10 ms·

I don't really get it (as always if tether is involved). If someone is printing tether to buy bitcoin, then who is selling bitcoin for tether and keeps the teth

by seppel 6y ago

I don't really get it (as always if tether is involved). If someone is printing tether to buy bitcoin, then who is selling bitcoin for tether and keeps the tether? I mean, if I had substantial bitcoin, I'd not sell it for tether. Maybe I'd use tether as some intermediate currency, but in the end I'd either buy stocks or real estate or yachts. Or I would keep the BTC. But I would never sell BTC and keep tether. Who does that and why?

randtrain34 6y ago
Despite all its controversy, Tether's technically a stablecoin, so it's should be more stable than Bitcoin, which may be desirable to some people.
amycastor 6y ago
Print tether, buy bitcoin, sell bitcoin for real money. Day traders use tether to slip in and out of positions in a volatile market. Unregulated exchanges use tethers in place of real dollars.
- paulgb 6y ago
  This doesn't create any net demand for Bitcoin, though, right? It's in one end and out the other. Or is the theory that Tether is actually backed by Bitcoin, in a sort of circular way that is sustainable as long as the Bitcoin price goes up but would unravel disastrously if the price were to come down?
  - raziel2701 6y ago
    Print tether for bitcoin, so the btc-usdT price goes up. Arbitrage bots buy btc in dollars so that btc-usd reaches parity with btc-usdt. The media and people notice that btc has gone up, euphoria is borne, they jump in, further driving the price up, narratives like paypal are used to explain the pump. The people that printed tether now sell their btc for a profit and can now cover their tether obligations to keep the illusion going that tether is 1:1 backed with usd. They can now repeat the tether printing cycle.
    - seppel 6y ago
      > The people that printed tether now sell their btc for a profit and can now cover their tether obligations to keep the illusion going that tether is 1:1 backed with usd. They can now repeat the tether printing cycle. And who is getting scamed here? Who is sitting on the tether at the end of the day?
      - raziel2701 6y ago
        Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value. If tether goes away that would hurt whomever believes it's worth a dollar. The exchanges who are in on the scam can trade tether back to USD if they need to when the tether company sells their bitcoin for a profit. But the exchanges also make a killing from increased business during this mania, so they may choose not to sell their useless tether since they are collecting real money from retail traders and might help with plausible deniability.
        seppel 6y ago
        Sorry, I'm slow and I really don't understand this. > Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value. But how? Let's say I have one BTC. You offer me 15k USD to buy it, I say no. You say, ok, what about 18k USDT (that you just printed)? I reconsider and say, yeah, ok. So you inflated the price ok, but then what? I now have 18k USDT, but I can't spend them on blackjack and hookers. In fact, I can buy nothing with the 18k USDT except crypto! So I have two options: * I keep the 18k USDT. But why should I do that? * I buy back my BTC. But then somebody else has the problem of spending the 18k USDT! Where do they eventually end up? I dont get that part.
        35fbe7d3d5b9 6y ago
        It's musical chairs. When the music stops, somebody's holding USDT: either because they were using it as in intermediary to trade into other coins, or because they believed that Tether is really backed 1:1 (lmao). > Where do they eventually end up? I dont get that part. Without a chair.
- seppel 6y ago
  > Print tether, buy bitcoin, sell bitcoin for real money. But to buy bitcoin for tether, you first need someone to sell bitcoin for tether. And this guy then has tether. What is he going to do with the tether? > Day traders use tether to slip in and out of positions in a volatile market. Unregulated exchanges use tethers in place of real dollars. But day traders close their positions at the end of the day (or at least regularly) so they will not hold tether.
