9 ms·

66% of all Tether (USDT) have been printed in the last 6 months

47 points by daolf 6y ago

nicolashahn 6y ago
Because the dollar supply has also skyrocketed in the same time period.
- yorwba 6y ago
  66% of all dollars were printed in the past six months?
  - qeternity 6y ago
    No - M2 increased by 20% in 2020. There is no connection to USDT issuance. As Michael Saylor, famed Bitcoin bull, says: no institutions and using Tether. Tether are printing it out of thin air. Bitcoin bulls know this and they rush to hand wave away Tether at every turn.
    - TekMol 6y ago
      M2 includes "I owe yous" by banks. But USDTs are only the "I owe yous" by the emitter. So a better comparison might be the federal reserve balance sheet: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren... 43% of these "original emitter" dollars have been printed in 2020.
      - qeternity 6y ago
        No it’s not a better comparison as banks genuinely create money by lending. This is the whole point of FRB. You can cherry pick your numbers but it doesn’t change the fact that Tether’s reserves likely don’t exist in the way they’re supposed to (cash and cash equivalents).
        incrudible 6y ago
        I don't think it's a better comparison when it comes to how much money is "printed". That's M1, not M2. Fractional reserve banking don't print money, it increases (and decreases) the money supply through lending. Despite perhaps not being backed properly, Tether is not supposed to be fractional reserve, nor is Tether created through debt.
        qeternity 6y ago
        > Fractional reserve banking don't print money, it increases (and decreases) the money supply through lending. Technically the Fed does the same. They lend money to the Treasury by buying Treasuries (or more recently, to other people by buying IG credit). When the Fed prints money, in theory it’s offset by a liability somewhere. They are the same. M2 is what matters.
    - deleted 6y ago
      [deleted]
- shuckles 6y ago
  Is this trying to say that the primary destination of new dollars is cryptocurrency?
  - PragmaticPulp 6y ago
    It’s trying to imply that the dollar is collapsing and everyone is rushing for the exits, which isn’t true by any other measure. These arguments are dishonest because they treat Bitcoin as a dual currency/asset but then only compare to the M2 money supply (currency) while ignoring the total wealth of the United States (including assets). These arguments also confuse quantitative easing with traditional government debt spending, and they ignore that the stimulus money is designed to fill gaps in the economy left by COVID, in which case inflation would be negligible (although I think the US is overshooting that target) They also ignore the fact that crypto isn’t the only exit for holders of USD looking to avoid inflation. They can invest in stocks or assets (crypto is a narrow subset of this), or they could exchange into the currency of another nation.
    - shuckles 6y ago
      Counter-point: the US government added $2.2T more dollars, yet they are almost as good at buying commodities and other goods and services today as they were a year ago. Furthermore, the market expectation of their goodness, as determined by Treasury Inflation-Protected Securities, is quite strong. That seems like almost the opposite of dollar holders rushing for the exits!
  - pmayrgundter 6y ago
    I don't know, but I think the destination is primarily the stock market for the past year. Maybe some also went to bitcoin. - Fed open market operations: $2.8T introduced over 9 month by the Fed in 2020[1]. - Stock market (DJIA) run-up in 2020: $2.2T [2] I don't think this can be just correlation, even on the simplest reading of how the Fed OMO works, but there is debate about this[3]. [1] https://fred.stlouisfed.org/series/M1 https://fred.stlouisfed.org/series/M1. I believe M1 money is a good proxy for the Fed's open market operations that would go towards the kind of asset purchases that would increase stock equity valuation. I'd appreciate any feedback on this [2] DJI went from $22k on Mar 1 2020 -> $30k, for an $8k change by end of year. DJI had a market cap of $8.3T when it was at $29k Dec 2019[2.1], so 8/29=0.27. 27% of 8.3T = $2.2T. [2.1] https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average [3] https://economics.stackexchange.com/questions/12226/does-the-federal-reserve-buy-and-sell-stocks https://economics.stackexchange.com/questions/12226/does-the...
- ur-whale 6y ago
  > Because the dollar supply has also skyrocketed in the same time period. With the following difference: USD is backed by guns, tanks, warships and missiles. And some actual tangible assets (a fraction of the mass of USD in circulation). USDT is backed by a bunch of italian people that are very well-versed in: - the art of engineering financial complications - the art of running when the weather turns bad - a vague, unaudited promise of USD reserves. Not a good thing.
throwaway4good 6y ago
I thought some US prosecutors were going after Tether? What ever happened to that?
- jcranmer 6y ago
  The case is still ongoing (although note it's New York, not the US, that is prosecuting the case). As I understand it, Tether still has yet to provide the documentation requested by the New York Attorney General.
