8 ms·

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 sp

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?
julianlam 6y ago
> The price of a USDT is 1 dollar. They give out new USDT for $1 a piece. That's circular logic isn't it? USDT is $1 USD and $1 USD is 1 USDT, therefore it is "stable". That sentence in and of itself is meaningless.
csomar 6y ago
> I still don't quite understand how they can manipulate the price. They largely can't (especially that a good fraction of Bitcoin is now held by institutional investors). But it makes up for a good story.
PragmaticPulp 6y ago
Scams always work on the way up. Madoff operated a Ponzi scheme for 17 years before running out of money. He simply used his bank account to pay off anyone who wanted to withdraw. As long as more total money flows in than flows out of the system, it doesn't fall apart. The entire narrative around BTC is "HODL", and the only thing people really do with it is buy and hold. Money is flowing into the system, so there's room for scams to operate undetected within those margins.

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?

julianlam 6y ago

> The price of a USDT is 1 dollar. They give out new USDT for $1 a piece. That's circular logic isn't it? USDT is $1 USD and $1 USD is 1 USDT, therefore it is "stable". That sentence in and of itself is meaningless.

csomar 6y ago

> I still don't quite understand how they can manipulate the price. They largely can't (especially that a good fraction of Bitcoin is now held by institutional investors). But it makes up for a good story.

PragmaticPulp 6y ago

Scams always work on the way up. Madoff operated a Ponzi scheme for 17 years before running out of money. He simply used his bank account to pay off anyone who wanted to withdraw. As long as more total money flows in than flows out of the system, it doesn't fall apart. The entire narrative around BTC is "HODL", and the only thing people really do with it is buy and hold. Money is flowing into the system, so there's room for scams to operate undetected within those margins.