  - deleted 6y ago
    [deleted]
  - raziel2701 6y ago
    A number of exchanges like bitfinex are in on the scam and are just holding the tether in cold storage: https://i.imgur.com/eIKDzJl.png https://i.imgur.com/eIKDzJl.png The exchanges will make money if btc goes up and more people buy it through them. By accepting tether for bitcoin they help pump up the price. Holding useless tether is fine as long as more retail comes in to them for bitcoin with USD.
    - seppel 6y ago
      > A number of exchanges like bitfinex are in on the scam and are just holding the tether in cold storage But how can that be a scam if they hold the tether? It can only be a scam if someone else now has the tether and they have the real money. I'm trying to understand who is getting scammed here. Moreover, why are they printing tether if they already have too much?
      - raziel2701 6y ago
        Bitfinex benefits from the increased business from retail investors that are lured by the bubble mania, that is one solid source of profit from running this scheme. While Tether, the company, makes a killing by buying btc low and selling high, they now have cash to back sufficient tether to cover whomever wants to convert their tether back to usd, such as say, their co-conspirators bitfinex. Tether is pretend-dollars that allows them (bitfinex and Tether the company) to fraudulently pump btc. As long as enough people believe 1 tether = 1 dollar, the show will go on. Tether has yet to be audited to prove their reserves, and the crypto community believes them even though they talk about trustless systems all the time. So this is a two party scam, one is Tether, the company, printing money out of thin air, who then the exchange, the second party, accepts and gives btc in return as if tether was backed 1:1 by USD. This transaction is what kicks off the chain reaction that pumps btc's value. Tether, the company, now sells btc for USD at a profit, and can use that money to convert tether back to USD if say, the exchange comes to them looking to trade tether for btc. So both parties win, and tether is just weird monopoly money that they know is useless but they have to continue pretending it's worth 1 USD or else they can't keep rinsing and repeating this cycle.
- smabie 6y ago
  More likely (most definitely), they are using tether as collateral for their futures positions. It's not capital efficient to trade spot in most cases.
zaroth 6y ago
I have the same question. The only answer I can think of, is people that want to get out of Bitcoin but aren’t able to sell for real USD because of AML / tax purposes. Even if the tether is only worth $0.70 it’s still a better deal for some people who can’t exit their BTC position legally. It still doesn’t really explain who is holding almost $20 billion of Tether though.
- seppel 6y ago
  > Even if the tether is only worth $0.70 it’s still a better deal for some people who can’t exit their BTC position legally. I don't get this part. What can you buy using tether, even if it is worth only $0.70? (Well, obviously you can buy bitcoin but this doesnt make any sense to buy the bitcoin back that you just sold. What else can you buy?)
  - raziel2701 6y ago
    You can trade tether for other crypto in some exchanges.
    - seppel 6y ago
      Yes but then someone else has the tether.
- Danieru 6y ago
  Tether's biggest holders presumably are people with cash balances at exchanges without us dollar banking. At such exchanges the account will show USD not tether.
- rabf 6y ago
  One large use for Tether is transferring value either for abitrage or to buy assets on another exchange not available on your current exchange. Sending real USD via the banking system could take weeks whereas sending Tether will take minutes. Also if Tether is trading below $1, Tether (the company) could buy them back and burn them for profit, assuming of course that each token is backed by one real USD.
