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Dozens of exchanges risking their reputation on it suggest otherwise.
by cryptonitez 9y ago
Dozens of exchanges risking their reputation on it suggest otherwise.
- conanbatt 9y agoDo you honestly believe Tether has 2.2 billion dollars in a bank account? Tether is a huge red flag to me..Enron level.
- cryptonitez 9y agoYes, the I believe the sum of fiat deposited on bitfinex, bittrex, huobi,... is close to that amount. I even see people from high school "investing" in crypto now. It's really not hard to believe when you consider how many millions of people are on these exchanges. Binance touts 3 million users, and has 425,819,642 tethers. 141$ average a user is completely believable.
- vkou 9y agoYou're being taken in by a basic accounting trick. Let's suppose I buy 100 USDT on an exchange. What Tether claims happens: 0. Bob and I own $100. Tether and Bittrex own nothing. 1. Bob sends $100 to Tether Limited. 2. Tether limited sends Bob 100 USDT. They now have $100 in their bank account. 3. Bob transfers 100 USDT to bittrex. 4. I send $100 to bittrex. I buy 100 USDT using that $100 from Bob. 5. Bob withdraws his $100 from Bittrex. I withdraw my 100 USDT from Bittrex. 6. Now, I own 100 USDT, Bob owns $100, Bittrex owns nothing. 7. Tether Limited has to hold $100 in reserve. It's not their money - it's supposed to be backing USDT. In addition to having assets of $100, they also have $100 of liabilities. The reality: Steps 0-6 are the same. Step 7: Tether Limited buys a vacation to the Bahamas with their $100, and ignores the $100 liability. They are actually insolvent, and I have no recourse against them, because the Tether TOS make it very clear that I cannot redeem my USDT for USD from them. The whole point of tether is that it is supposed to be backed 1:1 with USD in Tether Limited's accounts. They have not proven to anyone that this is actually the case. For all we know, all that money went to the Bahamas, or a Swiss bank account, and they are just issuing USDT, pocketing what people pay them for it, and keeping none of it in reserve.
- MatekCopatek 9y agoWhile I think you're absolutely right in general, there are a few exchanges that are registered as serious financial institutions, which means they need to follow stricter regulation and actually back 100% of their user's assets. As far as I know at least Coinbase and Bitstamp are among these.
- ceejayoz 9y agoYes, and to my knowledge the legit folks like Coinbase aren't using Tether. They're using actual USD. They'll still likely get hurt when the scam collapses, but nowhere near as much.
- deleted 9y ago[deleted]
- gruez 9y agoconsidering that multiple exchanges in addition to bitfinex ONLY deal with USDT (instead of regular USD), that's not too implausible.
- ceejayoz 9y agoFor the Tether to exist, someone's supposed to give Tether USD in exchange to USDT. If these exchanges are trying to avoid USD, where's the USD to buy the Tether coming from?
- KMag 9y agoThe USD is in the cloud, duh! It's magical cloud thinking all the way down, at least until you reach the turtles.
- umanwizard 9y agoYou can wire real USD to Bitfinex.
- ceejayoz 9y agoYes, and Bitfinex promptly gives it to Tether. Which they control. https://medium.com/@bitfinexed/spoiler-alert-the-institution-buying-tethers-is-bitfinex-themselves-f56af29ce60c https://medium.com/@bitfinexed/spoiler-alert-the-institution... https://www.coindesk.com/bitfinex-tether-break-silence-go-media-offensive/ https://www.coindesk.com/bitfinex-tether-break-silence-go-me...
- umanwizard 9y agoSure, I'm not disputing this, just giving one plausible way Tether might be getting real USD.
- ceejayoz 9y agoOh, they're certainly getting some. The suspicion is they're siphoning it off to their personal accounts, and that they're claiming to have received way more USD than they actually have so they can issue USDT that aren't actually backed to manipulate the market.
- vkou 9y agoI'm not sure if you're legitimately confused on this subject, or are deliberately misinforming people. Just because an exchange trades tether doesn't mean their reputation is staked on it. Exchanges do not vouch for the instruments that are being traded on them. Tether is issued by Tether Limited, which is a shell corporation wholly owned and controlled by one exchange - Bitfinex. Not 'dozens of exchanges.' Allegedly, when someone gives Tether Limited $1 USD, they give that person 1 USDT. In reality, Tether has never actually been audited, and for all we know, they just give themselves 1 USDT, and sell it on the market... Without keeping a 1:1 reserve.