38 ms·

Tether price manipulation

306 points by temp 6y ago

gruez 6y ago
>4) How the scam works: >Tether can print infinite amounts of (worthless) $USDT. >They then inject this into BTC, ETH, LTC, (and others) to cause prices to pump. >Notice how during the months they stopped printing Tether, the market moves sideways or drops significantly. >This graph also shows the extent to which USDT plays a role in Bitcoin's price action over the years. I don't get it. This doesn't really prove anything either way. Sure it could be the case that they're printing USDT backed by nothing and using it to by cryptos, but it could very well be the case that they're printing the USDT in response to real deposits from people who want to get into crypto. Since USDT accounts for a significant portion of the crypto market, it'd be more suspicious for price to go up without a corresponding large amount of USDT being printed, because that would mean prices are going up without more money being poured into the market.
- gillesjacobs 6y ago
  Exactly my issue with OP's argument. If BTC price rises, trade volume grows, increasing demand for stablecoins due to their utility as a low-volatile alternative to fiat to bypass legislation. You would EXPECT this pattern to arise. Note also how OP does not show a graph of trade volume/buy-sell volume which would potentially show that it is used as claimed. I still think Tether is extremely shady for refusing audits and dubious backing. I avoid it like the plague and hope others are as smart.
- jayd16 6y ago
  Yes, you're right. The point is without oversight or transparency we can't really know whats going on.
- Geee 6y ago
  Yes, and every exchange has 'money market' which means the cash reserves that hold user's deposits. Most exchanges use a simple database to hold these balances and there's no way to audit them. Every exchange can 'print' money in their database if they want. Tether is better because it offers some transparency into this side of the market.
- kart23 6y ago
  I dont understand how the OP knows/can prove that they are printing tether during the times that btc went up. Is there any more info on that part? It looks to me like they just drew lines under a graph and said tether is printing.
- TomSwirly 6y ago
  "It could be" that they have $2.5 billion dollars hidden somewhere but they don't want to show it to anyone or have it audited. "It could be" that if you send me $1 million, I'll make you live forever. You should try it and see.
dsr_ 6y ago
While correlation is not causation, correlation is evidence for causation... and there's a lot of correlation in those graphs.
- tomwojcik 6y ago
  It literally is not.
  - wegs 6y ago
    Correction: Correlation is evidence for causation. It's weak evidence, and generally speaking, stronger correlation isn't more evidence. There's a gradual process to go from hypothesis to theory to fact, and to get there, you need several types of independent evidence. Correlational evidence is okay as one of those. A correct statement is that correlation is not proof of causation (no matter how strong). Types of evidence: * Correlation * Theoretical basis / strong hypothesis * Extrapolation * Interpolation * Small-scale well-controlled experiments (lab setting) * Large-scale less controlled experiments (real-world setting) * Anecdotes * ... and so on You want several of those before you start to believe anything, and some are stronger than others. Correlation isn't fundamentally weaker than most of those, though; all of those carry their own methodological issues. The number of times you can have a large-scale perfectly-controlled preregistered randomized control trial with no confounding effects is exceptionally rare (some medical trials, and a few other settings).
  - benibela 6y ago
    But it is There are several algorithms that calculate the causal structure from correlations: PC, GES, FGS, FCI They are proven to be asymptotically correct
- arvindamirtaa 6y ago
  >"...correlation is evidence for causation" Yeah...that's not how it works.
  - kilnr 6y ago
    I assume you've conflated evidence and proof?
DJBunnies 6y ago
This is propaganda from a competing altcoin.
- diggan 6y ago
  Just like "Jacob Oracle" did on Twitter, you're gonna have to provide at least some proof of your accusation. Now this is not conclusive in any way, but the user has "Investing in #Bitcoin" listed in their Twitter biography, hinting that they have more to lose if Bitcoin loses it's price, rather than gain, so seems they don't have anything but fairness to win with this. But wouldn't be the first time someone lied on the internet. Point still stands, proof or GTFO.
  - danivaz 6y ago
    Where is the proof of whether or not Tether was actually injecting unbacked tokens? The tweet author just assumed bitcoin spikes were being pumped by Tether, basically they got the graph and put lines on it. Do you call that proof?
    - diggan 6y ago
      I don't have any inclination towards the tweets author being right or wrong, I simply know too little about it. But at least they are providing something to try to back up their claim. If it's true or not will ultimately be up to law enforcement, if it comes to that. My point was that the tweets author is trying to back up their claim while DJBunnies did absolutely nothing to try to back up theirs.
  - emteycz 6y ago
    Indeed, show the proof of manipulation or GTFO
chrisa 6y ago
I agree that a Tether reckoning is coming, but point #10 of that thread is the most important: it could be weeks, months or _years_ before it's fully corrected, so be super super super careful about using Tether as a reason to short Bitcoin... "The market can remain irrational longer than you can remain solvent"
- qeternity 6y ago
  It's even worse than that. Shorting TSLA is dangerous because of the above. But it's mitigated by people purchasing shares with real fiat. They have a natural incentive to not be absurd: whether or not $800/share is absurd is a matter of opinion...but everyone would agree that $1m/share is absurd. Tether has no such limitation. All the exchanges are complicit in this, wash trading is rampant, and there's an de facto central bank run by actual criminals. There is absolutely zero reason why iFinex can't take bitcoin to $100k or $1m or whatever they like. They only have opportunity costs. The only thing keeping them in check right now is the appearance of legitimacy. If they were to overdo it, people might actually sell, which is not what they want. So until their legitimacy is tested (Jan 15) they will probably responsibly grind this higher. But on the last day, I expect billions and billions of USDT issuance so that they can run stops on every short in the market, collecting their last few shekels before the music stops and they vanish to an island somewhere.
  - chrisa 6y ago
    Do you know if the public will actually find out any info on Jan 15th, or will that all be private, sealed documents? (I'm a bit lost at how that process is going to work)
    - qeternity 6y ago
      IANAL and don't have any real understanding of this process.
  - graeme 6y ago
    Wait what’s the January 15th date?
wsc981 6y ago
While I don’t doubt that Tether was used to manipulate the Bitcoin price upwards, at the same time I believe Bitcoin Futures were/are being used to suppress the Bitcoin price as well. ——— [0]: https://www.equities.com/news/how-do-bitcoin-futures-affect-the-price https://www.equities.com/news/how-do-bitcoin-futures-affect-...
- qeternity 6y ago
  "Suppress" is not the right word because that would imply that the price is wrong. There is nothing wrong with shorting a market. If the short is wrong, she loses money. The market remains balanced and often short squeezes are responsible for large bull runs. Tether however isn't balanced. There is no risk. There is no offsetting liability in the market for the Tether they create (unlike with a short future, which has an offsetting long side).
  - wsc981 6y ago
    But banks have been in the wrong in how they used futures to suppress prices of precious metals like gold. A quote from the linked article: > Precious metals markets have long since been subject to manipulation by large banks. Several banks have admitted wrongdoing and faced fines for manipulating gold prices. Many believe that the prices of gold and silver have been kept artificially low through the use of leveraged paper contracts. >Dr. Paul Craig Roberts, the former economic advisor for the Reagan administration, has written extensively about this subject. >In his view, some of the biggest banks in the world have been working to suppress the price of gold in Western markets for many years. They accomplish this through creating so-called “naked shorts” out of thin air (the term vapor contract term we’ve been using is analogous to a naked short). >A naked short is simply a contract that allows an institution to place a sell order for a particular asset without having any ownership of the asset. >In other words, it allows a bank to flood the market with fake sell orders, creating downward market pressure. Given that banks can create these shorts to the moon without any accountability, they can keep the price down at a level more or less of their choosing for quite some time. Especially the last alinea seems to reflect some of the things you said about Tether actually.
shuntress 6y ago
Can someone please explain to me how Tether is "injected" into Bitcoin? The entire argument seems to hinge on this but it is not (as far as I can see) explained. Are people accepting Tether in trade for BTC under the assumption that Tether will always be exchanged 1:1 for USD when this is not actually the case? EDIT: The answer seems to be yes Tether is 1-to-1 with "I O U $1" and enough people are accepting these IOUs in exchange for BTC that the market is moving because of this. That last part ("the market is moving because of this") seems so unbelievably stupid to me that I don't actually believe it.
- danivaz 6y ago
  Yes, if the company Thether has full control of its tokens they can print them and don't back them with anything (as the author says their reserves are not public)
- raesene9 6y ago
  Yep, AFAIK Tether is used by several exchanges that have problems getting direct banking relationships, as a on-ramp for funds. Tether originally promised that they were 1-2-1 backed with actual currency reserves, but had to abandon that statement when it became apparent they'd lost a load of money to Crypto Capital. Tether still claim to be 1-2-1 backed with "investments" but there has never been a completed 3rd party audit of that claim, so it literally has to be taken on trust.