  - rkalla 6y ago
    Was suppose to happen in Feb and now it's March =/
    - qeternity 6y ago
      Delayed again? Do you have a link?
      - shock-value 6y ago
        https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=3WkfcJM2sBbCFkgQv8Radg== https://iapps.courts.state.ny.us/nyscef/ViewDocument?docInde...
        qeternity 6y ago
        That’s the Jan extension til Feb. I’m not aware of an extension from Feb to Mar.
    - ac29 6y ago
      Tether/Bitfinex submitted something like 2.5 million documents. Reviewing them and taking a public position takes more than a few days.
jMyles 6y ago
I am absolutely befuddled. Why are we letting this happen? Who is holding this hot potato and why? Drop tether now. The more people hold it, the more damage it will do when it implodes.
- louwrentius 6y ago
  I agree. Also: Drop Bitcoin now. The more people hold it, the more damage it will do when it implodes.
  - jMyles 6y ago
    Well there's a false equivalence for the ages.
  - RivieraKid 6y ago
    Agreed. Surprised there are so many Bitcoin lovers on HN and in the startup scene, which is supposed to consist of smarter-than-average people. Bitcoin is basically shitty gold, because unlike gold, it has no intrinsic value and can go to zero, it's all based on fragile sentiment.
    - 177tcca 6y ago
      Same can be said for gold. Are most users even capable of melting it into tools when there's nobody that wants to trade for it?
      - tradri 6y ago
        The argument for gold is that it isn't 100% a speculative investment. According to Wikipedia(https://en.wikipedia.org/wiki/Gold https://en.wikipedia.org/wiki/Gold) 50% of gold's use case is in making jewelry and 10% is used for industry. On the other hand, Bitcoin isn't used for anything, except as for a speculative investment, not even as a currency or as a "decentralized PayPal".
        6y ago
mrcggl 6y ago
Apparently the size of Tether seems huge, 34 B$ of dollar-denominate liabilities, but Binance, the largest exchange, has most fiat customer deposits in USDT. Moreover, in the last year futures trading has moved from Bitcoin margined to USDT margined and it is very profitable. So I wouldn’t be surprised if large funds are trading those future markets and they require USDT. But offcourse it could still be insolvent if they issued too much or simply made insolvent if the assets (t-bills, cd) backing the issuances are frozen from US authorities. Just assume that as a known risk and plan accordingly
- kanwisher 6y ago
  Pretty sure Binance is now BUSD for all deposits, their own USD token
  - ur-whale 6y ago
    >BUSD for all deposits, their own USD token Which, goes without saying, is fully backed by USD reserves and properly audited ?
    - PeterisP 6y ago
      Kind of, see the monthly attestations at https://www.paxos.com/attestations/ https://www.paxos.com/attestations/ . It's significantly better than USDT, but IMHO not fully at a level where you can say "properly audited" without any caveats.
    - dustymcp 6y ago
      Atleast until the inevatible hack
      - ur-whale 6y ago
        >Atleast until the inevatible hack LOL, yeah, I always forget about this one. This, btw, is also something that makes crypto "different": the exchange can always pretend it wasn't a scam and blame it on a hack.
londons_explore 6y ago
Lots of people want to hold bitcoin, because it might be a great investment. Lots of people want to hold USD, because it has the backing of the world's largest economy. Nobody wants to hold USDT. The only use for it is as an in/off ramp for bitcoin (where it is used only briefly). Or as part of a probably-illegal scheme where Tether Inc uses bitcoin as collateral to issue a loan to buy more tethers...
- PragmaticPulp 6y ago
  > Nobody wants to hold USDT. If it exists, it exists in a wallet somewhere. Presumably the Tether company isn’t creating USDT on the books just to keep it in their balance sheet. It’s being held somewhere. Exchanges likely have a lot of it.
- xur17 6y ago
  Do you have evidence or is this all conjecture?
lalaland1125 6y ago
Another important takeaway from this data is that Tether is printing ~$500 million per day. That's an incredible amount of (probably) fake money being pumped right into the market. 3 days of Tether is equal to Tesla's whole investment.
optimalsolver 6y ago
Tether's collapse will be to Mt Gox what Little Boy was to a firecracker.
arisAlexis 6y ago
I wished people understood how Tether works. Bitcoin is up 6X this year , 600%. Many exchanges use Tether to onboard clients and that is why Tether is printed. Tldr; Tether gets printed whenever Bitcoin demand goes up and that's in their whitepaper. For downvoters: You are downvoting facts and truth, quite far from your scientific beliefs. Just read the actual whitepaper and then come and downvote. Don't repeat what you read or heard or think is obvious, obviously.
- ur-whale 6y ago
  >Tldr; Tether gets printed whenever Bitcoin demand goes up and that's in their whitepaper. The theory is sound, but the experimental verification of the theory (an actual audit of USD reserves) is sorely lacking. Plus, if you really dig into the history of the folks involved with Tether, I mean, I'm generally no fan of ad-hominems and generally willing to give people the benefit of the doubt, but in this case, the reek of fraud is overpowering [1] [1] https://nicolaborzi.medium.com/the-lawless-rollercoaster-of-bitcoin-enriches-few-investors-while-many-often-lose-everything-f9b4789444c2 https://nicolaborzi.medium.com/the-lawless-rollercoaster-of-...