raziel2701 6y ago
My understanding is that tether is printed (by Tether the company) and used to buy btc at just a couple exchanges (one is bitfinex, I forget the others) who are in on it. This initial purchase drives btc-usdt up, arbitrage bots then buy btc-usd so that it matches btc-usdt. The media and people notice the price increase and jump into btc-usd because it's going up, narratives are created to justify why the price went up (paypal, fidelity, rich investor), btc-usd further increases, and now Tether (the company) sells its btc for dollars, so that they make a profit, and also to cover whomever else wants to redeem tether for usd, thus maintaining the illusion that tether is fully backed by dollars. Tether then decides to start the cycle again after a certain amount of time. So, if the above is true then yes this is a scam and there's gonna be a lot of bagholders if/when tether is kaput (they are under investigation by NY AG). Note, that since March 2020 Tether has printed $13 billion in tether. Is this really a result of organic growth/demand? (https://imgur.com/i78BTXg https://imgur.com/i78BTXg) Most of the tether is in storage at the exchanges: https://i.imgur.com/eIKDzJl.png https://i.imgur.com/eIKDzJl.png So it looks to me that they know it's worthless.
- dannyw 6y ago
  Bitfinex is one of the largest exchanges, and Tether is also used by many other exchanges like Binance. It's not implausible to think that there's $13B of inflows to BTC this year. This whole Tether speculation / hit piece is basically people thinking "It's implausible people want to buy bitcoin on the largest bitcoin exchanges".
  - wmf 6y ago
    You could have $13B of inflow to BTC with only $1B of Tethers because they should be reused. Who is holding them and why?
    - amycastor 6y ago
      Who is holding USDT? Likely traders who went onto Bitfinex (Tether's sister company) and sold their BTC there for what they thought was a good price. BTC, in this scenario, is a bridge to USD, because it can be moved to an OTC desk or a banked exchange and sold for cash.
arcticbull 6y ago
Here's a study that performs analysis showing that tether prints the coins and someone at bitfinex uses them to buy BTC at optimal points to support it's price. https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12903 https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12903
- dannyw 6y ago
  This can be explained as whales/institutions telling BFX "I want $100M of BTC" and a human OTC trader at BFX executing it optimally.
  - arcticbull 6y ago
    Why on earth would a legitimate whale be dropping money into bitfinex and tether lol, they barely have banking relationships. They have at times literally not had access to withdrawals — because they were pretending not to be who they are and were caught by Wells Fargo. A few times if memory serves. You think a whale is dropping $2 billion dollars of new money into tether prints via bitfinex?! What kind of mad man would do that when they have access to Coinbase and Gemini, where they could actually get their money back out? Remember this is newly printed tether which means net deposits of new actual usd, if you believe them - and of course I do not.
    - wmf 6y ago
      https://www.theblockcrypto.com/post/48857/former-head-of-circle-otc-says-theres-more-to-the-tether-narrative https://www.theblockcrypto.com/post/48857/former-head-of-cir...
      - arcticbull 6y ago
        Look all I want to see is one measly audit of a $20 billion dollar money pile is that so much to ask? You’ll have to forgive me if I don’t take yet another rando with vested interest word for it. Well one auditor who doesn’t quit half way through because, and I assume this is true, it was too on the up and up to bother finishing the audit.
inquirerofsorts 6y ago