  - mmastrac 6y ago
    Minor point, but seeing "1-2-1" in your comment is strange to me. I've only ever seen it as "1:1" or "1-to-1".
    - panopticon 6y ago
      Thanks for pointing that out. I thought "1-2-1" was some jargon I was missing.
- jcpham2 6y ago
  Tether is the liquidity solution to the lank of United States Dollar withdrawal ie, a bank account. No bank, no problem! Tether on Wayne,Tether on Garth. But seriously, this old news. All of these stable coins and alt coins are just big pools of liquidity to swim in.
qeternity 6y ago
The problem is that in the early days of @Bitfinex'ed this was all a bit of a sideshow because there was genuinely large interest from retail and the outcome of crypto was far less certain. However three years on, crypto still does not have a "killer app" and is 99.99% used for speculation. Bitcoin's narrative has had to morph from "digital currency" to "digital gold". But in the depths of the March panic, Tether jumped the shark in order to backstop the entire crypto ecosystem, and they can never put that genie back in the bottle. Much like the Fed who cannot stop monetizing US deficits for fear of letting yields explode, the Tetheral Reserve must continue to print USDT in order to support prices. Exchanges cannot let this fail since the vast majority do not have access to the bonafide banking system and thus scrappy users must devise "fiat onramps". There are many theories about why, the predominant one being that iFinex know they are screwed, and are making one last cash grab before presumably disappearing. This sounds fairly reasonable if the entire operation is indeed a sham, but it means there is effectively no upper bound to BTC prices because the denominator in 90% of the market (USDT) is effectively zero. Tether has become too big to fail. Bitcoin now finds itself a high tech manifestation of the very thing that Satoshi sought to address.
- dylkil 6y ago
  >Bitcoin's narrative has had to morph from "digital currency" to "digital gold". This narrative was an intentional morphing by various actors within the space (Blockstream) who believed raising the blocksize to allow higher throughput would cause 'centralisation'. Instead they want people to use layer 2 solutions such as blockstreams own federated product Liquid.
  - tromp 6y ago
    As explained by blockstream co-founder Greg Maxwell in [1], the blocksize is constrained in order to ensure a steady backlog of fee paying transactions, that allow bitcoin to remain secure in the long term when block subsidy becomes insignificant. [1] https://bitcointalk.org/index.php?topic=5306354.0 https://bitcointalk.org/index.php?topic=5306354.0
    - 6y ago
tomtomtom777 6y ago
I still don't quite understand how they can manipulate the price. The price of a USDT is 1 dollar. They give out new USDT for $1 a piece. Sure, they may be spending these dollars elsewhere, thus holding a fractional reserve. Sure this may illegal and get them in trouble. But this doesn't effect the dollar value for which these USDT's and thus Bitcoins are traded. As long as a USDT is $1, nobody is manipulating the price.
- danivaz 6y ago
  The author is saying there are more tokens in circulation than dollars in their reserve.
- jaggirs 6y ago
  They print additional usdt, that are not backed by dollars, and buy bitcoin with them.
- Cthulhu_ 6y ago
  Not the Tether price, but that's not what the article is about; the article is that they print USDT and use it to buy BTC, increasing demand and causing the BTC price to go up. No dollars involved, not directly.
- NovemberWhiskey 6y ago
  >The price of a USDT is 1 dollar. They give out new USDT for $1 a piece. If this were the case, Tether would be back by cash. But it isn't: they claim it's backed by cash, cash-equivalents and receivables from loans, including loans to affiliated entities (or some similar language). So, for example: they could create 1M USDT and immediately loan it to their associated crypto-hedge-fund (for zero interest). The hedge-fund promises to repay that loan in USD (creating 'reserves' for USDT), and immediately places buy orders for Bitcoin; generating demand for Bitcoin that will raise the price.
- 3np 6y ago
  Well, what if you use those reserves to buy bitcoin on your own exchange?
- 6y ago
sharperguy 6y ago
Surely the only way to keep the valuer of tether stable is to "print" more of it whenever its value starts to increase? Otherwise it wouldn't be always worth $1.
- xur17 6y ago
  That or provide on and off ramps that users can use to arbitrage any deviations from a value of $1.
  - qeternity 6y ago
    Which they cannot do because 1) they don't have any banking and 2) they cannot allow redemptions which would risk a run on their reserves (to the degree those exist at all).
    - olalonde 6y ago
      Except they do allow redemptions: https://app.tether.to/app/signup https://app.tether.to/app/signup
      - qeternity 6y ago
        Nobody in the history of crypto has ever demonstrated this. Not a single person.
        olalonde 6y ago
        Nobody in the history of crypto has ever attempted it or no one has ever demonstrated it? It seems improbable no one has ever attempted it. And there's no reason to demonstrate if it is successful. So I'd argue the lack of failed demonstrations is evidence that it works.
- qeternity 6y ago
  Not sure if trolling but why would Tether ever be worth more than $1? Printing USDT is not the same is issuing new fully backed USDT.
ackbar03 6y ago
Wait I don't get it, it's not fully backed but it's still backed somewhat right? I thought it was only a chunk of USD that was missing? Or did they completely abandon the usd backing? If it's still somewhat backed and just that chunk of usd that remains unaccounted for, printing tether isn't exactly a scam? People trade their usd for printed tethers and use that to buy bitcoin, so it's still essentially people exchanging usd for bitcoin
- raesene9 6y ago
  no-one knows how backed it is. iFinex claim it's 100% backed. They may, or may not, be telling the truth. The question is do you believe that billions of dollars are flowing into an unaudited stablecoin when other, audited, stablecoins exist...
  - dgellow 6y ago
    In 2019 Tether's lawyer was talking about 74% backed by cash and "short-term securities". Edit: I forgot to add the link, here it is https://www.bloomberg.com/news/articles/2019-04-30/tether-says-stablecoin-is-only-backed-74-by-cash-securities https://www.bloomberg.com/news/articles/2019-04-30/tether-sa...
Speednet 6y ago
What a ridiculous Twitter thread showing absolutely no causality between Tether and Bitcoin. You might as well show that SpaceX rocket launches coincide with a rise in Bitcoin prices. There was a successful SpaceX launch yesterday, and Bitcoin went over $40,000 for the first time. In 2020, SpaceX had its best year ever for successful launches and returns of the first stage, perfectly coinciding with Bitcoin's meteoric rise in value. So Bitcoin must be tied to successful SpaceX launches.
- SNetForLife13 6y ago
  Upvote this gentleman for being the final trinity-piece in this mystery! HN-user Speednet is 1/3 rd of bitcoin's success!
  - Speednet 6y ago
    I can see I've been downvoted. I must have made a mistake. Bitcoin prices are actually tied to Elon Musk's rising wealth, not SpaceX launches.
xur17 6y ago
The graphs show a strong correlation between printing of USDT and the Bitcoin price rising, but it's not clear to me which one triggers the other. Interestingly, USDC seems to follow similar minting patterns, and they post quarterly audits of their books / are much better regulated.
- raesene9 6y ago
  They are better regulated and therefore less risky than Tether, which raises the interesting question, Why is USDC circulation only 20% of Tethers...
  - xur17 6y ago
    I agree, and it does surprise me, but I think it's a mix of 1. tether has been around a lot longer and is on a lot more exchanges 2. tether is.. less well controlled by US regulators and hence better for.. questionable exchanges to list.
    - raesene9 6y ago
      Challenge there is that it doesn't fit the narrative that Tether give about the demand being from "institutional investors". That kind of customer tends (IMO) to be very risk averse. Of course it is possible that Tether are getting custom, but not the kind that wants to leave a bank trail. But if that's the case they're going to fall foul of the regulators sooner or later...
      - qes 6y ago
        > Challenge there is that it doesn't fit the narrative that Tether give about the demand being from "institutional investors" Market makers and trading shops with 7-8 figure funds playing with riskier cryptos or trying to tap worldwide volume. It's not MicroStrategy and Mass Mutual Insurance using Tethers
  - raziel2p 6y ago
    Almost as if crypto is mostly about investment speculation and gambling, and not so much about actually useful assets.
sneak 6y ago
One thing the author and I agree on: When Tether falls, it's going to make a very big noise.
oxygenjoe 6y ago
Or perhaps USDT is created as BTC price increases to ensure exchange liquidity of USDT, allowing it to to stay very close to $1
- Cthulhu_ 6y ago
  The net effect is the same though; the company behind Tether is printing money from nothing and selling it for USD or BTC (which can be sold for USD more reliably).
Cthulhu_ 6y ago
I'm kinda glad BTC is up, this means I can do an exit with break even or a little profit. I just sold half my crypto assets on the two exchanges I have an account on, I just hope I can have the money transferred out before they become insolvent when the next great crash happens.
- Tepix 6y ago
  Good for you, parts of mine are stuck on CoinBase and the support isn't answering for days. Seems i'm not alone with that issue.
  - Triv888 6y ago
    I was finally able to login into Coinbase and do what I wanted to do.
curo 6y ago
The part I don't understand: Say the SEC takes on Tether and it falls. Why then does BTC and the crypto markets crash?
- danivaz 6y ago
  Because suddenly most of the bitcoin demand would stop which would make the price drop
- gillesjacobs 6y ago
