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Their assets equal liabilities in either case (whether selling USDT directly for USD, or cyclling them through BTC). Call it what you will, but in neither scen

by rmrm 9y ago

Their assets equal liabilities in either case (whether selling USDT directly for USD, or cyclling them through BTC). Call it what you will, but in neither scenario is anyone rich. Tether if backed by USD at the end of the day is revenue neutral. What am I missing?

TeMPOraL 9y ago
Tether being printed out of thin air if they're not backed by USD?
- rmrm 9y ago
  I dont understand your question. I think the math is fairly straightforward. There is a USD/USDT driven cross. Creating and destroying USDT is straightforward there. There is also a BTC/USDT cross. That creates a drive for USDT. If that demand to sell BTC and buy USDT bids up USDT, then USDT would be created, and the BTC would convert back to USD. I agree that Tether is not forthcoming that this happens, but yes this is exactly what I would expect to happen. Its not mysterious sounding to me, or necessarily nefarious. I dont understand why Im beimg downvoted, its a discussion about generic market mechanics. We can leave bogeyman words out of it.
  - paulmd 9y ago
    Because Tether obviously does not have $2.3 billion in cash reserves on hand, there probably isn't 1/10th that volume of fiat in the entire cryptocurrency ecosystem (not market caps, liquid cash that could be withdrawn). They're writing checks they cannot cash, plain and simple. It's called "lying" and "fraud", your "but what if they did have the cash" is irrelevant, because they don't, and you're getting downvoted because you're aggressively refusing to address that point in favor of hypotheticals. Could you hypothetically have a legitimate Tether token? Yeah, sure. Is the Tether Foundation on the up and up? Hell no. There's a reason their auditor bailed before completing the audit.
    - rmrm 9y ago
      Actually, you are the only one who has brought this up, that the liquidity dictates that they couldnt have sold BTC for USD. If that is true, then youve answered my question of what I was missing. I didnt aggressively fail to address this, it quite literally wasnt brought up. Thanks. EDIT: This apparently is no longer a site to ask questions or to challenge assumptions in good faith to get at an understanding. Its a religious conversation. One takes things on faith, or GTFO, apparently.
      - TeMPOraL 9y ago
        I might be getting lost in the discussion, but I still feel you miss the core point - it's not about liquidity. Even if they could sell BTC for USD without affecting the crypto market, they still seem to have printed out USDT out of thin air and - as I understand - proceeded to buy BTC with them. That is, you could say they literally stole those BTC. Going from USDT to USD in a roundabout way through BTC doesn't change anything if USDT themselves are bullshit. RE your EDIT: it is, but deep downthread like this, it's always luck what you get. Also don't worry about the downvotes, everyone gets their share of them here :).
        rmrm 9y ago
        I do understand that, they engaged in fraud, slight of hand, whatever. But my main interest is what happened after they exchanged USDT for Bitcoin. When they did this, or as they did this, they added $2 billion or marginal demand that didn't exist in dollars to the bitcoin market. However, if they subsequently and along the way sold the BTC for USD, they also extinguished that extra demand, so the bitcoin market net-net had no extra demand - all purchases ended up being backed by USD. I dont know the answer to the above, but its critical for the future price of bitcoin and is really really important. Everyone just seems to assume they held the bitcoin, which is a crazy move. If they could have sold for USD, it makes sense to me they would have...thats why I think its an important question. It doesnt seem to interest anyone else tho, which is fine. The comment above said liquidity dictates they could not have, that they must still be holding bitcoin. But I also say today, bitfinex'ed, the blogger that has been on this story, says they redeemed 330 million in past 24 hrs. Which is far above the 10% of 2 billion number he said of the entire crypto market is backed by USD. So to say the liquidity doesnt exist doesnt seem to make sense, there seem to be a lot of dollars into crypto. 1 million people with $1000 invested is a billion alone. That isnt crazy.
thedufer 9y ago
> Their assets equal liabilities This is irrelevant, though. You can commit fraud without losing any money - Martin Shkreli was famously convicted of fraud a few months ago even though the victims all came out ahead. In the USDT -> BTC -> USD trip, there is a point, namely the BTC part, where more USDT has been issued than USD has been accepted. If they claim USDT is backed by USD, but there were points where that was not true, they have committed fraud, regardless of whether they were lucky enough to come out ahead.
- rmrm 9y ago
  No argument there. There are multiple arguments about what Tether is or is not, and what part of this story interests people. Im most fascinated and interested in what form the proceeds of USDT sales are in. If they are holding bitcoins it has much bigger implications than if they are holding cash. Thats kind of why Im probing this. If they are really holding bitcoins, it means a spectacular implosion is coming. If holding cash, less so. If or why they all go to jail is less interesting to me. So, whether their books line up is irrelevant to whether they committed fraud, perhaps, but VERY relevant to the price of bitcoin.
Negitivefrags 9y ago
What you are missing is that they created money out of nowhere. No individual loses directly, but it affects the overall money supply. In this case, the price of bitcoin was inflated artificially by buying it with an asset that was created out of nowhere. It's like having a printing press that creates legitimate money. No individual loses, but the prices of everything you can buy will artificially increase (or another way to look at that is the currency deflates) if you print enough of it.
- rmrm 9y ago
  If they hold the bitcoin, yes. I dont think anyone is missing that.