Tether is literally a short on bitcoin that is quick and cheap to transact in, it is keeping the price down rather than up. There's only 21 million bitcoins, but there's infinite tether. People really need to take a step back from mindlessly repeating things and think about what that actually means. Go do a search of "tether site:news.ycombinator.com" to see how laughably wrong HN has been for the last 4 years on this subject. The adherents simply refuse to give up and many still identify with this "conspiracy" I'm not sure we have enough eggs for the number of faces.
- arcticbull 6y ago
  What conspiracy theories dude? We said it wasn't backed by dollars, lo and behold, $850 million or 30% of the entire backing amount at the time had been siezed by authorities for being the proceeds of money laundering. It was all held by CryptoCapital, give them a quick Google lol. We said it wasn't backed by dollars, they admitted it wasn't backed by dollars and instead crypto and swaps, and other ious. We said you couldn't redeem them, you can't. We said they didn't have a banking relationship, they don't and didn't. Crypto advocates keep pretending none of this is real because number go up. The fact it's still around doesn't invalidate a single thing anyone's said and if anything time showed this all to be quite accurate.
  - 1996 6y ago
    Ah, articbull as usual. So after the govt seizes almost one billion from tether, they are not fully backed anymore? Color me surprised!!
    - arcticbull 6y ago
      And yet going from 1:1 backed (ostensibly but not ever audited) to 1:0.7 backed it still traded 1:1. That’s my issue with it. The fact that they got caught with their pants 30% down is the least surprising thing ever imo. In fact as I recall they continued to tell people they were backed 1:1 for many months after the seizure. Remember BFX and Tether pretended to be two separate companies until the paradise papers because of course those clowns used Appleby. [1] [1] https://news.bitcoin.com/paradise-papers-reveal-bitfinexs-devasini-and-potter-established-tether-already-back-in-2014/ https://news.bitcoin.com/paradise-papers-reveal-bitfinexs-de...
Rainarrow 6y ago
>> then who is selling bitcoin for tether and keeps the tether? People who believe (in varying degrees) that 1 USDT == 1 USD. In countries with strict capital controls (China, Russia, etc), USD is inaccessible to most people. And the fact that USDT has been trading at 1 USD for the most part is the proof that most of its users either believe 1 USDT == 1 USD, or they simply don't care. In these countries, you have large amount of OTC desks due to lack of access to exchanges. Those OTC desks have to provide liquidity for large amount of trading activities (very large but I wouldn't think it's anywhere close to the 13b USDT that was printed in the last 6 months), and therefore they have to hold sufficient amount of USDT for that purpose. Once you have a group of people (miners, traders, etc.), USDT could act as as a token valued at 1 USD among those people, and at any given point, there would be a significant amount of people holding large amount of Tethers. After all, the Tether "FUD" has been ongoing for years and nothing bad seems to have happened, right?
- seppel 6y ago
  > People who believe (in varying degrees) that 1 USDT == 1 USD. I totally get that part. But then what? With USD I can buy, e.g, a house or a yacht. With USDT I can buy what? I guess only other crypto currencies. So what is the endgame here?
  - arcticbull 6y ago
    Since many exchanges use USDT and USD interchangeably, the endgame is for arbitrage bots to bid up the exchange rate between BTC:USD at legitimate exchanges to match BTC:USDT at Bitfinex. This allows Bitfinex to transfer the BTC they bought with Tethers to legitimate exchanges, sell them for USD, and transfer the USD back to themselves. They could care less about anything beyond that.
    - crasl 6y ago
      That's what I believe too, but once thing I don't understand is you would think by doing so they would depress the price on USD exchanges, and eventually cause the price to decouple between USD and USDT, but that doesn't seem to be happening this time.