  Because Tether's utility is as a legislatively advantageous on- and off-ramp for the whole crypto market. Off-ramp: If people want to sell BTC or other volatile tokens because they want to realize profits, the obvious thing would be to sell for fiat (USD/EUR). But due to taxation and legislation this is often difficult. Stablecoins like Tether provide the utility of a low-volatility currency that fiat would fill. Main advantage is bypassing legislation. This use is so common there is jargon for "Tethering up". There also exist many debit cards that allow paying with stablecoins, increasing utility. The rise of DeFi and money markets for stablecoins also provides a good return on stablecoins while in theory being low-volatility. On-ramp: If people want to buy a certain token they first go into Tether. This is usually for bypassing local legislation limiting the buying of a specific token or use of exchanges. This use is less common, I would wager. Because of this wide-spread use of Tether, it's collapse would cause a liquidity crisis: people want to but cannot sell their Tethers for other tokens/fiat. Tether goes down from it's 1USD peg, triggering a run on Tether as people try to swap it as much as they can for anything else, driving down the price further. Meanwhile noone is willing to buy Tether. The theory proposed by OP, is that panic in the already volatile crypto market ensues, people exit for fiat where they can driving down prices everywhere. Trust in the whole market will be obliterated. Personally, I haven't trusted Tether since the first BitFinex scandals and avoided like the plague. For my stablecoin needs, I use something that is audited and over-collateralized like DAIv2.
memossy 6y ago
I would trust Tether more if it ever had meaningful outflows in dollar terms, had $1bn or so in the last crash (https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/) but has been generally on an upward march, not what you would expect from a stable coin
Tepix 6y ago
I agree that USDT is fishy and it may be behind a large percentage of the gains in BTC and the other coins. However, there is also another possible explanation. When investors want to buy BTC they first to go Binance and ask for USDT in exchange for USD. Binance creates new USDT for them. Then they use the USDT to buy BTC (reverse causality). Just saying it's possible, but I believe Jacob Oracle to be right.
- PragmaticPulp 6y ago
  > When investors want to buy BTC they first to go Binance and ask for USDT in exchange for USD. Binance creates new USDT for them. Then they use the USDT to buy BTC (reverse causality). But why sell them USDT first and then sell them BTC in exchange for the USDT? Why not just sell them BTC directly? That's the issue.
  - qqii 6y ago
    The liquidity in BTCUSDT on binance is much higher so you're less likely to encounter slippage. You have to also remeber non US customers that use exchanges, for them it makes a lot of sense to exchange their native currency to USDT.
- triangleman 6y ago
  Can binance "create new USDT" or do they need to ask Tether to create it for them, exchanging USD?
  - Tepix 6y ago
    Don't they share the same owners?
hoschicz 6y ago
Would we not expect this same pattern if Tether was printed in response to money coming in? Meaning yes, they don't have USDT 100 % fully backed, but they aren't printing it out of thin air either. What surprises me are the incredible volumes in USDT -- why would anyone ever use USDT instead of USDC, DAI or BUSD? All of them are much more transparent and less risky.
- ElKrist 6y ago
  Sometimes it's just a practical matter The exchange I use only has instruments with USDT pairs (BTC/USDT, ETH/USDT), not with USDC.
seibelj 6y ago
Permabears’ final hope is that tether is a scam, because if that fails they have nothing to grasp onto to explain bitcoin’s rise other than legitimate demand.
dgellow 6y ago
Let's say you believe that Tether is a complete fraud and will crash the market at some point. How do you take advantage of this? I'm not myself trading, but I would be interested to know how that kind of short works in practice. From what I understand, that's what bitcoin futures can be used for?
- graeme 6y ago
  Cboe ended their bitcoin futures. As such there’s no way to bet on a bitcoin collapse that I know of, in a less risky options-like way. Shorts (if they exist) would be extremely risky, as you owe more if bitcoin rises.
  - otherjason 6y ago
    CME Group still offers Bitcoin futures, along with options: https://www.cmegroup.com/trading/bitcoin-futures.html https://www.cmegroup.com/trading/bitcoin-futures.html
    - graeme 6y ago
      Oh thanks. Where can you trade those? Couldn’t find them on questrade.
      - csomar 6y ago
        The minimum for CME is 5 bitcoins ($200k). So I guess they are for the big dudes?
  - cdiddy2 6y ago
    CME has fairly liquid futures https://www.theblockcrypto.com/data/crypto-markets/futures/average-daily-volume-of-cme-bitcoin-futures-monthly https://www.theblockcrypto.com/data/crypto-markets/futures/a...
  - hndudette2 6y ago
    There's many bitcoin derivative exchanges which allow you to short, in addition to the CME's contract. Bitmex, Huobi, etc.
technics256 6y ago
Can anyone recommend a business bank replacement for Azlo, which is also shutting down?
- dtelepathy 6y ago
  I'm planning on giving BlueVine a try: https://www.bluevine.com/checking/ https://www.bluevine.com/checking/ Relay looks interesting too: https://relayfi.com/business-banking https://relayfi.com/business-banking
ausbah 6y ago
can someone explain to me how a district court can sue someone? shouldn't this be the SEC or something?
NovemberWhiskey 6y ago
There is one question to ask here: "Why is so much of the volume in BTC driven by USDT trades?", i.e. what exactly is so great about Tether that we're supposed to believe everyone is actually buying it? It is supposed to be a stablecoin. That's meant to be exceedingly boring. Tether is anything but boring, with all kinds of intrigue, lack of transparency about its reserves, law suits and so on. There are a bunch of other stablecoins out there that just seem like better propositions, so why does crypto price action continue to be primarily driven by inflows from Tether?
lai-yin 6y ago
Anyone know the source of Jacob's chart in part 5 of his thread?
0xcoffee 6y ago
Here is ThreadReaderApp link for more readable version: https://threadreaderapp.com/thread/1346133062204198917.html https://threadreaderapp.com/thread/1346133062204198917.html
csomar 6y ago
OP gives no proof that Tether is not holding 1:1 reserves. There is, however, a good proof that they do: Tether has held the 1:1 beg pretty well recently. Bitcoin price dropped to $4.000 last year and Tether exchange rate has held pretty well. It is important to mention that USDT is still liquid despite the lack of USD on/off-ramps. People regularly sell USDT on the offline market, and can exchange to USDC on many exchanges. > But Tether is printing so much money. So is USDC, and the price of Bitcoin is going higher. This means Bitcoiners have lots of value in Bitcoin and some of them are going to convert that value to USD. They are mainly using USDT for that, for whatever reason. > Tether printing press is driving Bitcoin price. Wrong. My proof for that is "where is the premium to buy Bitcoin". In a very liquid market (which for the most part, crypto is), prices should be the same up to the costs (transaction and banking fees). Prices have been higher in Coinbase during this run. As I am typing right now, Coinbase prices are 50-80 dollars higher for Bitcoin. GBTC is even more ridiculous with 10-15% premium on price (but also GBTC is less liquid/arb-able). This signifies that demand is coming from US retail and institutional investors. > Tether is holding USD as securities/derivatives/whatever. All of them are. See: https://omarabid.com/usd-stable-coins https://omarabid.com/usd-stable-coins
- paulgb 6y ago
  I mostly agree with your skepticism on USDT driving BTC price, but I disagree with this: > There is, however, a good proof that they do: Tether has held the 1:1 beg pretty well recently. All this proves is that they have something in reserve, not that it is 1:1 backed. Most modern banking operates on a fractional reserve system, but when I take cash out of my bank account I get a cash dollar 1:1 with what they debit my account; they don’t prorate it for the amount of reserve they have.
  - csomar 6y ago
    That's good for 97% of the time, but not for the 3% where prices either crashes or goes way-up (volatility blackswan). These stressful situations tests the 1:1 peg. (which is why I mentioned the $4000 price crash). They probably have 1. good reserves ratios and 2. very liquid assets as reserve.
grapehut 6y ago
Might be good to get patio11's take on this. He's predicted the last 5 tether collapses.
coinward 6y ago
How about USD price manipulation? How much of the USD being created by the FED is back by their reserves?... Is this scam sustainable? What effect would a Fed collapse have on Bitcoin's price? I'm going to wager that the Fed scam has a far larger impact on the USD price of BTC than this article's claims on tether fraud or collapse and its not even close.
- quickthrower2 6y ago
  Tether’s only reason for existing is trading for crypto so that’s not a fair comparison.
subb 6y ago
Isn't this pretty much the same as taking a loan at a bank and buying bitcoins? Couldn't the "bubble" be explained by extremely low interest rates? Banks create money out of thin air when you take a loan. The only difference is they destroy that newly created money when you pay the loan back (but keep the interests). See : https://positivemoney.org/how-money-works/banking-101-video-course/ https://positivemoney.org/how-money-works/banking-101-video-...
aent 6y ago
And meanwhile another 600 million has just been printed by them today. And a few hours later bitcoin price went up. Amazing daily coincidences.
jpmattia 6y ago
The twitter thread is utterly fatuous, and another post this morning on reddit laid it out pretty well: > This is just dumb but I'll lay it out anyway: The NY AG issued the first Tether subpoena in Dec 2017. The AG got the financial info, found that tether was fully backed by dollars, and that the Tether company lent some of those dollars to the Bitfinex company, which is the basis of the NY AG lawsuit. Bitfinex has since issued tokens to cover the loan. To say that the NY AG got the subpoena info (which would require more evidence than an audit and be under penalties of perjury as well) found no backing and let them continue a ponzi is to say that the NY AG is part of the conspiracy. So enough with the tin foil hattery. https://www.reddit.com/r/BitcoinMarkets/comments/ksvlc3/daily_discussion_friday_january_08_2021/gijduzu/ https://www.reddit.com/r/BitcoinMarkets/comments/ksvlc3/dail...
- Slikey 6y ago
  > Dec 2017 I am fairly certain over 3 years passed since then.
  - jpmattia 6y ago
    Yes, I think that was their point: To suggest that the NYAG got the financial info and has waited more than 3 years to shut down an unbacked ponzi scheme is just tinfoil-hattery.
wskinner 6y ago
