilution works, how that typically destroys share prices, etc. I would like to suggest learning how finance works, starting from Investopedia /s
- davidbanham 9y ago
  It would destroy the issuing company in a similar way that Tether refusing to pay out would destroy them. The analogy holds.
  - jhwang5 9y ago
    Yeah - I agree it's a ticking bomb - hasn't exploded yet, though.
goldenkey 9y ago
The later authorized and issued shares are NOT considered equal to the initial class A shares. Here's a tutorial on the difference between class A shares, class B shares, and so on... https://www.delawareinc.com/blog/change-your-companys-number-of-authorized-shares/ https://www.delawareinc.com/blog/change-your-companys-number...
- KasianFranks 9y ago

throwaray122 9y ago

Finally people are waking up to this. Summary of Tether for the uninformed: 1. Their terms state that they owe you nothing in exchange for Tethers you hold 2. This effectively means Tether is backed by nothing. The 1:1 peg with USD is a total farce Tether must and does at all times reserve the right to refuse to issue or redeem Tether Tokens... No Representations & Warranties by Tether: Tether makes no representations, warranties, or guarantees to you of any kind. The Site and the Services are offered strictly on an as-is, where-is basis and, without limiting the generality of the foregoing, are offered without any representation as to merchantability or fitness for any particular purpose. What this means: Tether can print 1 billion Tethers, buy up 1 billion Bitcoin, and then cash out into dollars. In other words, they have engineered a way to more or less counterfeit U.S. dollars by counterfeiting cryptocurrency. I hope they go down hard.

catbird 9y ago
Why would anyone buy a Tether? Are people getting into cryptocurrencies really that clueless? I can see the idea behind bitcoin, that somehow it can hold value due to its inherent scarcity and high demand. But if the Tether supply is unlimited and controlled by a single company, how could anyone possibly believe it would hold its value?
- ttul 9y ago
  Yes, they are THAT clueless. This is “Boiler Room” x 1,000
- clark-kent 9y ago
  Most exchanges that trade Tether display it in a way that makes users think its actual fiat USD.
- lingben 9y ago
  > Are people getting into cryptocurrencies really that clueless? short answer is YES, people getting into cryptocurrencies really are that clueless. take for example that the vast majority who opened new accounts at coinbase didn't realize that you could buy fractional shares of bitcoin and therefore assumed since they couldn't afford bitcoin at 1BTC at around $15k they opted for altcoins https://www.reddit.com/r/Bitcoin/comments/7femm2/many_people_dont_realize_that_you_can_buy_a/ https://www.reddit.com/r/Bitcoin/comments/7femm2/many_people...

js2 9y ago

Their terms of service currently has this clause: Beginning on January 1, 2018, Tether Tokens will no longer be issued to U.S. Persons. https://tether.to/legal/ https://tether.to/legal/ So these USDT are being issued to non-U.S. Persons. How does that work? A non-U.S. Person wires funds in their local currency to tether who applies the current exchange rate for that currency to USD then issues an equivalent number of USDT? Why would anyone do that instead of just purchasing the tether for their own currency?

Mandatum 9y ago
It's so they're not caught out by laws pertaining to "USD-backed securities" enforced by the nice people at the SEC. This doesn't excuse them from previous transactions they've already made.. Which means likely they didn't start printing Tether until after 1st of Jan. It's likely they have loans out for the amount stuck in escrow since Taiwan froze their wire's in April. This is the heist of the century. They're 5% of the way to ENRON level shenanigans.

lvturner 9y ago

Shameless plug, I wrote a little telegram bot to send an alert whenever new Tether are created: http://t.me/TetherAlerterBot http://t.me/TetherAlerterBot

modeless 9y ago

Disclaimer: I think Tether is shady, likely illegal, and would never use it myself. However, I think there is a perfectly reasonable explanation for where this Tether is coming from and why no existing Tether has ever been redeemed for USD. First, understand that Tether and Bitfinex are the same people. Bitfinex has hundreds of millions of dollars in their accounts. It is likely that most or all of the Tether is bought directly by Bitfinex in order to satisfy Tether withdrawal requests. The money comes from USD deposits to Bitfinex. When people want to convert Tether to USD, rather than redeeming from Tether.to directly, they send Tether back to Bitfinex, which credits it to their USD balance at a 1:1 rate. The USD can then be withdrawn as a wire transfer. Crucially, this process does not require that Tether be redeemed, because Bitfinex maintains a large balance of both USD and Tether. As long as Tether demand keeps increasing, Bitfinex can simply sit on the Tether they receive until it's time to hand it out to someone else doing a Tether withdrawal. The only situation in which Tether would ever be redeemed is if there was a bank run on Bitfinex. As Bitfinex's USD reserves fell they would need to redeem the Tether that they hold for USD. So far, Bitfinex has not faced this situation and so no Tether has ever been redeemed. So, I've described a way in which Tether could be relatively legitimate. Is that actually what's going on? Nobody knows except the management of Bitfinex. Personally, I don't trust them. The incentives for fraud are astronomical, and even if it's been entirely legit up to this point it's unlikely to remain so forever.

FireBeyond 9y ago
> First, understand that Tether and Bitfinex are the same people. > Nobody knows except the management of Bitfinex. The management of Bitfinex, who as you say, are the management of Tether still claim, hand on heart, that there is no relation or interaction between the two.
hendzen 9y ago
If that was true, why would Bitfinex not agree to an audit to prove the funds were held? And do you really believe 450m was transferred to Bitfinex in the last 3-4 days?
- dhoulb 9y ago