  - arisAlexis 6y ago
    did you google the article that says how they submitted papers to NY attorney that they are fully backed?
    - ur-whale 6y ago
      >did you google the article that says how they submitted papers to NY attorney that they are fully backed? Nope, haven't. If so, I'd expect this to have hit most of the media channels dedicated to crypto (some of which I am sub'd to). Not a peep. Link?
- qeternity 6y ago
  I’m not sure you understand how it works. Please explain to me exactly how Tether is used to onboard clients and how it gets printed.
mancerayder 6y ago
Is this still a thing? I thought we cracked down on Tether already? Is that why BTC is 55k?
tomerbd 6y ago
2019 hackers - Bitcoin is going to collapse + downvoting anyone who beleive in bitcoin. 2021 hcakers - USDT is going to collapse + downvoting this.
boublepop 6y ago
Who is holding all this tether? I fully get the usecase of buying tether for usd, then going to an exchange to buy Bitcoin, there the exchange might briefly hold the tether, but would they not go back and convert the tether to dollars rather than hang on to it? Or are we really in a scenario where the majority of the usd pumped into crypto are held by tether and only “IOU’s” at the exchangs? And a crash in tether would simultaneously pull a my gox on almost all exchanges?
- qeternity 6y ago
  Users. Users are holding all of this USDT. Anyone with a dollar pnl on Binance and most other exchanges is actually holding USDT. The exchanges don’t have any USD. They never did and they don’t have banking relationships to process USD anyway. As to why anyone would hold USDT especially when there are better alternatives? They wouldn’t. But it’s not redeemable (Tether claim it is but it’s never actually been proven). Fiat goes in. Tether comes out. And that’s irreversible. It’s an amazing scam.
  - marcandre 6y ago
    Note that Kraken has a USD<->USDT trading pair, so it is convertible there (and only there AFAIK)
    - qeternity 6y ago
      The consensus is that all/most trading there is wash trading to give the illusion of volume. But like all bank runs, they don’t occur until enough people actually ask for their money. Until that point, people seem happy to consider USDT equivalent to USD (and that may never change)
  - throwaway4good 6y ago
    That doesn't make any sense. USDT is issued by Tether so if it is used by Binance, Binance would have had to buy it, assumingly from the fiat that went in.
fallingknife 6y ago
>75% of USDC, which is audited, has been printed in the last 6 months, so not surprising, or indicative of anything sketchy that USDT would be growing at a similar rate. https://coinmarketcap.com/currencies/usd-coin/ https://coinmarketcap.com/currencies/usd-coin/
- qeternity 6y ago
  USDT and USDC are fungible. It’s almost a certainty that USDT has leaked into USDC. Imagine this: 1) Print USDT out of thin air 2) Send USDT to Binance and buy BTC 3) Send BTC to Coinbase and sell for USD. 4) Convert USD to USDC You’ve now turned imaginary USDT into what is properly backed USDC. Why do this? Because then you don’t have to worry about pesky USD money trails or bank account seizures.
  - fallingknife 6y ago
    But Occam's razor says it's probably just that a whole ton of money has gone into and trading volumes have increased a lot over the past 6 months.
    - panarky 6y ago
      It's strange how perfectly rational people who know Occam's razor and Popper's falsifiability principle, and can explain with great eloquence why correlation is not causation, are unable to apply the same logical reasoning to cryptoassets.
    - qeternity 6y ago
      No, it doesn’t. Occam’s razor literally says if it walks like a duck and quacks like a duck, it’s probably a duck. Tether has admitted to being fractionally backed. They are unaudited and the directors are ghosts. Who the hell would deposit with that type of an organization? Most people would rather just transact in fiat and for those who must have stable coins, every other stablecoin is an order of magnitude safer.
  - doggosphere 6y ago
doggosphere 6y ago
I don't know what percent of Tether's funds are actually backed by USD. And I don't trust them as a company. But lets look at the economic game theory of it: - There is currently no premium on Bitcoin prices on Tether exchanges vs non-tether exchanges (http://www.untether.space/ http://www.untether.space/) - USD/USDT pairs can be traded on legit exchanges like Kraken and are currently trading evenly If the theory is that unbacked Tethers drive up Bitcoin prices, then we should see a premium on Bitfinex/Binance, because that's where buying demand should prop up first. A premium doesn't exist at the moment. And further, lets say Tether is exposed and crashes. We would expect that users race to buy Bitcoin with their bad USDT and withdraw. The only bag-holder is whoever is using USDT. Bitcoin holders would suffer in the short term as speculators become cautious, but technically should not be affected other than a couple of albeit large crypto gateways potentially going under.

