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On top of the suspect data source, I notice I few more issues with that teather hit piece. 1. They are only looking on the buy sides. They don't even show the

by phire 6y ago

On top of the suspect data source, I notice I few more issues with that teather hit piece. 1. They are only looking on the buy sides. They don't even show the sell side with all the people selling their bitcoin back for teather. On most exchanges, the amount of teather buys is roughly equal to the amount of teather sells. People just sit there all day selling back and forwards between teather and bitcoin, trying to take advantages in short-term fluctuations in the price. But by only presenting one side of the trades, that hit piece implies (but never actually claims) that teather is being created out of thin air to buy bitcoin. 2. They misrepresent teather's reserve by implying (and once again not claiming) that it is all cash held in a single bank account in a single Bahamian bank account. (and then pointing out that the value of teather massively exceeds all Bahamian bank holding) In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. -------- Personally, I'm not a fan of teather, or cryptocurrencies in general. Teather even admit they don't hold full cash/cash-equivalent reserves, saying in April 2019 they only had 74% cash+equivalent reserves. But I hate misleading journalism way more than I dislike teather. That article is hugely misleading and feels like it's designed to drive the price of bitcoin down so the anonymous author can profit from a short position.

sillysaurusx 6y ago
(Psst, it's tether, not teather. Carry on.)
arcticbull 6y ago
> In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. They haven't burned a single token in the last year. Give or take zero banks in the world want to do business with Tether, they're totally and utterly toxic to USD banking. Tether got shut down by every major bank on the mainland US, one. By. One. It got so bad they started getting rejected by third and fourth tier banks. They had to purchase Noble bank in Puerto Rico to get them onboard. Once Noble's mainland US correspondent bank found out, they got shut down immediately and pushed into insolvency. So they found the sketchiest bank in the entire world, Deltec, chaired by the man who created the Inspector Gadget TV series, Jean Chalopin. Look, I'm not saying they don't have the money, I'm saying I don't believe them, neither should you, and neither should anyone else until they pony up an audit.
- phire 6y ago
  > They haven't burned a single token in the last year. They burned 1 billion tokens 6 months ago, back in August. Besides, why do people act like not burning tokens is evidence of wrong-doing? That just shows ignorance for how tether have setup their accounts. They have a "treasury account" where tether tokens go when people redeem them, and where they can quickly issue tokens when people deposit cash. They only need to issue more tokens when the treasury account gets low, and they only need to burn tokens when they have an excess in treasury. It makes total sense that in the current bull market that they haven't had the need to burn many tokens. The burn in August only happened because they now have multiple tokens on multiple networks and their TRON treasury account had too much. ------------ All your remaining criticism about banking is 100% valid. And other peoples criticism about auditing and legal troubles. I don't want to write comments on hackernews rebutting claims about Teather. I want the crypto market to go bust again so I can afford a new GPU. But so many people just parrot invalid criticism without understanding it.
  - arcticbull 6y ago
    True, my implicit issue is that Paolo was justifying the Saturday billion tether prints by saying they were often chain swaps. If you’re doing a chain swap and minting new tokens do you not burn the old ones? Maybe I’m misunderstanding.
    - phire 6y ago
      Tether implements chain-swaps by depositing into the treasury account on one chain and withdrawing from the treasury account on the second chain. There is no printing/burning required. But there is a problem when a large wallet does a chain-swap. These are often exchange wallets with all their user' funds, and there simply isn't enough funds in the target chain treasury wallet. In these cases, new tokens need to be issued on the target chain. As for the tokens on the old chain, the treasury account just gets really large for a while. Perhaps they should be burning, but in this bull market, it looks like tether has just taken the approach of waiting and skipping issues until the treasury account gets down to a reasonable level. Tether document their treasury account balances on their transparency page[1] as "Less: Authorized but not issued" for each chain. Sure it's horrible that the transparency page is missing anything about real-currency reserve holdings (other than saying "All Tether tokens are backed 100% by Tether's reserves"), but they are quite transparent about all the on-blockchain stuff. You can also view the treasury accounts directly and view the inflow/outflow. Omni is here[2] and eth is here[3]. etherscan even has a nice 'value over time' graph [4] [1] https://wallet.tether.to/transparency https://wallet.tether.to/transparency [2] https://www.omniexplorer.info/address/1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz https://www.omniexplorer.info/address/1NTMakcgVwQpMdGxRQnFKy... [3] https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c13d831ec7?a=0x5754284f345afc66a98fbb0a0afe71e0f007b949 https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c... [4] https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c13d831ec7?a=0x5754284f345afc66a98fbb0a0afe71e0f007b949#tokenAnalytics https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c...
user-the-name 6y ago
> In reality, teather claims their reserves are cash and cash equivalents In reality, Tether claimed that they held full reserves, in cash, audited. Then they failed to ever produce an audit. Then they admitted, in court, that they did not actually have full reserves. Then they admitted that the reserves were not actually in cash, but in "cash and cash equivalents", never specifying what exactly "cash equivalent" meant. So we KNOW for a fact that they have lied repeatedly about their reserves. Why, exactly, would we trust anything they say about those reserves NOW? Why are you assuming they have stopped lying?
riffraff 6y ago
> In reality, teather claims their reserves are cash and cash equivalents. FWIW, no, they claim their reserves are > currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities which is pretty different.

