7 ms·
That's where I also get confused. So far the reasons I could come up with are: - the exchange got bought out silently and is now owned/controlled by the peo
by lurker456 9y ago
That's where I also get confused.
So far the reasons I could come up with are:
- the exchange got bought out silently and is now owned/controlled by the people behind tether
- the exchange got paid to use tether (for example 0.5% of the volume as incentive)
- the exchange holds a part of tether's fiat as guarantee
- the exchange is run by people who are inexperienced in appraising counterparty risk
- the exchange is run by people who like to take risks
- the exchange expects to cover any potential losses with the profits they made so far
- the exchange has been offered proof that the 1:1 peg is genuine (backed by the Chinese govt using US bonds)
other ideas are welcome
- moduspol 9y agoWhat risks does the exchange incur from allowing the trade of tethers? Exchanges make their money from people trading--not by holding their own reserves and betting on their values. If Tether value drops to zero, anyone holding Tethers would be upset, but exchanges would just have been profiting from all the trades necessary to bring that value down to zero.
- tlrobinson 9y agoIIRC some exchanges don’t make it clear you’re trading USDT, not USD. If Tether were to implode users might be able to sue the exchange to try to recover the USD value.
- moduspol 9y agoFor that case, maybe, but I'm correcting parent post's presumption that trading in tethers necessarily imparts some huge risk onto the exchange.
- lurker456 9y agoAllegedly, some exchanges commingle USD and USDT without informing their users. For exchanges that don't do that, the question "Why would exchanges even touch it ?" is less applicable. As to why end users would touch it, that's obvious - a (potentially misguided) belief that things will work out fine.
- notyourday 9y agoI have a much simpler explanation: the exchange is a fraud.