47 points by daolf 6y ago

nicolashahn 6y ago

Because the dollar supply has also skyrocketed in the same time period.

yorwba 6y ago
66% of all dollars were printed in the past six months?
- qeternity 6y ago
  No - M2 increased by 20% in 2020. There is no connection to USDT issuance. As Michael Saylor, famed Bitcoin bull, says: no institutions and using Tether. Tether are printing it out of thin air. Bitcoin bulls know this and they rush to hand wave away Tether at every turn.
  - TekMol 6y ago
    M2 includes "I owe yous" by banks. But USDTs are only the "I owe yous" by the emitter. So a better comparison might be the federal reserve balance sheet: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren... 43% of these "original emitter" dollars have been printed in 2020.
    - qeternity 6y ago
      No it’s not a better comparison as banks genuinely create money by lending. This is the whole point of FRB. You can cherry pick your numbers but it doesn’t change the fact that Tether’s reserves likely don’t exist in the way they’re supposed to (cash and cash equivalents).
      - incrudible 6y ago
        I don't think it's a better comparison when it comes to how much money is "printed". That's M1, not M2. Fractional reserve banking don't print money, it increases (and decreases) the money supply through lending. Despite perhaps not being backed properly, Tether is not supposed to be fractional reserve, nor is Tether created through debt.
        qeternity 6y ago
        > Fractional reserve banking don't print money, it increases (and decreases) the money supply through lending. Technically the Fed does the same. They lend money to the Treasury by buying Treasuries (or more recently, to other people by buying IG credit). When the Fed prints money, in theory it’s offset by a liability somewhere. They are the same. M2 is what matters.
  - deleted 6y ago
    [deleted]
shuckles 6y ago
Is this trying to say that the primary destination of new dollars is cryptocurrency?
- PragmaticPulp 6y ago
  It’s trying to imply that the dollar is collapsing and everyone is rushing for the exits, which isn’t true by any other measure. These arguments are dishonest because they treat Bitcoin as a dual currency/asset but then only compare to the M2 money supply (currency) while ignoring the total wealth of the United States (including assets). These arguments also confuse quantitative easing with traditional government debt spending, and they ignore that the stimulus money is designed to fill gaps in the economy left by COVID, in which case inflation would be negligible (although I think the US is overshooting that target) They also ignore the fact that crypto isn’t the only exit for holders of USD looking to avoid inflation. They can invest in stocks or assets (crypto is a narrow subset of this), or they could exchange into the currency of another nation.
  - shuckles 6y ago
    Counter-point: the US government added $2.2T more dollars, yet they are almost as good at buying commodities and other goods and services today as they were a year ago. Furthermore, the market expectation of their goodness, as determined by Treasury Inflation-Protected Securities, is quite strong. That seems like almost the opposite of dollar holders rushing for the exits!
- pmayrgundter 6y ago
