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The thing I don't understand about the "Illegit" method is that it relies on people accepting USDT for BTC and then not cashing them out to real USD. Because if

The thing I don't understand about the "Illegit" method is that it relies on people accepting USDT for BTC and then not cashing them out to real USD. Because if the company is printing USDT it wouldn't have the cash to pay the people trying to cash out USDT. So to allow this to happen you would need a people to be holding a huge amount of USDT.

vegannet 6y ago
You can’t redeem Tether — that’s a core part of the fraud, they have “banking issues” and had them for years. You can sell it on an exchange but the Tether organisation have prevented any redemption of USD from USDT for years. Anybody turning USDT into USD is selling their USDT.
- tim333 6y ago
  Though when you sell your USDT for euro or whatever on Kraken say, the tether org must step in and buy to keep the price at US$1. So they effectively redem if not directly.
  - griffinheart 6y ago
    When is tether org involved in this? From your example the only thing that happened is that now you hold x euros and Kraken holds x amount of USDT. Unless Kraken goes to Tether org and asks "hey I got these USDTs, please give me the USD" no redemption has occurred. That some people can in effect transact USDT for fiat via other mechanisms (like your example above) says nothing about Tether org backing or reserves. Until you go to Tether org with your USDT's and ask them for USD you won't know if they have the reserves.
    - tim333 6y ago
      The reason tether stays at $1 is because the tether org or their delegates buy or sell to keep it there. They have to or the whole thing would become untethered as it were.
- seibelj 6y ago
  Plenty of companies redeem USDT for USD. I myself worked at a company that redeemed billions of dollars. The FUD on HN is approaching delusional levels.
  - xur17 6y ago
    https://tether.to/faqs/ https://tether.to/faqs/ > Unfortunately, Tether has decided to stop serving U.S. individual and corporate customers altogether. As of January 1, 2018, no issuance or redeeming services will be available to these users. Exceptions to these provisions may be made by Tether, in its sole discretion, for entities that are: Established or organized outside of the United States or its territorial or insular possessions; and, Eligible Contract Participants pursuant to U.S. law. > An Eligible Contract Participant includes a corporation that has total assets exceeding $10,000,000 and is incorporated in a jurisdiction outside of the United States or its territories or insular possessions. This will be the principal basis upon which we will continue to do business with selected U.S. persons. Basically, it looks like they only provide on and off ramps for large clients outside the US. Given their history, I am betting they might not want to reveal where they store their assets, and don't want to deal with US regulators (but not sure this is working).
    - seibelj 6y ago
      Yes, I worked at a company that had an entity outside the US that minted and redeemed tethers. This is how it works.
    - whimsicalism 6y ago
      So as source for the claim that you "can't redeem tether", you are linking to something that says you can redeem tether?
      - xur17 6y ago
        When did I say I was providing a source for not being able to redeem tether? I'm just linking to information that I found useful when forming an opinion on the matter.
- gruez 6y ago
  So you can't trade USDT for USD at all (eg. third party exchange trades, or withdrawing from an USDT exchange directly), or is it only that you can't trade USDT for USD by going through Tether Limited?
tim333 6y ago
People do hold USDT. I hold some myself. If you are going to buy crypto again it saves the hassle and expense of converting into fiat money and back again. The majority of exchanges can't actually hold fiat money due to regulatory issues. Also I imagine some people are hoping to avoid the taxman by keeping it in crypto though that's legally not kosher.
- rglullis 6y ago
  Why USDT and not USDC or DAI? Don't you feel like holding USDT makes you complicit in whatever shit is going on? Also, I would be very, very weary of using an centralized exchange that "can not hold fiat". With the layer-2 projects that are coming now (take a look at loopring or Stakenet), you can transact as much as you want, no gas fees and exchange fees are about the same as any CEX.
  - xur17 6y ago
    Because way more exchanges offer USDT trading. USDC / DAI are both fairly new, and aren't offered as trading pairs nearly as frequently.
    - rglullis 6y ago
      Still, they do exist now. And again, if an exchange only offers USDT as on-ramp that should be a massive signal against its trustworthiness.
      - xur17 6y ago
        I somewhat agree, but it's also a chicken and the egg problem - everyone uses USDT as the primary pair because everyone wants it, and everyone wants it because that's what every other exchange offers. Exchanges can offer another stablecoin, but it's likely to have very little volume.
    - whimsicalism 6y ago
      Coinbase offers DAI, plus you can exchange DAI for any ERC20 token on a dex.