When the Bitfinex’d posts came out in 2017, I found them fairly convincing. It seems likely there is something not quite right at Bitfinex and Tether. But I have yet to see any evidence that the scale of “not right” is so large as is frequently claimed. These critiques never seem to address the most parsimonious explanation for periods of increased Tether issuance, which is that they are driven by genuine demand for bitcoin, and much of that demand is routed via Tether. There is ample evidence of the sketchiness of the people behind Bitfinex. But there is also a simple explanation for the behavior of bitcoin and Tether in 202 that involves no conspiracies. Many hodlers bought during the March crash because they saw it as an opportunity to buy at a discount (I am one of these people). The crash coincided with events that should drive up the price of bitcoin over the longer term. Specifically, the creation of trillions of new dollars and what many saw as a new era of much looser monetary and fiscal policy. The idea that demand for hard currencies is increased is totally consistent with this. Compared to 2017, I now believe there is a smaller chance of total tether insolvency and a larger chance of significant but not catastrophic shenanigans.
- PragmaticPulp 6y ago
  > These critiques never seem to address the most parsimonious explanation for periods of increased Tether issuance, which is that they are driven by genuine demand for bitcoin, and much of that demand is routed via Tether The bigger question is: Why are so many institutions using Tether to purchase 7-8 figures of bitcoin at a time instead of simply engaging with any of the well-known institutions who will facilitate the purchase directly? What do all of these buyers possibly gain by using an intermediary currency and funneling all of their money through the Tether company first? The only explanation I can come up with is that Tether is being used to skirt financial regulations or launder money, which doesn't bode well for Tether either.
  - wskinner 6y ago
    > The only explanation I can come up with is that Tether is being used to skirt financial regulations or launder money, which doesn't bode well for Tether either. This may well be true. But it also seems to be the case that for a long time, Tether was the only game in town, and institutions built integrations around it. Someone starting out now might not build on Tether.
nathansmith2017 6y ago
So, lets assume this is price manipulation is true. If they print tether, and buy BTC/USDT on an exchange than someone else has to go long the other side (USDT/BTC). When 600 mil of USDT was printed and was used to purchase 600 mil of BTC/USDT, then who purchased 600 mil USDT/BTC. It doesn't make sense that people who want to cash out of BTC at a certain price level will cash out through USDT because there is no exchange to redeem USDT to USD directly. You have to cash out through USD/BTC or USD/ETH. There are arbs traders who maintain the peg the USD/USDT, but arbs traders will always attempt to have a net 0 position, it doesn't make sense for them to hold tether either. Defi flash loans like AAVE and byz offer 0 collateral loans. If they are not using flash loans, then they will post collateral with USD (as this is presumably how they want profits) to short whatever ticker they need to short for the arb play. If bitfinex and tether keep printing tether, someone is holding all this tether. A lot of this is probably held in defi liquidity pools and AMM pools, but the total reserves in these exchanges (Compound, curve, dydx...) is far less than the 600 million printed. Perhaps the same institutions printing are the last holders, but Why would tether and bifinex hold their tether if it is truly a scam? I am confused as to who the last holders of tether are, if people are swapping tether for BTC and BTC for USD. Most people that buy tether (other than people supplying liquidity pools) do so to swap to another token for a real potential of gains, since Tether will never gain in value significantly with a 1:1 peg.
suikadayo 6y ago
I've said it before and I'll say it again: It’s mysterious how Bitcoiners hate the Fed printing money but they get awfully quiet with Tether printing money when it helps prop up the price.
mmastrac 6y ago
Bernie Madoff ran the same alleged scam for years, including giving interest to people in the fund. It would be even easier to run with a non-interest-bearing fund and you'd never even notice the money was missing unless there was a bank run.
thom 6y ago
Even if Tether is a scam, it still seems like the market for Bitcoin scams is infinite, so I'm not sure how much difference it makes.
WMX123 6y ago
Not true since coinbase doesn't accept tether. so, how do you explain bitcoin's rise on coinbase exchange without tether??
WMX123 6y ago
To people who think Tether manipulates Bitcoin price: How do you explain Bitcoin doing so well on Coinbase when Tether is NOT ACCEPTED on Coinbase???
- MystK 6y ago
  If BTC's price is manipulated anywhere, the market adjusts for it everywhere.
  - WMX123 6y ago
    That makes no sense. Again, how can someone manipulate Bitcoin on Coinbase with Tether when Tether is NOT accepted?
    - lippel82 6y ago
      It does make sense. The price of BTC in USD is roughly the same on every exchange. If some exchanges allow USD and USDT interchangeably, the BTC price can be driven up by trades that are conducted in USDT. The price on Coinbase will adapt to that.
      - WMX123 6y ago
        how will Coinbase "adapt"? it's a walled garden.
        qqii 6y ago
        Individuals and bots will take advantage of the price discrepancies between exchanges by purchasing BTC on the cheaper exchange, sending the BTC to the more expensive exchange and selling it. As long as its possible to do this different exchanges normally stay within a few % of each other.
    - xenihn 6y ago
      Scenario: Eth is $400 on Coinbase, Bitcoin is $12000 on Coinbase Print 1,000,000 Tether Buy $1,000,000 of Eth on an exchange that supports Tether Sell $1,000,000 of Eth on Coinbase Buy $900,000 (arbitrary post-sale amount from selling Eth) of Bitcoin on Coinbase Another scenario: Bitcoin is $12000 on Coinbase Bitcoin is $12000 on another exchange that supports Tether Print 1,000,000 Tether Buy $1,000,000 of Bitcoin on the exchange that supports Tether Bitcoin is now $12050 on another exchange Coinbase price of BTC rises as arbitrage bots and manual traders purchase cheaper Bitcoin on Coinbase and sell it for profit on the other exchange until prices equalize
deeeeplearning 6y ago
Can someone post a real analysis? Are we supposed to believe this guy because he's a "Finance Major" with 5k followers and he posted a few graphs??
tether-fork 6y ago
Why hasn't anyone forked tether? What happened to the tether issued on bitcoin cash blockchain through omni after the fork of bitcoin? A tether fork can be 'backed by tether.' The issuer of forked tether would accept 1 tether for one new tether fork. this issuer immediately sells tether to get the risk off their books through an exchange while liquidity exists. When redeeming the tether fork ppl can either get back tether or ~ 1 us dollar. So you effectively have front running the inevitable tether bank run. Sure they have to put trust in this new tether fork. You can steal tether's customers that are worried and since the feds seem to have a blind eye towards a company that isn't a bank and is most likely practicing fractional reserve lending, you let the free market 'regulate' tether.
pearjuice 6y ago
I'm no expert but wouldn't it make sense that Tether has to mint new USDT pegged to the price of BTC? If BTC price increases, regardless of what reason, the next buyer has to somehow have more USDT than there previously was in the system. - B buys 1USDT for 1USD - BTC sale at 1USDT from A to B - person B now lists their BTC for 3USDT - if person C now wants to buy this BTC for 3 USD, there has to be an additional 3 USDT minted Given new influx of money keeps happening to buy BTC, more and more USDT needs to be printed. Meaning, extra USDT is printed BEFORE the price increases. Because it's required to buy. Doesn't explain why it's seldom burned. Nobody ever cashes out?
EVa5I7bHFq9mnYK 6y ago
This is a qanon-style conspiracy theory going on for years now. Just follow the money: tethers are freely traded vs USD on multiple markets, including anonymous exchanges. If the conspiracy theory were right, the price of 1 Tether would be less than 1 USD. Meanwhile, it's very close to 1.00 USD on all the exchanges.
Triv888 6y ago
They just minted another 300,000,000, here are the latest whale mints: https://twitter.com/search?q=%22minted%20at%20Tether%20Treasury%22%20%20(from%3Awhale_alert)&src=typed_query&f=live https://twitter.com/search?q=%22minted%20at%20Tether%20Treas...
tether--fork 6y ago
Why hasn't anyone forked tether? A tether fork call it 'tether2' can be 'backed by tether', with the same legal setup (wyoming msb state license according to fincen, which isn't real since wyoming exempts them). The issuer of tether2 would accept 1 tether for one new tether2. This issuer would immediately sell tether to get real dollars on an exchange like Kraken while liquidity exists - usdt/usd pair, which is the only real way to redeem tether, unless you directly deal with tether(which mean you better be located in wyoming). When redeeming the tether2 ppl can either get back tether or optionally 1 real us dollar. So you effectively have front run the inevitable tether bank run. Sure they have to put trust in this new tether fork. You can steal tether's customers that are worried and since the feds seem to have a blind eye towards a company that isn't a bank and is most likely practicing fractional reserve lending, you let the free market 'regulate' tether. since you can always buy tether for a us dollar, but you may not be able to sell tether for a dollar there is no risk of selling tethers for real dollars. Also what happened to the tether issued on bitcoin cash blockchain through omni after the fork of bitcoin?
kneel 6y ago
This narrative has been dead for years.
tdeck 6y ago
Here's a good write-up about the issues with Tether from a few years ago: https://tonyarcieri.com/the-tether-conundrum https://tonyarcieri.com/the-tether-conundrum
TimJRobinson 6y ago
Why do people still use tether when decentralized stable coins like DAO now exist? Seems super risky to have USDT when you could simply exchange if for DAO and hold that instead.
UltimateBallR 6y ago
Enough with these manipulation controversies. Been hearing this for 3+ years
ajg4 6y ago
Let me cite https://tether.to/legal/ https://tether.to/legal/ "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."