  I don't know, but I think the destination is primarily the stock market for the past year. Maybe some also went to bitcoin. - Fed open market operations: $2.8T introduced over 9 month by the Fed in 2020[1]. - Stock market (DJIA) run-up in 2020: $2.2T [2] I don't think this can be just correlation, even on the simplest reading of how the Fed OMO works, but there is debate about this[3]. [1] https://fred.stlouisfed.org/series/M1 https://fred.stlouisfed.org/series/M1. I believe M1 money is a good proxy for the Fed's open market operations that would go towards the kind of asset purchases that would increase stock equity valuation. I'd appreciate any feedback on this [2] DJI went from $22k on Mar 1 2020 -> $30k, for an $8k change by end of year. DJI had a market cap of $8.3T when it was at $29k Dec 2019[2.1], so 8/29=0.27. 27% of 8.3T = $2.2T. [2.1] https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average [3] https://economics.stackexchange.com/questions/12226/does-the-federal-reserve-buy-and-sell-stocks https://economics.stackexchange.com/questions/12226/does-the...
ur-whale 6y ago
> Because the dollar supply has also skyrocketed in the same time period. With the following difference: USD is backed by guns, tanks, warships and missiles. And some actual tangible assets (a fraction of the mass of USD in circulation). USDT is backed by a bunch of italian people that are very well-versed in: - the art of engineering financial complications - the art of running when the weather turns bad - a vague, unaudited promise of USD reserves. Not a good thing.

throwaway4good 6y ago

I thought some US prosecutors were going after Tether? What ever happened to that?

jcranmer 6y ago
The case is still ongoing (although note it's New York, not the US, that is prosecuting the case). As I understand it, Tether still has yet to provide the documentation requested by the New York Attorney General.
- rkalla 6y ago
  Was suppose to happen in Feb and now it's March =/
  - qeternity 6y ago
    Delayed again? Do you have a link?
    - shock-value 6y ago
      https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=3WkfcJM2sBbCFkgQv8Radg== https://iapps.courts.state.ny.us/nyscef/ViewDocument?docInde...
      - qeternity 6y ago
        That’s the Jan extension til Feb. I’m not aware of an extension from Feb to Mar.
  - ac29 6y ago
    Tether/Bitfinex submitted something like 2.5 million documents. Reviewing them and taking a public position takes more than a few days.

jMyles 6y ago

I am absolutely befuddled. Why are we letting this happen? Who is holding this hot potato and why? Drop tether now. The more people hold it, the more damage it will do when it implodes.

louwrentius 6y ago
I agree. Also: Drop Bitcoin now. The more people hold it, the more damage it will do when it implodes.
- jMyles 6y ago
  Well there's a false equivalence for the ages.
- RivieraKid 6y ago
  Agreed. Surprised there are so many Bitcoin lovers on HN and in the startup scene, which is supposed to consist of smarter-than-average people. Bitcoin is basically shitty gold, because unlike gold, it has no intrinsic value and can go to zero, it's all based on fragile sentiment.
  - 177tcca 6y ago
    Same can be said for gold. Are most users even capable of melting it into tools when there's nobody that wants to trade for it?
    - tradri 6y ago
      The argument for gold is that it isn't 100% a speculative investment. According to Wikipedia(https://en.wikipedia.org/wiki/Gold https://en.wikipedia.org/wiki/Gold) 50% of gold's use case is in making jewelry and 10% is used for industry. On the other hand, Bitcoin isn't used for anything, except as for a speculative investment, not even as a currency or as a "decentralized PayPal".
      - 6y ago

