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I'm not sure how Kraken trading to themselves would indicate that Tether is not backed. Kraken is not associated with tether and their volume is not large and c

I'm not sure how Kraken trading to themselves would indicate that Tether is not backed. Kraken is not associated with tether and their volume is not large and contributes very little to the market. And how does someone trading to themselves have any effect on price whatsoever? If there was real liquidity on Kraken and the price actually hit 1.10, then Bitfinex/Tether could simply print tether and arbitrage the difference themselves, essentially creating the tether out of all the money they made arbitraging, meaning it is fully backed. If the accusation is wash trading I just don't see how that would matter.

darawk 8y ago
Yep. Not to mention the fact that there is a tether usd market on Bittrex, and a tether/trueusd market. As well as a Tether/TrueUSD market on Binance. TrueUSD is a US-based company with properly audited reserves. There is zero chance that all of these markets are manipulated.
- JumpCrisscross 8y ago
  > There is zero chance that all of these markets are manipulated This lacks the imagination of market manipulators from even the 19th century. For more modern context, see penny stocks. These are traded OTC at a variety of venues. Manipulation is trivial given (a) prices on one venue are broadcast to others, thereby letting one bad apple spoil the bunch and (b) electronic trading makes overseeing dozens of accounts easy.
  - darawk 8y ago
    You're forgetting that all of these exchanges have percentage-wise fees. "Wash trading" burns money in large amounts, if you do it for any substantial amount of volume, unless you are colluding with the exchange and they let you trade for free. But if you're positing that, then you have to posit that all three exchanges are allowing this. Which raises the question that this article doesn't bother to address: for what purpose? Why would you wash trade tether? Nobody cares about the kraken tether market. Creating fake volume there accomplishes what, exactly?
    - JumpCrisscross 8y ago
      > you have to posit that all three exchanges are allowing this Not necessarily. All it takes is one. (But it does take at least one.) See my comment elsewhere in this thread [1]. [1] https://news.ycombinator.com/item?id=17425607 https://news.ycombinator.com/item?id=17425607
      - darawk 8y ago
        > Let's assume a third-party manipulator (i.e. they can't print new Tether). Ok, sure. > To make this economical, they would need an in with at least one exchange. Their trades on this venue (let's call it ShadyBit) would be free, or close to it. This is where the majority of their wash trades happen. If one naïvely averages volume across the market, this will do the trick. Do what trick, exactly? What does your hypothetical manipulator get out of this? > But the jig will fall apart if another exchange starts sharply diverging. So you set up sock puppet accounts there to soak up excess demand. As long as you keep the confidence game balanced, there shouldn't be too many people looking to sell at unusually low prices. "Sock puppet accounts to soak up excess demand". See, right there, you're saying something, but I don't think you're following it through to its logical conclusion. Saying you just "soak up excess demand" hides the fact that this requires enormous amounts of capital, not to mention paying the transaction fees on the exchanges you aren't colluding with. What you are supposing here is that someone is artificially propping up the price of Tether. What that means is that they are taking real US dollars and exchanging them for an asset that they know is not worth its current price, en masse. If you want to posit someone is doing that, you need to provide an extremely compelling motive for so doing. A motive that would generate more money than it costs them, and I don't see any way that could be happening, with the possible exception of Bitfinex themselves doing it. But...of course, if Bitfinex is propping up the price of Tether by exchanging them for USD 1:1 then....isn't that the point of Tether in the first place? > In the meantime, you can continue using your inflated-value tokens as collateral for borrowing or to buy appreciating assets or to sell or whatnot. You're really handwaving here. You're saying they're taking real money, USD, and buying Tether tokens so that they can prop up the price of Tether because they have a lot of Tether that they can exchange for other stuff? Play this tape all the way through. Let's say you have 100M Tether and 1M USD. You want to prop up the price of Tether so that you can buy sweet cool stuff with your Tether tokens. So you use your 1M USD to prop up the price of Tether, and you starting buying shiny new Bitcoins with your Tether. Now you've bought 10M USDT worth of BTC, so now there is 10M more Tether out there in circulation. You've created massive selling pressure that you now need to balance with real USD. What you are proposing here just fundamentally violates equilibrium principles and so cannot, on its own, be what's happening.
notahacker 8y ago
Wash trading (with or without the collusion of the exchanges) is a way for a criminal enterprise lying about the backing of their token to create the illusion of substantial and sustained real demand to acquire the token, increasing confidence of a relatively small number of real buyers and deterring shorters getting involved and existing holders from rushing to sell.
- trophycase 8y ago
  Tether is doing 2 billion in volume today across dozens of exchanges. The Kraken USD/USDT pair is doing 2 million today. There is demand.
deleted 8y ago
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darawk 8y ago

Yep. Not to mention the fact that there is a tether usd market on Bittrex, and a tether/trueusd market. As well as a Tether/TrueUSD market on Binance. TrueUSD is a US-based company with properly audited reserves. There is zero chance that all of these markets are manipulated.