by rmrm 9y ago

TeMPOraL 9y ago

Tether being printed out of thin air if they're not backed by USD?

rmrm 9y ago
I dont understand your question. I think the math is fairly straightforward. There is a USD/USDT driven cross. Creating and destroying USDT is straightforward there. There is also a BTC/USDT cross. That creates a drive for USDT. If that demand to sell BTC and buy USDT bids up USDT, then USDT would be created, and the BTC would convert back to USD. I agree that Tether is not forthcoming that this happens, but yes this is exactly what I would expect to happen. Its not mysterious sounding to me, or necessarily nefarious. I dont understand why Im beimg downvoted, its a discussion about generic market mechanics. We can leave bogeyman words out of it.
- paulmd 9y ago
  Because Tether obviously does not have $2.3 billion in cash reserves on hand, there probably isn't 1/10th that volume of fiat in the entire cryptocurrency ecosystem (not market caps, liquid cash that could be withdrawn). They're writing checks they cannot cash, plain and simple. It's called "lying" and "fraud", your "but what if they did have the cash" is irrelevant, because they don't, and you're getting downvoted because you're aggressively refusing to address that point in favor of hypotheticals. Could you hypothetically have a legitimate Tether token? Yeah, sure. Is the Tether Foundation on the up and up? Hell no. There's a reason their auditor bailed before completing the audit.
  - rmrm 9y ago
    Actually, you are the only one who has brought this up, that the liquidity dictates that they couldnt have sold BTC for USD. If that is true, then youve answered my question of what I was missing. I didnt aggressively fail to address this, it quite literally wasnt brought up. Thanks. EDIT: This apparently is no longer a site to ask questions or to challenge assumptions in good faith to get at an understanding. Its a religious conversation. One takes things on faith, or GTFO, apparently.
    - TeMPOraL 9y ago
      I might be getting lost in the discussion, but I still feel you miss the core point - it's not about liquidity. Even if they could sell BTC for USD without affecting the crypto market, they still seem to have printed out USDT out of thin air and - as I understand - proceeded to buy BTC with them. That is, you could say they literally stole those BTC. Going from USDT to USD in a roundabout way through BTC doesn't change anything if USDT themselves are bullshit. RE your EDIT: it is, but deep downthread like this, it's always luck what you get. Also don't worry about the downvotes, everyone gets their share of them here :).
      - rmrm 9y ago
        I do understand that, they engaged in fraud, slight of hand, whatever. But my main interest is what happened after they exchanged USDT for Bitcoin. When they did this, or as they did this, they added $2 billion or marginal demand that didn't exist in dollars to the bitcoin market. However, if they subsequently and along the way sold the BTC for USD, they also extinguished that extra demand, so the bitcoin market net-net had no extra demand - all purchases ended up being backed by USD. I dont know the answer to the above, but its critical for the future price of bitcoin and is really really important. Everyone just seems to assume they held the bitcoin, which is a crazy move. If they could have sold for USD, it makes sense to me they would have...thats why I think its an important question. It doesnt seem to interest anyone else tho, which is fine. The comment above said liquidity dictates they could not have, that they must still be holding bitcoin. But I also say today, bitfinex'ed, the blogger that has been on this story, says they redeemed 330 million in past 24 hrs. Which is far above the 10% of 2 billion number he said of the entire crypto market is backed by USD. So to say the liquidity doesnt exist doesnt seem to make sense, there seem to be a lot of dollars into crypto. 1 million people with $1000 invested is a billion alone. That isnt crazy.

thedufer 9y ago

> Their assets equal liabilities This is irrelevant, though. You can commit fraud without losing any money - Martin Shkreli was famously convicted of fraud a few months ago even though the victims all came out ahead. In the USDT -> BTC -> USD trip, there is a point, namely the BTC part, where more USDT has been issued than USD has been accepted. If they claim USDT is backed by USD, but there were points where that was not true, they have committed fraud, regardless of whether they were lucky enough to come out ahead.

rmrm 9y ago
No argument there. There are multiple arguments about what Tether is or is not, and what part of this story interests people. Im most fascinated and interested in what form the proceeds of USDT sales are in. If they are holding bitcoins it has much bigger implications than if they are holding cash. Thats kind of why Im probing this. If they are really holding bitcoins, it means a spectacular implosion is coming. If holding cash, less so. If or why they all go to jail is less interesting to me. So, whether their books line up is irrelevant to whether they committed fraud, perhaps, but VERY relevant to the price of bitcoin.

Negitivefrags 9y ago

What you are missing is that they created money out of nowhere. No individual loses directly, but it affects the overall money supply. In this case, the price of bitcoin was inflated artificially by buying it with an asset that was created out of nowhere. It's like having a printing press that creates legitimate money. No individual loses, but the prices of everything you can buy will artificially increase (or another way to look at that is the currency deflates) if you print enough of it.

rmrm 9y ago
If they hold the bitcoin, yes. I dont think anyone is missing that.