16 ms·

The argument some people have is that tether is printing fake money to prop up crypto market. I think it might have some effects like that if it was truly all f

The argument some people have is that tether is printing fake money to prop up crypto market. I think it might have some effects like that if it was truly all fake money. I hope that NY investigation will shed more light on it.

gruez 6y ago
>The argument some people have is that tether is printing fake money to prop up crypto market. I don't think that's actually supported by evidence. AFAIK there are concerns about tether's solvency (because one of their bank accounts got frozen), but evidence of money printing is lacking.
- aero-glide2 6y ago
  They never provided the audit they promised. They lied many times about their banking partners. Its on them to prove that they are not printing money.
  - EGreg 6y ago
    USA prints money. How is the actual dollar any better supported?
    - bobbylarrybobby 6y ago
      The chance of a bank run on tether is much higher than that of a bank run on US banks.
    - riffraff 6y ago
      You will always be able to pay taxes in the US with US dollars, that is the promise of the US government, and there is no reason to believe this will change. The promise of USD tether is that you will be able to get back 1 USD for 1 token, and there are reasons to believe this may not happen.
      - valzam 6y ago
        As mentioned otherwise in this thread (but it warrants repeating) their T&C say that they have absolutely no obligation to give you USD for your tether, so it's even worse.
      - arcticbull 6y ago
        Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens,... ... and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all. [1] tether.to/legal
    - ldbooth 6y ago
      The US Gross Domestic Product.
    - lottin 6y ago
      The dollar doesn't claim to be convertible, whereas Tether does claim to be convertible and therefore needs backing.
    - K0balt 6y ago
      Aircraft carriers? Ultimately, the dollar is backed by US military force. Historically, atremps to debase markets from US dollars have been met with military intervention (khadafi et al). This enforces a relationship between dollar value and global resource value. The US military is so vast that it has no legitimate challenger on any strategic scale, and nuclear deterrent is traditionally irrelevant to this type of threat model.
      - mamon 6y ago
        US military power still has it's limits. Imagine for example that China refuses to trade in USD, demanding payment in physical gold for all the goods manufactured there. Or Russia refuses USD payments for oil and gas. No way the US Navy would be able pull of an invasion.
        oarsinsync 6y ago
        > Imagine for example that China refuses to trade in USD, demanding payment in physical gold for all the goods manufactured there Lets imagine. All of a sudden, China has decided that USD SWIFT payments are no longer acceptable, and requires all exports to be settled in physical gold. Suddenly, the vast majority of consumers are no longer able to buy goods from China, as the vast majority of consumers do not posses physical gold. Those that do, do not have gold in small denominations, and now costs have to round up to whatever denominations of gold that one has. How do you buy things with $400 sovereigns and $1800 kugerands and still make change? So instead, we now rely on the banking industry to magically transport this problem away. We still pay USD, and it's transparently converted to AU for you in the background. The banks pool enough transactions together, and do T+2 settlement. Except due to the trade deficit, outflows are going to be significantly higher than inflows, and the vendors would rather have the physical gold delivered before issueing the products, given that massive trade deficit. So now the banks need to arrange for regular, and large transports of physical gold. They also need to do this securely, since gold is a tempting target for theives. Shipping by air is too expensive, and few people will be willing to face transaction fees that high, so then it returns to sea freight, which is slow. Suddenly T+2 settlement becomes T+50. So now you're waiting 50 days for your $5 payment to clear, before goods ship, which take another 2-5 weeks depending on shipping method. Or you'd just buy from someone else, who's willing to settle in cash.
    - arcticbull 6y ago
      Well, the obvious answer is that the supply of dollars is only half the equation. Velocity of money is the other. Inflation is a function of velocity and supply. This is well managed by the Fed. Inflation literally only matters from the moment you obtain fiat to the time you spend it on necessities or invest it in productive assets - or bitcoin. It's amazing how crypto folks hate on inflation, but the 2% well-controlled rate is specifically designed to incentivize people to allocate that capital in the way they think is best. In some cases, that's Bitcoin. So inflation causing people to invest in Bitcoin (or anything else) is literally inflation doing what it's designed to do. Of course bank runs are different, but in the US, bank runs are backstopped by the FDIC which has, since the Great Depression seen exactly $0 lost by depositors. Tether is backstopped by literally nothing.
  - arcticbull 6y ago
    Further, their auditor, Friedman LLP, ran away in 2018. According to the evidence in the NYAG lawsuit, this was when Bitfinex had reached into the Tether kitty to borrow 26% of their assets, $850M. That'd make it hard to pass an audit when your website says 1:1 backed with real physical dollars. Few fun facts, ready? - At that point Bitfinex and Tether were pretending not to know eachother. - The Paradise Papers revealed they had the same owners. - Bitfinex lost the $850M because they were banking with a money launderer, CryptoCapital, after getting shut out of literally every bank in the entire world.