JumpCrisscross 8y ago
> There is zero chance that all of these markets are manipulated This lacks the imagination of market manipulators from even the 19th century. For more modern context, see penny stocks. These are traded OTC at a variety of venues. Manipulation is trivial given (a) prices on one venue are broadcast to others, thereby letting one bad apple spoil the bunch and (b) electronic trading makes overseeing dozens of accounts easy.
- darawk 8y ago
  You're forgetting that all of these exchanges have percentage-wise fees. "Wash trading" burns money in large amounts, if you do it for any substantial amount of volume, unless you are colluding with the exchange and they let you trade for free. But if you're positing that, then you have to posit that all three exchanges are allowing this. Which raises the question that this article doesn't bother to address: for what purpose? Why would you wash trade tether? Nobody cares about the kraken tether market. Creating fake volume there accomplishes what, exactly?
  - JumpCrisscross 8y ago
    > you have to posit that all three exchanges are allowing this Not necessarily. All it takes is one. (But it does take at least one.) See my comment elsewhere in this thread [1]. [1] https://news.ycombinator.com/item?id=17425607 https://news.ycombinator.com/item?id=17425607
    - darawk 8y ago
      > Let's assume a third-party manipulator (i.e. they can't print new Tether). Ok, sure. > To make this economical, they would need an in with at least one exchange. Their trades on this venue (let's call it ShadyBit) would be free, or close to it. This is where the majority of their wash trades happen. If one naïvely averages volume across the market, this will do the trick. Do what trick, exactly? What does your hypothetical manipulator get out of this? > But the jig will fall apart if another exchange starts sharply diverging. So you set up sock puppet accounts there to soak up excess demand. As long as you keep the confidence game balanced, there shouldn't be too many people looking to sell at unusually low prices. "Sock puppet accounts to soak up excess demand". See, right there, you're saying something, but I don't think you're following it through to its logical conclusion. Saying you just "soak up excess demand" hides the fact that this requires enormous amounts of capital, not to mention paying the transaction fees on the exchanges you aren't colluding with. What you are supposing here is that someone is artificially propping up the price of Tether. What that means is that they are taking real US dollars and exchanging them for an asset that they know is not worth its current price, en masse. If you want to posit someone is doing that, you need to provide an extremely compelling motive for so doing. A motive that would generate more money than it costs them, and I don't see any way that could be happening, with the possible exception of Bitfinex themselves doing it. But...of course, if Bitfinex is propping up the price of Tether by exchanging them for USD 1:1 then....isn't that the point of Tether in the first place? > In the meantime, you can continue using your inflated-value tokens as collateral for borrowing or to buy appreciating assets or to sell or whatnot. You're really handwaving here. You're saying they're taking real money, USD, and buying Tether tokens so that they can prop up the price of Tether because they have a lot of Tether that they can exchange for other stuff? Play this tape all the way through. Let's say you have 100M Tether and 1M USD. You want to prop up the price of Tether so that you can buy sweet cool stuff with your Tether tokens. So you use your 1M USD to prop up the price of Tether, and you starting buying shiny new Bitcoins with your Tether. Now you've bought 10M USDT worth of BTC, so now there is 10M more Tether out there in circulation. You've created massive selling pressure that you now need to balance with real USD. What you are proposing here just fundamentally violates equilibrium principles and so cannot, on its own, be what's happening.

notahacker 8y ago

Wash trading (with or without the collusion of the exchanges) is a way for a criminal enterprise lying about the backing of their token to create the illusion of substantial and sustained real demand to acquire the token, increasing confidence of a relatively small number of real buyers and deterring shorters getting involved and existing holders from rushing to sell.

trophycase 8y ago
Tether is doing 2 billion in volume today across dozens of exchanges. The Kraken USD/USDT pair is doing 2 million today. There is demand.

deleted 8y ago

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