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Fine. Sometimes they do, but legally are not obligated to do so. So it’s a moot point. They’re protected from runs because they don’t have to cash out. Their cu

Fine. Sometimes they do, but legally are not obligated to do so. So it’s a moot point. They’re protected from runs because they don’t have to cash out. Their current terms of service state: > Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all.

comex 7y ago
Not sure whether it's moot. Even though they're not legally required to provide cash, Tether's accomplishment of establishing and then maintaining a $1 market value is presumably assisted at least to some extent by their offer to provide it. To what extent precisely remains to be seen. The longstanding doubts about Tether's reserves didn't impair its market value; the more recent revelations may not either, but that's not certain yet (in particular, if the market is being manipulated, the muted short-term response may not last). But yes, they are protected from runs. Edit: Also, that text wasn't always there; in 2015 they claimed Tether was "redeemable for cash at any time" [1] and didn't have any similar disclaimer in their terms, as far as I can tell [2]. In addition, even with the disclaimer, if someone sued Tether for breach of contract (because they breached their promise to hold 1:1 reserves), fraud (because at certain points they made false claims that they did hold them), etc., they might be able to recover some USD in the form of restitution. [1] https://web.archive.org/web/20150320090830/https://tether.to/faqs/ https://web.archive.org/web/20150320090830/https://tether.to... [2] https://web.archive.org/web/20150921163244/https://tether.to/legal/ https://web.archive.org/web/20150921163244/https://tether.to...

comex 7y ago

Not sure whether it's moot. Even though they're not legally required to provide cash, Tether's accomplishment of establishing and then maintaining a $1 market value is presumably assisted at least to some extent by their offer to provide it. To what extent precisely remains to be seen. The longstanding doubts about Tether's reserves didn't impair its market value; the more recent revelations may not either, but that's not certain yet (in particular, if the market is being manipulated, the muted short-term response may not last). But yes, they are protected from runs. Edit: Also, that text wasn't always there; in 2015 they claimed Tether was "redeemable for cash at any time" [1] and didn't have any similar disclaimer in their terms, as far as I can tell [2]. In addition, even with the disclaimer, if someone sued Tether for breach of contract (because they breached their promise to hold 1:1 reserves), fraud (because at certain points they made false claims that they did hold them), etc., they might be able to recover some USD in the form of restitution. [1] https://web.archive.org/web/20150320090830/https://tether.to/faqs/ https://web.archive.org/web/20150320090830/https://tether.to... [2] https://web.archive.org/web/20150921163244/https://tether.to/legal/ https://web.archive.org/web/20150921163244/https://tether.to...