mrcggl 6y ago

Apparently the size of Tether seems huge, 34 B$ of dollar-denominate liabilities, but Binance, the largest exchange, has most fiat customer deposits in USDT. Moreover, in the last year futures trading has moved from Bitcoin margined to USDT margined and it is very profitable. So I wouldn’t be surprised if large funds are trading those future markets and they require USDT. But offcourse it could still be insolvent if they issued too much or simply made insolvent if the assets (t-bills, cd) backing the issuances are frozen from US authorities. Just assume that as a known risk and plan accordingly

kanwisher 6y ago
Pretty sure Binance is now BUSD for all deposits, their own USD token
- ur-whale 6y ago
  >BUSD for all deposits, their own USD token Which, goes without saying, is fully backed by USD reserves and properly audited ?
  - PeterisP 6y ago
    Kind of, see the monthly attestations at https://www.paxos.com/attestations/ https://www.paxos.com/attestations/ . It's significantly better than USDT, but IMHO not fully at a level where you can say "properly audited" without any caveats.
  - dustymcp 6y ago
    Atleast until the inevatible hack
    - ur-whale 6y ago
      >Atleast until the inevatible hack LOL, yeah, I always forget about this one. This, btw, is also something that makes crypto "different": the exchange can always pretend it wasn't a scam and blame it on a hack.

londons_explore 6y ago

Lots of people want to hold bitcoin, because it might be a great investment. Lots of people want to hold USD, because it has the backing of the world's largest economy. Nobody wants to hold USDT. The only use for it is as an in/off ramp for bitcoin (where it is used only briefly). Or as part of a probably-illegal scheme where Tether Inc uses bitcoin as collateral to issue a loan to buy more tethers...

PragmaticPulp 6y ago
> Nobody wants to hold USDT. If it exists, it exists in a wallet somewhere. Presumably the Tether company isn’t creating USDT on the books just to keep it in their balance sheet. It’s being held somewhere. Exchanges likely have a lot of it.
xur17 6y ago
Do you have evidence or is this all conjecture?

lalaland1125 6y ago

Another important takeaway from this data is that Tether is printing ~$500 million per day. That's an incredible amount of (probably) fake money being pumped right into the market. 3 days of Tether is equal to Tesla's whole investment.

optimalsolver 6y ago

Tether's collapse will be to Mt Gox what Little Boy was to a firecracker.

arisAlexis 6y ago

I wished people understood how Tether works. Bitcoin is up 6X this year , 600%. Many exchanges use Tether to onboard clients and that is why Tether is printed. Tldr; Tether gets printed whenever Bitcoin demand goes up and that's in their whitepaper. For downvoters: You are downvoting facts and truth, quite far from your scientific beliefs. Just read the actual whitepaper and then come and downvote. Don't repeat what you read or heard or think is obvious, obviously.

ur-whale 6y ago
>Tldr; Tether gets printed whenever Bitcoin demand goes up and that's in their whitepaper. The theory is sound, but the experimental verification of the theory (an actual audit of USD reserves) is sorely lacking. Plus, if you really dig into the history of the folks involved with Tether, I mean, I'm generally no fan of ad-hominems and generally willing to give people the benefit of the doubt, but in this case, the reek of fraud is overpowering [1] [1] https://nicolaborzi.medium.com/the-lawless-rollercoaster-of-bitcoin-enriches-few-investors-while-many-often-lose-everything-f9b4789444c2 https://nicolaborzi.medium.com/the-lawless-rollercoaster-of-...
- arisAlexis 6y ago
  did you google the article that says how they submitted papers to NY attorney that they are fully backed?
  - ur-whale 6y ago
    >did you google the article that says how they submitted papers to NY attorney that they are fully backed? Nope, haven't. If so, I'd expect this to have hit most of the media channels dedicated to crypto (some of which I am sub'd to). Not a peep. Link?
qeternity 6y ago
I’m not sure you understand how it works. Please explain to me exactly how Tether is used to onboard clients and how it gets printed.