gruez 6y ago

>The argument some people have is that tether is printing fake money to prop up crypto market. I don't think that's actually supported by evidence. AFAIK there are concerns about tether's solvency (because one of their bank accounts got frozen), but evidence of money printing is lacking.

aero-glide2 6y ago
They never provided the audit they promised. They lied many times about their banking partners. Its on them to prove that they are not printing money.
- EGreg 6y ago
  USA prints money. How is the actual dollar any better supported?
  - bobbylarrybobby 6y ago
    The chance of a bank run on tether is much higher than that of a bank run on US banks.
  - riffraff 6y ago
    You will always be able to pay taxes in the US with US dollars, that is the promise of the US government, and there is no reason to believe this will change. The promise of USD tether is that you will be able to get back 1 USD for 1 token, and there are reasons to believe this may not happen.
    - valzam 6y ago
      As mentioned otherwise in this thread (but it warrants repeating) their T&C say that they have absolutely no obligation to give you USD for your tether, so it's even worse.
    - arcticbull 6y ago
      Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens,... ... and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all. [1] tether.to/legal
  - ldbooth 6y ago
    The US Gross Domestic Product.
  - lottin 6y ago
    The dollar doesn't claim to be convertible, whereas Tether does claim to be convertible and therefore needs backing.
  - K0balt 6y ago
    Aircraft carriers? Ultimately, the dollar is backed by US military force. Historically, atremps to debase markets from US dollars have been met with military intervention (khadafi et al). This enforces a relationship between dollar value and global resource value. The US military is so vast that it has no legitimate challenger on any strategic scale, and nuclear deterrent is traditionally irrelevant to this type of threat model.
    - mamon 6y ago
      US military power still has it's limits. Imagine for example that China refuses to trade in USD, demanding payment in physical gold for all the goods manufactured there. Or Russia refuses USD payments for oil and gas. No way the US Navy would be able pull of an invasion.
      - oarsinsync 6y ago
        > Imagine for example that China refuses to trade in USD, demanding payment in physical gold for all the goods manufactured there Lets imagine. All of a sudden, China has decided that USD SWIFT payments are no longer acceptable, and requires all exports to be settled in physical gold. Suddenly, the vast majority of consumers are no longer able to buy goods from China, as the vast majority of consumers do not posses physical gold. Those that do, do not have gold in small denominations, and now costs have to round up to whatever denominations of gold that one has. How do you buy things with $400 sovereigns and $1800 kugerands and still make change? So instead, we now rely on the banking industry to magically transport this problem away. We still pay USD, and it's transparently converted to AU for you in the background. The banks pool enough transactions together, and do T+2 settlement. Except due to the trade deficit, outflows are going to be significantly higher than inflows, and the vendors would rather have the physical gold delivered before issueing the products, given that massive trade deficit. So now the banks need to arrange for regular, and large transports of physical gold. They also need to do this securely, since gold is a tempting target for theives. Shipping by air is too expensive, and few people will be willing to face transaction fees that high, so then it returns to sea freight, which is slow. Suddenly T+2 settlement becomes T+50. So now you're waiting 50 days for your $5 payment to clear, before goods ship, which take another 2-5 weeks depending on shipping method. Or you'd just buy from someone else, who's willing to settle in cash.
  - arcticbull 6y ago
    Well, the obvious answer is that the supply of dollars is only half the equation. Velocity of money is the other. Inflation is a function of velocity and supply. This is well managed by the Fed. Inflation literally only matters from the moment you obtain fiat to the time you spend it on necessities or invest it in productive assets - or bitcoin. It's amazing how crypto folks hate on inflation, but the 2% well-controlled rate is specifically designed to incentivize people to allocate that capital in the way they think is best. In some cases, that's Bitcoin. So inflation causing people to invest in Bitcoin (or anything else) is literally inflation doing what it's designed to do. Of course bank runs are different, but in the US, bank runs are backstopped by the FDIC which has, since the Great Depression seen exactly $0 lost by depositors. Tether is backstopped by literally nothing.
- arcticbull 6y ago
  Further, their auditor, Friedman LLP, ran away in 2018. According to the evidence in the NYAG lawsuit, this was when Bitfinex had reached into the Tether kitty to borrow 26% of their assets, $850M. That'd make it hard to pass an audit when your website says 1:1 backed with real physical dollars. Few fun facts, ready? - At that point Bitfinex and Tether were pretending not to know eachother. - The Paradise Papers revealed they had the same owners. - Bitfinex lost the $850M because they were banking with a money launderer, CryptoCapital, after getting shut out of literally every bank in the entire world.