306 points by temp 6y ago

>4) How the scam works: >Tether can print infinite amounts of (worthless) $USDT. >They then inject this into BTC, ETH, LTC, (and others) to cause prices to pump. >Notice how during the months they stopped printing Tether, the market moves sideways or drops significantly. >This graph also shows the extent to which USDT plays a role in Bitcoin's price action over the years. I don't get it. This doesn't really prove anything either way. Sure it could be the case that they're printing USDT backed by nothing and using it to by cryptos, but it could very well be the case that they're printing the USDT in response to real deposits from people who want to get into crypto. Since USDT accounts for a significant portion of the crypto market, it'd be more suspicious for price to go up without a corresponding large amount of USDT being printed, because that would mean prices are going up without more money being poured into the market.

gillesjacobs 6y ago
Exactly my issue with OP's argument. If BTC price rises, trade volume grows, increasing demand for stablecoins due to their utility as a low-volatile alternative to fiat to bypass legislation. You would EXPECT this pattern to arise. Note also how OP does not show a graph of trade volume/buy-sell volume which would potentially show that it is used as claimed. I still think Tether is extremely shady for refusing audits and dubious backing. I avoid it like the plague and hope others are as smart.
jayd16 6y ago
Yes, you're right. The point is without oversight or transparency we can't really know whats going on.
Geee 6y ago
Yes, and every exchange has 'money market' which means the cash reserves that hold user's deposits. Most exchanges use a simple database to hold these balances and there's no way to audit them. Every exchange can 'print' money in their database if they want. Tether is better because it offers some transparency into this side of the market.
kart23 6y ago
I dont understand how the OP knows/can prove that they are printing tether during the times that btc went up. Is there any more info on that part? It looks to me like they just drew lines under a graph and said tether is printing.
TomSwirly 6y ago
"It could be" that they have $2.5 billion dollars hidden somewhere but they don't want to show it to anyone or have it audited. "It could be" that if you send me $1 million, I'll make you live forever. You should try it and see.

dsr_ 6y ago

While correlation is not causation, correlation is evidence for causation... and there's a lot of correlation in those graphs.

tomwojcik 6y ago
It literally is not.
- wegs 6y ago
  Correction: Correlation is evidence for causation. It's weak evidence, and generally speaking, stronger correlation isn't more evidence. There's a gradual process to go from hypothesis to theory to fact, and to get there, you need several types of independent evidence. Correlational evidence is okay as one of those. A correct statement is that correlation is not proof of causation (no matter how strong). Types of evidence: * Correlation * Theoretical basis / strong hypothesis * Extrapolation * Interpolation * Small-scale well-controlled experiments (lab setting) * Large-scale less controlled experiments (real-world setting) * Anecdotes * ... and so on You want several of those before you start to believe anything, and some are stronger than others. Correlation isn't fundamentally weaker than most of those, though; all of those carry their own methodological issues. The number of times you can have a large-scale perfectly-controlled preregistered randomized control trial with no confounding effects is exceptionally rare (some medical trials, and a few other settings).
- benibela 6y ago
  But it is There are several algorithms that calculate the causal structure from correlations: PC, GES, FGS, FCI They are proven to be asymptotically correct
arvindamirtaa 6y ago
>"...correlation is evidence for causation" Yeah...that's not how it works.
- kilnr 6y ago
  I assume you've conflated evidence and proof?

DJBunnies 6y ago

This is propaganda from a competing altcoin.

diggan 6y ago
Just like "Jacob Oracle" did on Twitter, you're gonna have to provide at least some proof of your accusation. Now this is not conclusive in any way, but the user has "Investing in #Bitcoin" listed in their Twitter biography, hinting that they have more to lose if Bitcoin loses it's price, rather than gain, so seems they don't have anything but fairness to win with this. But wouldn't be the first time someone lied on the internet. Point still stands, proof or GTFO.
- danivaz 6y ago
  Where is the proof of whether or not Tether was actually injecting unbacked tokens? The tweet author just assumed bitcoin spikes were being pumped by Tether, basically they got the graph and put lines on it. Do you call that proof?
  - diggan 6y ago
    I don't have any inclination towards the tweets author being right or wrong, I simply know too little about it. But at least they are providing something to try to back up their claim. If it's true or not will ultimately be up to law enforcement, if it comes to that. My point was that the tweets author is trying to back up their claim while DJBunnies did absolutely nothing to try to back up theirs.
- emteycz 6y ago
  Indeed, show the proof of manipulation or GTFO

chrisa 6y ago

I agree that a Tether reckoning is coming, but point #10 of that thread is the most important: it could be weeks, months or _years_ before it's fully corrected, so be super super super careful about using Tether as a reason to short Bitcoin... "The market can remain irrational longer than you can remain solvent"

qeternity 6y ago
It's even worse than that. Shorting TSLA is dangerous because of the above. But it's mitigated by people purchasing shares with real fiat. They have a natural incentive to not be absurd: whether or not $800/share is absurd is a matter of opinion...but everyone would agree that $1m/share is absurd. Tether has no such limitation. All the exchanges are complicit in this, wash trading is rampant, and there's an de facto central bank run by actual criminals. There is absolutely zero reason why iFinex can't take bitcoin to $100k or $1m or whatever they like. They only have opportunity costs. The only thing keeping them in check right now is the appearance of legitimacy. If they were to overdo it, people might actually sell, which is not what they want. So until their legitimacy is tested (Jan 15) they will probably responsibly grind this higher. But on the last day, I expect billions and billions of USDT issuance so that they can run stops on every short in the market, collecting their last few shekels before the music stops and they vanish to an island somewhere.
- chrisa 6y ago
  Do you know if the public will actually find out any info on Jan 15th, or will that all be private, sealed documents? (I'm a bit lost at how that process is going to work)
  - qeternity 6y ago
    IANAL and don't have any real understanding of this process.
- graeme 6y ago
  Wait what’s the January 15th date?

wsc981 6y ago

While I don’t doubt that Tether was used to manipulate the Bitcoin price upwards, at the same time I believe Bitcoin Futures were/are being used to suppress the Bitcoin price as well. ——— [0]: https://www.equities.com/news/how-do-bitcoin-futures-affect-the-price https://www.equities.com/news/how-do-bitcoin-futures-affect-...

qeternity 6y ago
"Suppress" is not the right word because that would imply that the price is wrong. There is nothing wrong with shorting a market. If the short is wrong, she loses money. The market remains balanced and often short squeezes are responsible for large bull runs. Tether however isn't balanced. There is no risk. There is no offsetting liability in the market for the Tether they create (unlike with a short future, which has an offsetting long side).
- wsc981 6y ago
  But banks have been in the wrong in how they used futures to suppress prices of precious metals like gold. A quote from the linked article: > Precious metals markets have long since been subject to manipulation by large banks. Several banks have admitted wrongdoing and faced fines for manipulating gold prices. Many believe that the prices of gold and silver have been kept artificially low through the use of leveraged paper contracts. >Dr. Paul Craig Roberts, the former economic advisor for the Reagan administration, has written extensively about this subject. >In his view, some of the biggest banks in the world have been working to suppress the price of gold in Western markets for many years. They accomplish this through creating so-called “naked shorts” out of thin air (the term vapor contract term we’ve been using is analogous to a naked short). >A naked short is simply a contract that allows an institution to place a sell order for a particular asset without having any ownership of the asset. >In other words, it allows a bank to flood the market with fake sell orders, creating downward market pressure. Given that banks can create these shorts to the moon without any accountability, they can keep the price down at a level more or less of their choosing for quite some time. Especially the last alinea seems to reflect some of the things you said about Tether actually.

shuntress 6y ago

Can someone please explain to me how Tether is "injected" into Bitcoin? The entire argument seems to hinge on this but it is not (as far as I can see) explained. Are people accepting Tether in trade for BTC under the assumption that Tether will always be exchanged 1:1 for USD when this is not actually the case? EDIT: The answer seems to be yes Tether is 1-to-1 with "I O U $1" and enough people are accepting these IOUs in exchange for BTC that the market is moving because of this. That last part ("the market is moving because of this") seems so unbelievably stupid to me that I don't actually believe it.

danivaz 6y ago
Yes, if the company Thether has full control of its tokens they can print them and don't back them with anything (as the author says their reserves are not public)
raesene9 6y ago
Yep, AFAIK Tether is used by several exchanges that have problems getting direct banking relationships, as a on-ramp for funds. Tether originally promised that they were 1-2-1 backed with actual currency reserves, but had to abandon that statement when it became apparent they'd lost a load of money to Crypto Capital. Tether still claim to be 1-2-1 backed with "investments" but there has never been a completed 3rd party audit of that claim, so it literally has to be taken on trust.
- mmastrac 6y ago
  Minor point, but seeing "1-2-1" in your comment is strange to me. I've only ever seen it as "1:1" or "1-to-1".
  - panopticon 6y ago
    Thanks for pointing that out. I thought "1-2-1" was some jargon I was missing.
jcpham2 6y ago
Tether is the liquidity solution to the lank of United States Dollar withdrawal ie, a bank account. No bank, no problem! Tether on Wayne,Tether on Garth. But seriously, this old news. All of these stable coins and alt coins are just big pools of liquidity to swim in.