by seppel 6y ago

randtrain34 6y ago

Despite all its controversy, Tether's technically a stablecoin, so it's should be more stable than Bitcoin, which may be desirable to some people.

amycastor 6y ago

Print tether, buy bitcoin, sell bitcoin for real money. Day traders use tether to slip in and out of positions in a volatile market. Unregulated exchanges use tethers in place of real dollars.

paulgb 6y ago
This doesn't create any net demand for Bitcoin, though, right? It's in one end and out the other. Or is the theory that Tether is actually backed by Bitcoin, in a sort of circular way that is sustainable as long as the Bitcoin price goes up but would unravel disastrously if the price were to come down?
- raziel2701 6y ago
  Print tether for bitcoin, so the btc-usdT price goes up. Arbitrage bots buy btc in dollars so that btc-usd reaches parity with btc-usdt. The media and people notice that btc has gone up, euphoria is borne, they jump in, further driving the price up, narratives like paypal are used to explain the pump. The people that printed tether now sell their btc for a profit and can now cover their tether obligations to keep the illusion going that tether is 1:1 backed with usd. They can now repeat the tether printing cycle.
  - seppel 6y ago
    > The people that printed tether now sell their btc for a profit and can now cover their tether obligations to keep the illusion going that tether is 1:1 backed with usd. They can now repeat the tether printing cycle. And who is getting scamed here? Who is sitting on the tether at the end of the day?
    - raziel2701 6y ago
      Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value. If tether goes away that would hurt whomever believes it's worth a dollar. The exchanges who are in on the scam can trade tether back to USD if they need to when the tether company sells their bitcoin for a profit. But the exchanges also make a killing from increased business during this mania, so they may choose not to sell their useless tether since they are collecting real money from retail traders and might help with plausible deniability.
      - seppel 6y ago
        Sorry, I'm slow and I really don't understand this. > Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value. But how? Let's say I have one BTC. You offer me 15k USD to buy it, I say no. You say, ok, what about 18k USDT (that you just printed)? I reconsider and say, yeah, ok. So you inflated the price ok, but then what? I now have 18k USDT, but I can't spend them on blackjack and hookers. In fact, I can buy nothing with the 18k USDT except crypto! So I have two options: * I keep the 18k USDT. But why should I do that? * I buy back my BTC. But then somebody else has the problem of spending the 18k USDT! Where do they eventually end up? I dont get that part.
        35fbe7d3d5b9 6y ago
        It's musical chairs. When the music stops, somebody's holding USDT: either because they were using it as in intermediary to trade into other coins, or because they believed that Tether is really backed 1:1 (lmao). > Where do they eventually end up? I dont get that part. Without a chair.
seppel 6y ago
> Print tether, buy bitcoin, sell bitcoin for real money. But to buy bitcoin for tether, you first need someone to sell bitcoin for tether. And this guy then has tether. What is he going to do with the tether? > Day traders use tether to slip in and out of positions in a volatile market. Unregulated exchanges use tethers in place of real dollars. But day traders close their positions at the end of the day (or at least regularly) so they will not hold tether.
- deleted 6y ago
  [deleted]
- raziel2701 6y ago
  A number of exchanges like bitfinex are in on the scam and are just holding the tether in cold storage: https://i.imgur.com/eIKDzJl.png https://i.imgur.com/eIKDzJl.png The exchanges will make money if btc goes up and more people buy it through them. By accepting tether for bitcoin they help pump up the price. Holding useless tether is fine as long as more retail comes in to them for bitcoin with USD.
  - seppel 6y ago
    > A number of exchanges like bitfinex are in on the scam and are just holding the tether in cold storage But how can that be a scam if they hold the tether? It can only be a scam if someone else now has the tether and they have the real money. I'm trying to understand who is getting scammed here. Moreover, why are they printing tether if they already have too much?
    - raziel2701 6y ago
      Bitfinex benefits from the increased business from retail investors that are lured by the bubble mania, that is one solid source of profit from running this scheme. While Tether, the company, makes a killing by buying btc low and selling high, they now have cash to back sufficient tether to cover whomever wants to convert their tether back to usd, such as say, their co-conspirators bitfinex. Tether is pretend-dollars that allows them (bitfinex and Tether the company) to fraudulently pump btc. As long as enough people believe 1 tether = 1 dollar, the show will go on. Tether has yet to be audited to prove their reserves, and the crypto community believes them even though they talk about trustless systems all the time. So this is a two party scam, one is Tether, the company, printing money out of thin air, who then the exchange, the second party, accepts and gives btc in return as if tether was backed 1:1 by USD. This transaction is what kicks off the chain reaction that pumps btc's value. Tether, the company, now sells btc for USD at a profit, and can use that money to convert tether back to USD if say, the exchange comes to them looking to trade tether for btc. So both parties win, and tether is just weird monopoly money that they know is useless but they have to continue pretending it's worth 1 USD or else they can't keep rinsing and repeating this cycle.
smabie 6y ago
More likely (most definitely), they are using tether as collateral for their futures positions. It's not capital efficient to trade spot in most cases.

zaroth 6y ago

I have the same question. The only answer I can think of, is people that want to get out of Bitcoin but aren’t able to sell for real USD because of AML / tax purposes. Even if the tether is only worth $0.70 it’s still a better deal for some people who can’t exit their BTC position legally. It still doesn’t really explain who is holding almost $20 billion of Tether though.

