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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 hol

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.
  - qeternity 6y ago
    That assumption is the key issue: Binance doesn’t have USD banking, there is no way for them to accept USD for which to buy USDT. Exchanges use Tether because they don’t have banking and can’t accept USD. So the USD has to find its way to Tether by some other mechanism. They claim it’s institutions, which is absurd. No institutional investor would ever give billions to an unaudited offshore entity when they can send fiat directly to legit exchanges. Michael Saylor himself says no institutions are using Tether. So where do the Tethers come from? Maybe it’s not a fraud. But the answer should be very simple, and yet they cannot explain it.

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.
- qeternity 6y ago
  That assumption is the key issue: Binance doesn’t have USD banking, there is no way for them to accept USD for which to buy USDT. Exchanges use Tether because they don’t have banking and can’t accept USD. So the USD has to find its way to Tether by some other mechanism. They claim it’s institutions, which is absurd. No institutional investor would ever give billions to an unaudited offshore entity when they can send fiat directly to legit exchanges. Michael Saylor himself says no institutions are using Tether. So where do the Tethers come from? Maybe it’s not a fraud. But the answer should be very simple, and yet they cannot explain it.