mancerayder 6y ago

Is this still a thing? I thought we cracked down on Tether already? Is that why BTC is 55k?

tomerbd 6y ago

2019 hackers - Bitcoin is going to collapse + downvoting anyone who beleive in bitcoin. 2021 hcakers - USDT is going to collapse + downvoting this.

boublepop 6y ago

Who is holding all this tether? I fully get the usecase of buying tether for usd, then going to an exchange to buy Bitcoin, there the exchange might briefly hold the tether, but would they not go back and convert the tether to dollars rather than hang on to it? Or are we really in a scenario where the majority of the usd pumped into crypto are held by tether and only “IOU’s” at the exchangs? And a crash in tether would simultaneously pull a my gox on almost all exchanges?

qeternity 6y ago
Users. Users are holding all of this USDT. Anyone with a dollar pnl on Binance and most other exchanges is actually holding USDT. The exchanges don’t have any USD. They never did and they don’t have banking relationships to process USD anyway. As to why anyone would hold USDT especially when there are better alternatives? They wouldn’t. But it’s not redeemable (Tether claim it is but it’s never actually been proven). Fiat goes in. Tether comes out. And that’s irreversible. It’s an amazing scam.
- marcandre 6y ago
  Note that Kraken has a USD<->USDT trading pair, so it is convertible there (and only there AFAIK)
  - qeternity 6y ago
    The consensus is that all/most trading there is wash trading to give the illusion of volume. But like all bank runs, they don’t occur until enough people actually ask for their money. Until that point, people seem happy to consider USDT equivalent to USD (and that may never change)
- throwaway4good 6y ago
  That doesn't make any sense. USDT is issued by Tether so if it is used by Binance, Binance would have had to buy it, assumingly from the fiat that went in.

fallingknife 6y ago

>75% of USDC, which is audited, has been printed in the last 6 months, so not surprising, or indicative of anything sketchy that USDT would be growing at a similar rate. https://coinmarketcap.com/currencies/usd-coin/ https://coinmarketcap.com/currencies/usd-coin/

qeternity 6y ago
USDT and USDC are fungible. It’s almost a certainty that USDT has leaked into USDC. Imagine this: 1) Print USDT out of thin air 2) Send USDT to Binance and buy BTC 3) Send BTC to Coinbase and sell for USD. 4) Convert USD to USDC You’ve now turned imaginary USDT into what is properly backed USDC. Why do this? Because then you don’t have to worry about pesky USD money trails or bank account seizures.
- fallingknife 6y ago
  But Occam's razor says it's probably just that a whole ton of money has gone into and trading volumes have increased a lot over the past 6 months.
  - panarky 6y ago
    It's strange how perfectly rational people who know Occam's razor and Popper's falsifiability principle, and can explain with great eloquence why correlation is not causation, are unable to apply the same logical reasoning to cryptoassets.
  - qeternity 6y ago
    No, it doesn’t. Occam’s razor literally says if it walks like a duck and quacks like a duck, it’s probably a duck. Tether has admitted to being fractionally backed. They are unaudited and the directors are ghosts. Who the hell would deposit with that type of an organization? Most people would rather just transact in fiat and for those who must have stable coins, every other stablecoin is an order of magnitude safer.
- doggosphere 6y ago

doggosphere 6y ago

I don't know what percent of Tether's funds are actually backed by USD. And I don't trust them as a company. But lets look at the economic game theory of it: - There is currently no premium on Bitcoin prices on Tether exchanges vs non-tether exchanges (http://www.untether.space/ http://www.untether.space/) - USD/USDT pairs can be traded on legit exchanges like Kraken and are currently trading evenly If the theory is that unbacked Tethers drive up Bitcoin prices, then we should see a premium on Bitfinex/Binance, because that's where buying demand should prop up first. A premium doesn't exist at the moment. And further, lets say Tether is exposed and crashes. We would expect that users race to buy Bitcoin with their bad USDT and withdraw. The only bag-holder is whoever is using USDT. Bitcoin holders would suffer in the short term as speculators become cautious, but technically should not be affected other than a couple of albeit large crypto gateways potentially going under.