qeternity 6y ago

The problem is that in the early days of @Bitfinex'ed this was all a bit of a sideshow because there was genuinely large interest from retail and the outcome of crypto was far less certain. However three years on, crypto still does not have a "killer app" and is 99.99% used for speculation. Bitcoin's narrative has had to morph from "digital currency" to "digital gold". But in the depths of the March panic, Tether jumped the shark in order to backstop the entire crypto ecosystem, and they can never put that genie back in the bottle. Much like the Fed who cannot stop monetizing US deficits for fear of letting yields explode, the Tetheral Reserve must continue to print USDT in order to support prices. Exchanges cannot let this fail since the vast majority do not have access to the bonafide banking system and thus scrappy users must devise "fiat onramps". There are many theories about why, the predominant one being that iFinex know they are screwed, and are making one last cash grab before presumably disappearing. This sounds fairly reasonable if the entire operation is indeed a sham, but it means there is effectively no upper bound to BTC prices because the denominator in 90% of the market (USDT) is effectively zero. Tether has become too big to fail. Bitcoin now finds itself a high tech manifestation of the very thing that Satoshi sought to address.

dylkil 6y ago
>Bitcoin's narrative has had to morph from "digital currency" to "digital gold". This narrative was an intentional morphing by various actors within the space (Blockstream) who believed raising the blocksize to allow higher throughput would cause 'centralisation'. Instead they want people to use layer 2 solutions such as blockstreams own federated product Liquid.
- tromp 6y ago
  As explained by blockstream co-founder Greg Maxwell in [1], the blocksize is constrained in order to ensure a steady backlog of fee paying transactions, that allow bitcoin to remain secure in the long term when block subsidy becomes insignificant. [1] https://bitcointalk.org/index.php?topic=5306354.0 https://bitcointalk.org/index.php?topic=5306354.0
  - 6y ago

tomtomtom777 6y ago

I still don't quite understand how they can manipulate the price. The price of a USDT is 1 dollar. They give out new USDT for $1 a piece. Sure, they may be spending these dollars elsewhere, thus holding a fractional reserve. Sure this may illegal and get them in trouble. But this doesn't effect the dollar value for which these USDT's and thus Bitcoins are traded. As long as a USDT is $1, nobody is manipulating the price.

danivaz 6y ago
The author is saying there are more tokens in circulation than dollars in their reserve.
jaggirs 6y ago
They print additional usdt, that are not backed by dollars, and buy bitcoin with them.
Cthulhu_ 6y ago
Not the Tether price, but that's not what the article is about; the article is that they print USDT and use it to buy BTC, increasing demand and causing the BTC price to go up. No dollars involved, not directly.
NovemberWhiskey 6y ago
>The price of a USDT is 1 dollar. They give out new USDT for $1 a piece. If this were the case, Tether would be back by cash. But it isn't: they claim it's backed by cash, cash-equivalents and receivables from loans, including loans to affiliated entities (or some similar language). So, for example: they could create 1M USDT and immediately loan it to their associated crypto-hedge-fund (for zero interest). The hedge-fund promises to repay that loan in USD (creating 'reserves' for USDT), and immediately places buy orders for Bitcoin; generating demand for Bitcoin that will raise the price.
3np 6y ago
Well, what if you use those reserves to buy bitcoin on your own exchange?
6y ago

sharperguy 6y ago

Surely the only way to keep the valuer of tether stable is to "print" more of it whenever its value starts to increase? Otherwise it wouldn't be always worth $1.

xur17 6y ago
That or provide on and off ramps that users can use to arbitrage any deviations from a value of $1.
- qeternity 6y ago
  Which they cannot do because 1) they don't have any banking and 2) they cannot allow redemptions which would risk a run on their reserves (to the degree those exist at all).
  - olalonde 6y ago
    Except they do allow redemptions: https://app.tether.to/app/signup https://app.tether.to/app/signup
    - qeternity 6y ago
      Nobody in the history of crypto has ever demonstrated this. Not a single person.
      - olalonde 6y ago
        Nobody in the history of crypto has ever attempted it or no one has ever demonstrated it? It seems improbable no one has ever attempted it. And there's no reason to demonstrate if it is successful. So I'd argue the lack of failed demonstrations is evidence that it works.
qeternity 6y ago
Not sure if trolling but why would Tether ever be worth more than $1? Printing USDT is not the same is issuing new fully backed USDT.

ackbar03 6y ago

Wait I don't get it, it's not fully backed but it's still backed somewhat right? I thought it was only a chunk of USD that was missing? Or did they completely abandon the usd backing? If it's still somewhat backed and just that chunk of usd that remains unaccounted for, printing tether isn't exactly a scam? People trade their usd for printed tethers and use that to buy bitcoin, so it's still essentially people exchanging usd for bitcoin

raesene9 6y ago
no-one knows how backed it is. iFinex claim it's 100% backed. They may, or may not, be telling the truth. The question is do you believe that billions of dollars are flowing into an unaudited stablecoin when other, audited, stablecoins exist...
- dgellow 6y ago
  In 2019 Tether's lawyer was talking about 74% backed by cash and "short-term securities". Edit: I forgot to add the link, here it is https://www.bloomberg.com/news/articles/2019-04-30/tether-says-stablecoin-is-only-backed-74-by-cash-securities https://www.bloomberg.com/news/articles/2019-04-30/tether-sa...

Speednet 6y ago

What a ridiculous Twitter thread showing absolutely no causality between Tether and Bitcoin. You might as well show that SpaceX rocket launches coincide with a rise in Bitcoin prices. There was a successful SpaceX launch yesterday, and Bitcoin went over $40,000 for the first time. In 2020, SpaceX had its best year ever for successful launches and returns of the first stage, perfectly coinciding with Bitcoin's meteoric rise in value. So Bitcoin must be tied to successful SpaceX launches.

SNetForLife13 6y ago
Upvote this gentleman for being the final trinity-piece in this mystery! HN-user Speednet is 1/3 rd of bitcoin's success!
- Speednet 6y ago
  I can see I've been downvoted. I must have made a mistake. Bitcoin prices are actually tied to Elon Musk's rising wealth, not SpaceX launches.

xur17 6y ago

The graphs show a strong correlation between printing of USDT and the Bitcoin price rising, but it's not clear to me which one triggers the other. Interestingly, USDC seems to follow similar minting patterns, and they post quarterly audits of their books / are much better regulated.

raesene9 6y ago
They are better regulated and therefore less risky than Tether, which raises the interesting question, Why is USDC circulation only 20% of Tethers...
- xur17 6y ago
  I agree, and it does surprise me, but I think it's a mix of 1. tether has been around a lot longer and is on a lot more exchanges 2. tether is.. less well controlled by US regulators and hence better for.. questionable exchanges to list.
  - raesene9 6y ago
    Challenge there is that it doesn't fit the narrative that Tether give about the demand being from "institutional investors". That kind of customer tends (IMO) to be very risk averse. Of course it is possible that Tether are getting custom, but not the kind that wants to leave a bank trail. But if that's the case they're going to fall foul of the regulators sooner or later...
    - qes 6y ago
      > Challenge there is that it doesn't fit the narrative that Tether give about the demand being from "institutional investors" Market makers and trading shops with 7-8 figure funds playing with riskier cryptos or trying to tap worldwide volume. It's not MicroStrategy and Mass Mutual Insurance using Tethers
- raziel2p 6y ago
  Almost as if crypto is mostly about investment speculation and gambling, and not so much about actually useful assets.

sneak 6y ago

One thing the author and I agree on: When Tether falls, it's going to make a very big noise.

oxygenjoe 6y ago

Or perhaps USDT is created as BTC price increases to ensure exchange liquidity of USDT, allowing it to to stay very close to $1

Cthulhu_ 6y ago
The net effect is the same though; the company behind Tether is printing money from nothing and selling it for USD or BTC (which can be sold for USD more reliably).

Cthulhu_ 6y ago

I'm kinda glad BTC is up, this means I can do an exit with break even or a little profit. I just sold half my crypto assets on the two exchanges I have an account on, I just hope I can have the money transferred out before they become insolvent when the next great crash happens.

Tepix 6y ago
Good for you, parts of mine are stuck on CoinBase and the support isn't answering for days. Seems i'm not alone with that issue.
- Triv888 6y ago
  I was finally able to login into Coinbase and do what I wanted to do.

curo 6y ago

The part I don't understand: Say the SEC takes on Tether and it falls. Why then does BTC and the crypto markets crash?

danivaz 6y ago
Because suddenly most of the bitcoin demand would stop which would make the price drop
gillesjacobs 6y ago
Because Tether's utility is as a legislatively advantageous on- and off-ramp for the whole crypto market. Off-ramp: If people want to sell BTC or other volatile tokens because they want to realize profits, the obvious thing would be to sell for fiat (USD/EUR). But due to taxation and legislation this is often difficult. Stablecoins like Tether provide the utility of a low-volatility currency that fiat would fill. Main advantage is bypassing legislation. This use is so common there is jargon for "Tethering up". There also exist many debit cards that allow paying with stablecoins, increasing utility. The rise of DeFi and money markets for stablecoins also provides a good return on stablecoins while in theory being low-volatility. On-ramp: If people want to buy a certain token they first go into Tether. This is usually for bypassing local legislation limiting the buying of a specific token or use of exchanges. This use is less common, I would wager. Because of this wide-spread use of Tether, it's collapse would cause a liquidity crisis: people want to but cannot sell their Tethers for other tokens/fiat. Tether goes down from it's 1USD peg, triggering a run on Tether as people try to swap it as much as they can for anything else, driving down the price further. Meanwhile noone is willing to buy Tether. The theory proposed by OP, is that panic in the already volatile crypto market ensues, people exit for fiat where they can driving down prices everywhere. Trust in the whole market will be obliterated. Personally, I haven't trusted Tether since the first BitFinex scandals and avoided like the plague. For my stablecoin needs, I use something that is audited and over-collateralized like DAIv2.

memossy 6y ago

I would trust Tether more if it ever had meaningful outflows in dollar terms, had $1bn or so in the last crash (https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/) but has been generally on an upward march, not what you would expect from a stable coin

Tepix 6y ago

I agree that USDT is fishy and it may be behind a large percentage of the gains in BTC and the other coins. However, there is also another possible explanation. When investors want to buy BTC they first to go Binance and ask for USDT in exchange for USD. Binance creates new USDT for them. Then they use the USDT to buy BTC (reverse causality). Just saying it's possible, but I believe Jacob Oracle to be right.