by phire 6y ago

sillysaurusx 6y ago

(Psst, it's tether, not teather. Carry on.)

arcticbull 6y ago

> In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. They haven't burned a single token in the last year. Give or take zero banks in the world want to do business with Tether, they're totally and utterly toxic to USD banking. Tether got shut down by every major bank on the mainland US, one. By. One. It got so bad they started getting rejected by third and fourth tier banks. They had to purchase Noble bank in Puerto Rico to get them onboard. Once Noble's mainland US correspondent bank found out, they got shut down immediately and pushed into insolvency. So they found the sketchiest bank in the entire world, Deltec, chaired by the man who created the Inspector Gadget TV series, Jean Chalopin. Look, I'm not saying they don't have the money, I'm saying I don't believe them, neither should you, and neither should anyone else until they pony up an audit.

phire 6y ago
> They haven't burned a single token in the last year. They burned 1 billion tokens 6 months ago, back in August. Besides, why do people act like not burning tokens is evidence of wrong-doing? That just shows ignorance for how tether have setup their accounts. They have a "treasury account" where tether tokens go when people redeem them, and where they can quickly issue tokens when people deposit cash. They only need to issue more tokens when the treasury account gets low, and they only need to burn tokens when they have an excess in treasury. It makes total sense that in the current bull market that they haven't had the need to burn many tokens. The burn in August only happened because they now have multiple tokens on multiple networks and their TRON treasury account had too much. ------------ All your remaining criticism about banking is 100% valid. And other peoples criticism about auditing and legal troubles. I don't want to write comments on hackernews rebutting claims about Teather. I want the crypto market to go bust again so I can afford a new GPU. But so many people just parrot invalid criticism without understanding it.
- arcticbull 6y ago
  True, my implicit issue is that Paolo was justifying the Saturday billion tether prints by saying they were often chain swaps. If you’re doing a chain swap and minting new tokens do you not burn the old ones? Maybe I’m misunderstanding.
  - phire 6y ago
    Tether implements chain-swaps by depositing into the treasury account on one chain and withdrawing from the treasury account on the second chain. There is no printing/burning required. But there is a problem when a large wallet does a chain-swap. These are often exchange wallets with all their user' funds, and there simply isn't enough funds in the target chain treasury wallet. In these cases, new tokens need to be issued on the target chain. As for the tokens on the old chain, the treasury account just gets really large for a while. Perhaps they should be burning, but in this bull market, it looks like tether has just taken the approach of waiting and skipping issues until the treasury account gets down to a reasonable level. Tether document their treasury account balances on their transparency page[1] as "Less: Authorized but not issued" for each chain. Sure it's horrible that the transparency page is missing anything about real-currency reserve holdings (other than saying "All Tether tokens are backed 100% by Tether's reserves"), but they are quite transparent about all the on-blockchain stuff. You can also view the treasury accounts directly and view the inflow/outflow. Omni is here[2] and eth is here[3]. etherscan even has a nice 'value over time' graph [4] [1] https://wallet.tether.to/transparency https://wallet.tether.to/transparency [2] https://www.omniexplorer.info/address/1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz https://www.omniexplorer.info/address/1NTMakcgVwQpMdGxRQnFKy... [3] https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c13d831ec7?a=0x5754284f345afc66a98fbb0a0afe71e0f007b949 https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c... [4] https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c13d831ec7?a=0x5754284f345afc66a98fbb0a0afe71e0f007b949#tokenAnalytics https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c...

user-the-name 6y ago

> In reality, teather claims their reserves are cash and cash equivalents In reality, Tether claimed that they held full reserves, in cash, audited. Then they failed to ever produce an audit. Then they admitted, in court, that they did not actually have full reserves. Then they admitted that the reserves were not actually in cash, but in "cash and cash equivalents", never specifying what exactly "cash equivalent" meant. So we KNOW for a fact that they have lied repeatedly about their reserves. Why, exactly, would we trust anything they say about those reserves NOW? Why are you assuming they have stopped lying?

riffraff 6y ago

> In reality, teather claims their reserves are cash and cash equivalents. FWIW, no, they claim their reserves are > currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities which is pretty different.