4 ms·

Tether as an organization operates with no transparency, and has a toxic symbiotic relationship with exchanges. I'm certain that Tether has backroom relationshi

Tether as an organization operates with no transparency, and has a toxic symbiotic relationship with exchanges. I'm certain that Tether has backroom relationships with major exchanges - Tether provides liquidity to exchanges in the form of short term USDT loans. So Tether can claim their issues are backed by real reserves https://tether.to/wp-content/uploads/2021/05/tether-march-31-2021-reserves-breakdown.pdf https://tether.to/wp-content/uploads/2021/05/tether-march-31..., omitting the convenient fact that much of the debt they own is itself denominated in USDT. Tether uses this scheme to issue loans and collect interest without the pesky step of actually having cash reserves to loan out.

gruez 5y ago
>I'm certain that Tether has backroom relationships with major exchanges - Tether provides liquidity to exchanges in the form of short term USDT loans. Is there a reason why exchanges even need such loans?
- deleted 5y ago
  [deleted]
- shkkmo 5y ago
  A lot of shadier exchanges are giving away USDT to encourage people to move their other cryptocurrency holdings onto the exchange.
  - gruez 5y ago
    Can you link to some? Most of them are pretty modest, eg. create an account, make $500 worth of trades and we'll give you $50 in USDT. You certainly don't need to move all of your holdings over to take advantage. Moreover, I don't see how account opening bonuses are shady. It might be cheaper for them if they can get hold of USDT for cheaper than its face value, but if that were the case I don't see why they don't go with the more straightforward route of directly selling USDT for USD (eg. https://trade.kraken.com/charts/KRAKEN:USDT-USD https://trade.kraken.com/charts/KRAKEN:USDT-USD).
- fastball 5y ago
  Having all that Tether massively increases trade volume. Exchanges make money on fees, which of course rise proportionally to trade volume.
  - gruez 5y ago
    >Having all that Tether massively increases trade volume. How? Having massive amounts of tether in your wallet doesn't increase trade volume, having users who trade increases trade volume. If I own 1B USDT and deposit it to some random exchange and let it sit there, the volume isn't going to change one bit.
    - agumonkey 5y ago
      I think it would work on margin trading. Having more asset allows to lend to more margin traders. Which also more risky so more chances for the exchange to get fees
    - fastball 5y ago
      Without stablecoins, people that want to cash out at a certain price will be cashing out to fiat, which generally is not a seamless process and requires stronger KYC, etc. With a stablecoin like Tether, you have people constantly "cashing out" by just trading their BTC/ETH/etc for Tether. It is much easier to go back and forth between some "hard"-dollar value (scare quotes due to the question around how "hard" Tether actually is) and cryptos, and therefore encourages more trading. Long story short – Tether reduces the friction of certain trades, which obviously is going to make those trades more common.
      - gruez 5y ago
        > Without stablecoins, people that want to cash out at a certain price will be cashing out to fiat, which generally is not a seamless process and requires stronger KYC, etc. Are we talking about whales or someone holding a bitcoin or two? Trading/withdraw limits at non-USDT exchanges (eg. coinbase/kraken/gemini) are quite generous, and you'd only be running into issues if you're selling several bitcoins per day. As a concrete example, kraken has a $500k daily withdraw limit for their "Intermediate" account.

gruez 5y ago

>I'm certain that Tether has backroom relationships with major exchanges - Tether provides liquidity to exchanges in the form of short term USDT loans. Is there a reason why exchanges even need such loans?

deleted 5y ago
[deleted]
shkkmo 5y ago
A lot of shadier exchanges are giving away USDT to encourage people to move their other cryptocurrency holdings onto the exchange.
- gruez 5y ago
  Can you link to some? Most of them are pretty modest, eg. create an account, make $500 worth of trades and we'll give you $50 in USDT. You certainly don't need to move all of your holdings over to take advantage. Moreover, I don't see how account opening bonuses are shady. It might be cheaper for them if they can get hold of USDT for cheaper than its face value, but if that were the case I don't see why they don't go with the more straightforward route of directly selling USDT for USD (eg. https://trade.kraken.com/charts/KRAKEN:USDT-USD https://trade.kraken.com/charts/KRAKEN:USDT-USD).
fastball 5y ago
Having all that Tether massively increases trade volume. Exchanges make money on fees, which of course rise proportionally to trade volume.
- gruez 5y ago
  >Having all that Tether massively increases trade volume. How? Having massive amounts of tether in your wallet doesn't increase trade volume, having users who trade increases trade volume. If I own 1B USDT and deposit it to some random exchange and let it sit there, the volume isn't going to change one bit.
  - agumonkey 5y ago
    I think it would work on margin trading. Having more asset allows to lend to more margin traders. Which also more risky so more chances for the exchange to get fees
  - fastball 5y ago
    Without stablecoins, people that want to cash out at a certain price will be cashing out to fiat, which generally is not a seamless process and requires stronger KYC, etc. With a stablecoin like Tether, you have people constantly "cashing out" by just trading their BTC/ETH/etc for Tether. It is much easier to go back and forth between some "hard"-dollar value (scare quotes due to the question around how "hard" Tether actually is) and cryptos, and therefore encourages more trading. Long story short – Tether reduces the friction of certain trades, which obviously is going to make those trades more common.
    - gruez 5y ago
      > Without stablecoins, people that want to cash out at a certain price will be cashing out to fiat, which generally is not a seamless process and requires stronger KYC, etc. Are we talking about whales or someone holding a bitcoin or two? Trading/withdraw limits at non-USDT exchanges (eg. coinbase/kraken/gemini) are quite generous, and you'd only be running into issues if you're selling several bitcoins per day. As a concrete example, kraken has a $500k daily withdraw limit for their "Intermediate" account.