PragmaticPulp 6y ago
> When investors want to buy BTC they first to go Binance and ask for USDT in exchange for USD. Binance creates new USDT for them. Then they use the USDT to buy BTC (reverse causality). But why sell them USDT first and then sell them BTC in exchange for the USDT? Why not just sell them BTC directly? That's the issue.
- qqii 6y ago
  The liquidity in BTCUSDT on binance is much higher so you're less likely to encounter slippage. You have to also remeber non US customers that use exchanges, for them it makes a lot of sense to exchange their native currency to USDT.
triangleman 6y ago
Can binance "create new USDT" or do they need to ask Tether to create it for them, exchanging USD?
- Tepix 6y ago
  Don't they share the same owners?

hoschicz 6y ago

Would we not expect this same pattern if Tether was printed in response to money coming in? Meaning yes, they don't have USDT 100 % fully backed, but they aren't printing it out of thin air either. What surprises me are the incredible volumes in USDT -- why would anyone ever use USDT instead of USDC, DAI or BUSD? All of them are much more transparent and less risky.

ElKrist 6y ago
Sometimes it's just a practical matter The exchange I use only has instruments with USDT pairs (BTC/USDT, ETH/USDT), not with USDC.

seibelj 6y ago

Permabears’ final hope is that tether is a scam, because if that fails they have nothing to grasp onto to explain bitcoin’s rise other than legitimate demand.

dgellow 6y ago

Let's say you believe that Tether is a complete fraud and will crash the market at some point. How do you take advantage of this? I'm not myself trading, but I would be interested to know how that kind of short works in practice. From what I understand, that's what bitcoin futures can be used for?

graeme 6y ago
Cboe ended their bitcoin futures. As such there’s no way to bet on a bitcoin collapse that I know of, in a less risky options-like way. Shorts (if they exist) would be extremely risky, as you owe more if bitcoin rises.
- otherjason 6y ago
  CME Group still offers Bitcoin futures, along with options: https://www.cmegroup.com/trading/bitcoin-futures.html https://www.cmegroup.com/trading/bitcoin-futures.html
  - graeme 6y ago
    Oh thanks. Where can you trade those? Couldn’t find them on questrade.
    - csomar 6y ago
      The minimum for CME is 5 bitcoins ($200k). So I guess they are for the big dudes?
- cdiddy2 6y ago
  CME has fairly liquid futures https://www.theblockcrypto.com/data/crypto-markets/futures/average-daily-volume-of-cme-bitcoin-futures-monthly https://www.theblockcrypto.com/data/crypto-markets/futures/a...
- hndudette2 6y ago
  There's many bitcoin derivative exchanges which allow you to short, in addition to the CME's contract. Bitmex, Huobi, etc.

technics256 6y ago

Can anyone recommend a business bank replacement for Azlo, which is also shutting down?

dtelepathy 6y ago
I'm planning on giving BlueVine a try: https://www.bluevine.com/checking/ https://www.bluevine.com/checking/ Relay looks interesting too: https://relayfi.com/business-banking https://relayfi.com/business-banking

ausbah 6y ago

can someone explain to me how a district court can sue someone? shouldn't this be the SEC or something?

NovemberWhiskey 6y ago

There is one question to ask here: "Why is so much of the volume in BTC driven by USDT trades?", i.e. what exactly is so great about Tether that we're supposed to believe everyone is actually buying it? It is supposed to be a stablecoin. That's meant to be exceedingly boring. Tether is anything but boring, with all kinds of intrigue, lack of transparency about its reserves, law suits and so on. There are a bunch of other stablecoins out there that just seem like better propositions, so why does crypto price action continue to be primarily driven by inflows from Tether?

lai-yin 6y ago

Anyone know the source of Jacob's chart in part 5 of his thread?

0xcoffee 6y ago

Here is ThreadReaderApp link for more readable version: https://threadreaderapp.com/thread/1346133062204198917.html https://threadreaderapp.com/thread/1346133062204198917.html

csomar 6y ago

OP gives no proof that Tether is not holding 1:1 reserves. There is, however, a good proof that they do: Tether has held the 1:1 beg pretty well recently. Bitcoin price dropped to $4.000 last year and Tether exchange rate has held pretty well. It is important to mention that USDT is still liquid despite the lack of USD on/off-ramps. People regularly sell USDT on the offline market, and can exchange to USDC on many exchanges. > But Tether is printing so much money. So is USDC, and the price of Bitcoin is going higher. This means Bitcoiners have lots of value in Bitcoin and some of them are going to convert that value to USD. They are mainly using USDT for that, for whatever reason. > Tether printing press is driving Bitcoin price. Wrong. My proof for that is "where is the premium to buy Bitcoin". In a very liquid market (which for the most part, crypto is), prices should be the same up to the costs (transaction and banking fees). Prices have been higher in Coinbase during this run. As I am typing right now, Coinbase prices are 50-80 dollars higher for Bitcoin. GBTC is even more ridiculous with 10-15% premium on price (but also GBTC is less liquid/arb-able). This signifies that demand is coming from US retail and institutional investors. > Tether is holding USD as securities/derivatives/whatever. All of them are. See: https://omarabid.com/usd-stable-coins https://omarabid.com/usd-stable-coins

paulgb 6y ago
I mostly agree with your skepticism on USDT driving BTC price, but I disagree with this: > There is, however, a good proof that they do: Tether has held the 1:1 beg pretty well recently. All this proves is that they have something in reserve, not that it is 1:1 backed. Most modern banking operates on a fractional reserve system, but when I take cash out of my bank account I get a cash dollar 1:1 with what they debit my account; they don’t prorate it for the amount of reserve they have.
- csomar 6y ago
  That's good for 97% of the time, but not for the 3% where prices either crashes or goes way-up (volatility blackswan). These stressful situations tests the 1:1 peg. (which is why I mentioned the $4000 price crash). They probably have 1. good reserves ratios and 2. very liquid assets as reserve.

grapehut 6y ago

Might be good to get patio11's take on this. He's predicted the last 5 tether collapses.

coinward 6y ago

How about USD price manipulation? How much of the USD being created by the FED is back by their reserves?... Is this scam sustainable? What effect would a Fed collapse have on Bitcoin's price? I'm going to wager that the Fed scam has a far larger impact on the USD price of BTC than this article's claims on tether fraud or collapse and its not even close.

quickthrower2 6y ago
Tether’s only reason for existing is trading for crypto so that’s not a fair comparison.

subb 6y ago

Isn't this pretty much the same as taking a loan at a bank and buying bitcoins? Couldn't the "bubble" be explained by extremely low interest rates? Banks create money out of thin air when you take a loan. The only difference is they destroy that newly created money when you pay the loan back (but keep the interests). See : https://positivemoney.org/how-money-works/banking-101-video-course/ https://positivemoney.org/how-money-works/banking-101-video-...

aent 6y ago

And meanwhile another 600 million has just been printed by them today. And a few hours later bitcoin price went up. Amazing daily coincidences.

jpmattia 6y ago

The twitter thread is utterly fatuous, and another post this morning on reddit laid it out pretty well: > This is just dumb but I'll lay it out anyway: The NY AG issued the first Tether subpoena in Dec 2017. The AG got the financial info, found that tether was fully backed by dollars, and that the Tether company lent some of those dollars to the Bitfinex company, which is the basis of the NY AG lawsuit. Bitfinex has since issued tokens to cover the loan. To say that the NY AG got the subpoena info (which would require more evidence than an audit and be under penalties of perjury as well) found no backing and let them continue a ponzi is to say that the NY AG is part of the conspiracy. So enough with the tin foil hattery. https://www.reddit.com/r/BitcoinMarkets/comments/ksvlc3/daily_discussion_friday_january_08_2021/gijduzu/ https://www.reddit.com/r/BitcoinMarkets/comments/ksvlc3/dail...