seppel 6y ago
> Even if the tether is only worth $0.70 it’s still a better deal for some people who can’t exit their BTC position legally. I don't get this part. What can you buy using tether, even if it is worth only $0.70? (Well, obviously you can buy bitcoin but this doesnt make any sense to buy the bitcoin back that you just sold. What else can you buy?)
- raziel2701 6y ago
  You can trade tether for other crypto in some exchanges.
  - seppel 6y ago
    Yes but then someone else has the tether.
Danieru 6y ago
Tether's biggest holders presumably are people with cash balances at exchanges without us dollar banking. At such exchanges the account will show USD not tether.
rabf 6y ago
One large use for Tether is transferring value either for abitrage or to buy assets on another exchange not available on your current exchange. Sending real USD via the banking system could take weeks whereas sending Tether will take minutes. Also if Tether is trading below $1, Tether (the company) could buy them back and burn them for profit, assuming of course that each token is backed by one real USD.

raziel2701 6y ago

My understanding is that tether is printed (by Tether the company) and used to buy btc at just a couple exchanges (one is bitfinex, I forget the others) who are in on it. This initial purchase drives btc-usdt up, arbitrage bots then buy btc-usd so that it matches btc-usdt. The media and people notice the price increase and jump into btc-usd because it's going up, narratives are created to justify why the price went up (paypal, fidelity, rich investor), btc-usd further increases, and now Tether (the company) sells its btc for dollars, so that they make a profit, and also to cover whomever else wants to redeem tether for usd, thus maintaining the illusion that tether is fully backed by dollars. Tether then decides to start the cycle again after a certain amount of time. So, if the above is true then yes this is a scam and there's gonna be a lot of bagholders if/when tether is kaput (they are under investigation by NY AG). Note, that since March 2020 Tether has printed $13 billion in tether. Is this really a result of organic growth/demand? (https://imgur.com/i78BTXg https://imgur.com/i78BTXg) Most of the tether is in storage at the exchanges: https://i.imgur.com/eIKDzJl.png https://i.imgur.com/eIKDzJl.png So it looks to me that they know it's worthless.

dannyw 6y ago
Bitfinex is one of the largest exchanges, and Tether is also used by many other exchanges like Binance. It's not implausible to think that there's $13B of inflows to BTC this year. This whole Tether speculation / hit piece is basically people thinking "It's implausible people want to buy bitcoin on the largest bitcoin exchanges".
- wmf 6y ago
  You could have $13B of inflow to BTC with only $1B of Tethers because they should be reused. Who is holding them and why?
  - amycastor 6y ago
    Who is holding USDT? Likely traders who went onto Bitfinex (Tether's sister company) and sold their BTC there for what they thought was a good price. BTC, in this scenario, is a bridge to USD, because it can be moved to an OTC desk or a banked exchange and sold for cash.

arcticbull 6y ago

Here's a study that performs analysis showing that tether prints the coins and someone at bitfinex uses them to buy BTC at optimal points to support it's price. https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12903 https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12903

dannyw 6y ago
This can be explained as whales/institutions telling BFX "I want $100M of BTC" and a human OTC trader at BFX executing it optimally.
- arcticbull 6y ago
  Why on earth would a legitimate whale be dropping money into bitfinex and tether lol, they barely have banking relationships. They have at times literally not had access to withdrawals — because they were pretending not to be who they are and were caught by Wells Fargo. A few times if memory serves. You think a whale is dropping $2 billion dollars of new money into tether prints via bitfinex?! What kind of mad man would do that when they have access to Coinbase and Gemini, where they could actually get their money back out? Remember this is newly printed tether which means net deposits of new actual usd, if you believe them - and of course I do not.
  - wmf 6y ago
    https://www.theblockcrypto.com/post/48857/former-head-of-circle-otc-says-theres-more-to-the-tether-narrative https://www.theblockcrypto.com/post/48857/former-head-of-cir...
    - arcticbull 6y ago
      Look all I want to see is one measly audit of a $20 billion dollar money pile is that so much to ask? You’ll have to forgive me if I don’t take yet another rando with vested interest word for it. Well one auditor who doesn’t quit half way through because, and I assume this is true, it was too on the up and up to bother finishing the audit.