vegannet 6y ago

You can’t redeem Tether — that’s a core part of the fraud, they have “banking issues” and had them for years. You can sell it on an exchange but the Tether organisation have prevented any redemption of USD from USDT for years. Anybody turning USDT into USD is selling their USDT.

tim333 6y ago
Though when you sell your USDT for euro or whatever on Kraken say, the tether org must step in and buy to keep the price at US$1. So they effectively redem if not directly.
- griffinheart 6y ago
  When is tether org involved in this? From your example the only thing that happened is that now you hold x euros and Kraken holds x amount of USDT. Unless Kraken goes to Tether org and asks "hey I got these USDTs, please give me the USD" no redemption has occurred. That some people can in effect transact USDT for fiat via other mechanisms (like your example above) says nothing about Tether org backing or reserves. Until you go to Tether org with your USDT's and ask them for USD you won't know if they have the reserves.
  - tim333 6y ago
    The reason tether stays at $1 is because the tether org or their delegates buy or sell to keep it there. They have to or the whole thing would become untethered as it were.
seibelj 6y ago
Plenty of companies redeem USDT for USD. I myself worked at a company that redeemed billions of dollars. The FUD on HN is approaching delusional levels.
- xur17 6y ago
  https://tether.to/faqs/ https://tether.to/faqs/ > Unfortunately, Tether has decided to stop serving U.S. individual and corporate customers altogether. As of January 1, 2018, no issuance or redeeming services will be available to these users. Exceptions to these provisions may be made by Tether, in its sole discretion, for entities that are: Established or organized outside of the United States or its territorial or insular possessions; and, Eligible Contract Participants pursuant to U.S. law. > An Eligible Contract Participant includes a corporation that has total assets exceeding $10,000,000 and is incorporated in a jurisdiction outside of the United States or its territories or insular possessions. This will be the principal basis upon which we will continue to do business with selected U.S. persons. Basically, it looks like they only provide on and off ramps for large clients outside the US. Given their history, I am betting they might not want to reveal where they store their assets, and don't want to deal with US regulators (but not sure this is working).
  - seibelj 6y ago
    Yes, I worked at a company that had an entity outside the US that minted and redeemed tethers. This is how it works.
  - whimsicalism 6y ago
    So as source for the claim that you "can't redeem tether", you are linking to something that says you can redeem tether?
    - xur17 6y ago
      When did I say I was providing a source for not being able to redeem tether? I'm just linking to information that I found useful when forming an opinion on the matter.
gruez 6y ago
So you can't trade USDT for USD at all (eg. third party exchange trades, or withdrawing from an USDT exchange directly), or is it only that you can't trade USDT for USD by going through Tether Limited?

tim333 6y ago

People do hold USDT. I hold some myself. If you are going to buy crypto again it saves the hassle and expense of converting into fiat money and back again. The majority of exchanges can't actually hold fiat money due to regulatory issues. Also I imagine some people are hoping to avoid the taxman by keeping it in crypto though that's legally not kosher.

rglullis 6y ago
Why USDT and not USDC or DAI? Don't you feel like holding USDT makes you complicit in whatever shit is going on? Also, I would be very, very weary of using an centralized exchange that "can not hold fiat". With the layer-2 projects that are coming now (take a look at loopring or Stakenet), you can transact as much as you want, no gas fees and exchange fees are about the same as any CEX.
- xur17 6y ago
  Because way more exchanges offer USDT trading. USDC / DAI are both fairly new, and aren't offered as trading pairs nearly as frequently.
  - rglullis 6y ago
    Still, they do exist now. And again, if an exchange only offers USDT as on-ramp that should be a massive signal against its trustworthiness.
    - xur17 6y ago
      I somewhat agree, but it's also a chicken and the egg problem - everyone uses USDT as the primary pair because everyone wants it, and everyone wants it because that's what every other exchange offers. Exchanges can offer another stablecoin, but it's likely to have very little volume.
  - whimsicalism 6y ago
    Coinbase offers DAI, plus you can exchange DAI for any ERC20 token on a dex.