Slikey 6y ago
> Dec 2017 I am fairly certain over 3 years passed since then.
- jpmattia 6y ago
  Yes, I think that was their point: To suggest that the NYAG got the financial info and has waited more than 3 years to shut down an unbacked ponzi scheme is just tinfoil-hattery.

wskinner 6y ago

When the Bitfinex’d posts came out in 2017, I found them fairly convincing. It seems likely there is something not quite right at Bitfinex and Tether. But I have yet to see any evidence that the scale of “not right” is so large as is frequently claimed. These critiques never seem to address the most parsimonious explanation for periods of increased Tether issuance, which is that they are driven by genuine demand for bitcoin, and much of that demand is routed via Tether. There is ample evidence of the sketchiness of the people behind Bitfinex. But there is also a simple explanation for the behavior of bitcoin and Tether in 202 that involves no conspiracies. Many hodlers bought during the March crash because they saw it as an opportunity to buy at a discount (I am one of these people). The crash coincided with events that should drive up the price of bitcoin over the longer term. Specifically, the creation of trillions of new dollars and what many saw as a new era of much looser monetary and fiscal policy. The idea that demand for hard currencies is increased is totally consistent with this. Compared to 2017, I now believe there is a smaller chance of total tether insolvency and a larger chance of significant but not catastrophic shenanigans.

PragmaticPulp 6y ago
> These critiques never seem to address the most parsimonious explanation for periods of increased Tether issuance, which is that they are driven by genuine demand for bitcoin, and much of that demand is routed via Tether The bigger question is: Why are so many institutions using Tether to purchase 7-8 figures of bitcoin at a time instead of simply engaging with any of the well-known institutions who will facilitate the purchase directly? What do all of these buyers possibly gain by using an intermediary currency and funneling all of their money through the Tether company first? The only explanation I can come up with is that Tether is being used to skirt financial regulations or launder money, which doesn't bode well for Tether either.
- wskinner 6y ago
  > The only explanation I can come up with is that Tether is being used to skirt financial regulations or launder money, which doesn't bode well for Tether either. This may well be true. But it also seems to be the case that for a long time, Tether was the only game in town, and institutions built integrations around it. Someone starting out now might not build on Tether.

nathansmith2017 6y ago

So, lets assume this is price manipulation is true. If they print tether, and buy BTC/USDT on an exchange than someone else has to go long the other side (USDT/BTC). When 600 mil of USDT was printed and was used to purchase 600 mil of BTC/USDT, then who purchased 600 mil USDT/BTC. It doesn't make sense that people who want to cash out of BTC at a certain price level will cash out through USDT because there is no exchange to redeem USDT to USD directly. You have to cash out through USD/BTC or USD/ETH. There are arbs traders who maintain the peg the USD/USDT, but arbs traders will always attempt to have a net 0 position, it doesn't make sense for them to hold tether either. Defi flash loans like AAVE and byz offer 0 collateral loans. If they are not using flash loans, then they will post collateral with USD (as this is presumably how they want profits) to short whatever ticker they need to short for the arb play. If bitfinex and tether keep printing tether, someone is holding all this tether. A lot of this is probably held in defi liquidity pools and AMM pools, but the total reserves in these exchanges (Compound, curve, dydx...) is far less than the 600 million printed. Perhaps the same institutions printing are the last holders, but Why would tether and bifinex hold their tether if it is truly a scam? I am confused as to who the last holders of tether are, if people are swapping tether for BTC and BTC for USD. Most people that buy tether (other than people supplying liquidity pools) do so to swap to another token for a real potential of gains, since Tether will never gain in value significantly with a 1:1 peg.

suikadayo 6y ago

I've said it before and I'll say it again: It’s mysterious how Bitcoiners hate the Fed printing money but they get awfully quiet with Tether printing money when it helps prop up the price.

mmastrac 6y ago

Bernie Madoff ran the same alleged scam for years, including giving interest to people in the fund. It would be even easier to run with a non-interest-bearing fund and you'd never even notice the money was missing unless there was a bank run.

thom 6y ago

Even if Tether is a scam, it still seems like the market for Bitcoin scams is infinite, so I'm not sure how much difference it makes.

WMX123 6y ago

Not true since coinbase doesn't accept tether. so, how do you explain bitcoin's rise on coinbase exchange without tether??

WMX123 6y ago

To people who think Tether manipulates Bitcoin price: How do you explain Bitcoin doing so well on Coinbase when Tether is NOT ACCEPTED on Coinbase???

MystK 6y ago
If BTC's price is manipulated anywhere, the market adjusts for it everywhere.
- WMX123 6y ago
  That makes no sense. Again, how can someone manipulate Bitcoin on Coinbase with Tether when Tether is NOT accepted?
  - lippel82 6y ago
    It does make sense. The price of BTC in USD is roughly the same on every exchange. If some exchanges allow USD and USDT interchangeably, the BTC price can be driven up by trades that are conducted in USDT. The price on Coinbase will adapt to that.
    - WMX123 6y ago
      how will Coinbase "adapt"? it's a walled garden.
      - qqii 6y ago
        Individuals and bots will take advantage of the price discrepancies between exchanges by purchasing BTC on the cheaper exchange, sending the BTC to the more expensive exchange and selling it. As long as its possible to do this different exchanges normally stay within a few % of each other.
  - xenihn 6y ago
    Scenario: Eth is $400 on Coinbase, Bitcoin is $12000 on Coinbase Print 1,000,000 Tether Buy $1,000,000 of Eth on an exchange that supports Tether Sell $1,000,000 of Eth on Coinbase Buy $900,000 (arbitrary post-sale amount from selling Eth) of Bitcoin on Coinbase Another scenario: Bitcoin is $12000 on Coinbase Bitcoin is $12000 on another exchange that supports Tether Print 1,000,000 Tether Buy $1,000,000 of Bitcoin on the exchange that supports Tether Bitcoin is now $12050 on another exchange Coinbase price of BTC rises as arbitrage bots and manual traders purchase cheaper Bitcoin on Coinbase and sell it for profit on the other exchange until prices equalize

deeeeplearning 6y ago

Can someone post a real analysis? Are we supposed to believe this guy because he's a "Finance Major" with 5k followers and he posted a few graphs??

tether-fork 6y ago

Why hasn't anyone forked tether? What happened to the tether issued on bitcoin cash blockchain through omni after the fork of bitcoin? A tether fork can be 'backed by tether.' The issuer of forked tether would accept 1 tether for one new tether fork. this issuer immediately sells tether to get the risk off their books through an exchange while liquidity exists. When redeeming the tether fork ppl can either get back tether or ~ 1 us dollar. So you effectively have front running the inevitable tether bank run. Sure they have to put trust in this new tether fork. You can steal tether's customers that are worried and since the feds seem to have a blind eye towards a company that isn't a bank and is most likely practicing fractional reserve lending, you let the free market 'regulate' tether.

pearjuice 6y ago

I'm no expert but wouldn't it make sense that Tether has to mint new USDT pegged to the price of BTC? If BTC price increases, regardless of what reason, the next buyer has to somehow have more USDT than there previously was in the system. - B buys 1USDT for 1USD - BTC sale at 1USDT from A to B - person B now lists their BTC for 3USDT - if person C now wants to buy this BTC for 3 USD, there has to be an additional 3 USDT minted Given new influx of money keeps happening to buy BTC, more and more USDT needs to be printed. Meaning, extra USDT is printed BEFORE the price increases. Because it's required to buy. Doesn't explain why it's seldom burned. Nobody ever cashes out?

EVa5I7bHFq9mnYK 6y ago

This is a qanon-style conspiracy theory going on for years now. Just follow the money: tethers are freely traded vs USD on multiple markets, including anonymous exchanges. If the conspiracy theory were right, the price of 1 Tether would be less than 1 USD. Meanwhile, it's very close to 1.00 USD on all the exchanges.

Triv888 6y ago

They just minted another 300,000,000, here are the latest whale mints: https://twitter.com/search?q=%22minted%20at%20Tether%20Treasury%22%20%20(from%3Awhale_alert)&src=typed_query&f=live https://twitter.com/search?q=%22minted%20at%20Tether%20Treas...

tether--fork 6y ago

Why hasn't anyone forked tether? A tether fork call it 'tether2' can be 'backed by tether', with the same legal setup (wyoming msb state license according to fincen, which isn't real since wyoming exempts them). The issuer of tether2 would accept 1 tether for one new tether2. This issuer would immediately sell tether to get real dollars on an exchange like Kraken while liquidity exists - usdt/usd pair, which is the only real way to redeem tether, unless you directly deal with tether(which mean you better be located in wyoming). When redeeming the tether2 ppl can either get back tether or optionally 1 real us dollar. So you effectively have front run the inevitable tether bank run. Sure they have to put trust in this new tether fork. You can steal tether's customers that are worried and since the feds seem to have a blind eye towards a company that isn't a bank and is most likely practicing fractional reserve lending, you let the free market 'regulate' tether. since you can always buy tether for a us dollar, but you may not be able to sell tether for a dollar there is no risk of selling tethers for real dollars. Also what happened to the tether issued on bitcoin cash blockchain through omni after the fork of bitcoin?

kneel 6y ago

This narrative has been dead for years.

tdeck 6y ago

Here's a good write-up about the issues with Tether from a few years ago: https://tonyarcieri.com/the-tether-conundrum https://tonyarcieri.com/the-tether-conundrum

TimJRobinson 6y ago

Why do people still use tether when decentralized stable coins like DAO now exist? Seems super risky to have USDT when you could simply exchange if for DAO and hold that instead.

UltimateBallR 6y ago

Enough with these manipulation controversies. Been hearing this for 3+ years

ajg4 6y ago

Let me cite https://tether.to/legal/ https://tether.to/legal/ "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."