inquirerofsorts 6y ago

Tether is literally a short on bitcoin that is quick and cheap to transact in, it is keeping the price down rather than up. There's only 21 million bitcoins, but there's infinite tether. People really need to take a step back from mindlessly repeating things and think about what that actually means. Go do a search of "tether site:news.ycombinator.com" to see how laughably wrong HN has been for the last 4 years on this subject. The adherents simply refuse to give up and many still identify with this "conspiracy" I'm not sure we have enough eggs for the number of faces.

arcticbull 6y ago
What conspiracy theories dude? We said it wasn't backed by dollars, lo and behold, $850 million or 30% of the entire backing amount at the time had been siezed by authorities for being the proceeds of money laundering. It was all held by CryptoCapital, give them a quick Google lol. We said it wasn't backed by dollars, they admitted it wasn't backed by dollars and instead crypto and swaps, and other ious. We said you couldn't redeem them, you can't. We said they didn't have a banking relationship, they don't and didn't. Crypto advocates keep pretending none of this is real because number go up. The fact it's still around doesn't invalidate a single thing anyone's said and if anything time showed this all to be quite accurate.
- 1996 6y ago
  Ah, articbull as usual. So after the govt seizes almost one billion from tether, they are not fully backed anymore? Color me surprised!!
  - arcticbull 6y ago
    And yet going from 1:1 backed (ostensibly but not ever audited) to 1:0.7 backed it still traded 1:1. That’s my issue with it. The fact that they got caught with their pants 30% down is the least surprising thing ever imo. In fact as I recall they continued to tell people they were backed 1:1 for many months after the seizure. Remember BFX and Tether pretended to be two separate companies until the paradise papers because of course those clowns used Appleby. [1] [1] https://news.bitcoin.com/paradise-papers-reveal-bitfinexs-devasini-and-potter-established-tether-already-back-in-2014/ https://news.bitcoin.com/paradise-papers-reveal-bitfinexs-de...

Rainarrow 6y ago

>> then who is selling bitcoin for tether and keeps the tether? People who believe (in varying degrees) that 1 USDT == 1 USD. In countries with strict capital controls (China, Russia, etc), USD is inaccessible to most people. And the fact that USDT has been trading at 1 USD for the most part is the proof that most of its users either believe 1 USDT == 1 USD, or they simply don't care. In these countries, you have large amount of OTC desks due to lack of access to exchanges. Those OTC desks have to provide liquidity for large amount of trading activities (very large but I wouldn't think it's anywhere close to the 13b USDT that was printed in the last 6 months), and therefore they have to hold sufficient amount of USDT for that purpose. Once you have a group of people (miners, traders, etc.), USDT could act as as a token valued at 1 USD among those people, and at any given point, there would be a significant amount of people holding large amount of Tethers. After all, the Tether "FUD" has been ongoing for years and nothing bad seems to have happened, right?

seppel 6y ago
> People who believe (in varying degrees) that 1 USDT == 1 USD. I totally get that part. But then what? With USD I can buy, e.g, a house or a yacht. With USDT I can buy what? I guess only other crypto currencies. So what is the endgame here?
- arcticbull 6y ago
  Since many exchanges use USDT and USD interchangeably, the endgame is for arbitrage bots to bid up the exchange rate between BTC:USD at legitimate exchanges to match BTC:USDT at Bitfinex. This allows Bitfinex to transfer the BTC they bought with Tethers to legitimate exchanges, sell them for USD, and transfer the USD back to themselves. They could care less about anything beyond that.
  - crasl 6y ago
    That's what I believe too, but once thing I don't understand is you would think by doing so they would depress the price on USD exchanges, and eventually cause the price to decouple between USD and USDT, but that doesn't seem to be happening this time.