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Tether is bound to collapse soon and will likely take the whole crypto market with it. There is no doubt in my mind that Tether is as scam, they blatantly lied

Tether is bound to collapse soon and will likely take the whole crypto market with it. There is no doubt in my mind that Tether is as scam, they blatantly lied that they had USD cash backing of 100% of Tethers, their recent amateurish pie chart reveal of assets was a farce, no doubt these bond assets were created out of thin air, just like the Billions of Tethers they regularly print whenever they feel like it.

adflux 5y ago
I think they are partially backed, and kicking themselves back billions of dollars. It's trivial to do this for them, and their whole board is filled with crooks, ponzi schemers and "Criminal" lawyers. They hide behind anonymity and shady shell corporations. Their ceo hasn't been seen for years. Etc etc etc.
- onlyrealcuzzo 5y ago
  By their own numbers, it is at most 2.9% backed by cash. The rest of it is supposed to mostly be commercial paper. The problem with that is, in one month, they would've needed to buy more commercial paper than was even sold. So that part is likely false, too.
oarsinsync 5y ago
I remember a lot of people (including myself) saying the same thing a few years ago, and selling a bunch of BTC at ~$8000. "The market can remain irrational longer than you can remain solvent" It's a good thing I was simply closing positions instead of taking a short position, cuz boy oh boy was I wrong. That was before institutional money started going into BTC. Will be interesting to see if the 'little guy' individual investor will be enabled to take large amounts of early stage profits and saddling the 'big guy' institutional investor (which is in a lot of cases, essentially just lots of 'little guys' money pooled together while the managers skim the profits off the top) with the late stage losses. (I am long BTC)
- onethought 5y ago
  How can you be “long BTC” - it’s a currency not a stock. You might say “I’m long USD” but then you are really saying you believe the US economy will grow, and the value of its currency will strengthen. Given Bitcoin isn’t attached to anything… what does long mean?
  - kristofferc 5y ago
    It just means that you think people are willing to buy it from you at a higher price later in time.
  - foota 5y ago
    The US dollar isn't really tied to the strength of the economy either, it's about the supply and demand for dollars on the international market. Generally, dollars are in high demand as a result of their status as a worldwide reserve currency, but otherwise the strength of the dollar should be tied to the trade deficit. Having a trade deficit, all else the same, exhibits downward pressure on the dollar because people buying foreign things in dollars give their money to people that need to then trade those dollars back to someone for their own currency.
  - nl 5y ago
    When people say they are “long something” they mean they are invested in the price growth. People can be “long USD” because they expect the price to increase. That's not expressing any belief beyond that. People are long on something for many reasons.
  - the_gastropod 5y ago
    Not sure why you’re being downvoted. I think it’s a fair question. Being “long” in a zero-sum game seems a bit odd to me, as well. In a zero-sum game like Bitcoin, there is necessarily a timing component at play. Being “long” seems at odds with that.
    - dtwest 5y ago
      Long simply means taking a position that would benefit if the stock/currency/commodity/bond/etc goes up in value. Similarly, being short generally means the opposite (although in specific situations it can mean selling something you do not own, like a stock, with the intention of buying it back later for a lower price). The terminology isn't limited to stocks, investors talk about being long currencies all the time. Hope this clears up some of the confusion.
cdstyh 5y ago
print tether, deposit it into an exchange, buy btc, tether is now back by an asset (btc), btc now higher in price, repeat
varajelle 5y ago
> will likely take the whole crypto market with it. I often see this repeated on HN, but this is never explained. Why will the collapse of Thether impact the whole crypto market?
- dcolkitt 5y ago
  If anything, it would most likely create substantial buying pressure in BTC or ETH in the short term. The whole reason people hold Tether is because they’re in an ecosystem where they can’t easily access dollars directly. Say you’re on a crypto only exchange, like BitMEX, or on blockchain. What are your exit options? You can’t buy USD on Uniswap, only stablecoins. In this case “panic-selling” Tether means a massive rush into Bitcoin and Ethereum.
  - paulgb 5y ago
    > In this case “panic-selling” Tether means a massive rush into Bitcoin and Ethereum. I’m sure there would be a lot of people who would like to trade their Tethers for Bitcoin in the event of a collapse, but who is going to sell it to them?
    - deleted 5y ago
      [deleted]
    - tgsovlerkhgsel 5y ago
      Someone who thinks that they can recover 10% of the nominal value may be willing to sell BTC for Tether, at a price 10x as high as the actual-USD Bitcoin price.
  - deleted 5y ago
    [deleted]
  - jkhdigital 5y ago
    Yup, flight to safety in crypto means buying BTC. Nobody needs Tether—you can get into and out of nearly any fiat currency from BTC directly.
meowface 5y ago
So many people have been saying it's a scam for so long that I almost wonder if something else is going on. Like, if you polled anyone who knew what Tether is, I bet 80% or 90% would say it's a scam. It's pretty much consensus. I've never seen a single defense or counter-argument of it online. And the vague reserve disclosure didn't help. (And, to be clear, I also think it's likely a scam.) I'd perhaps think it's like the lead-up to 2008 where the people behind the scenes largely knew it was funny money but the general public didn't - but here it seems pretty unanimous from the lowest-level retail investor to the most sophisticated institutional investor that it's a scam. So what's the deal? Is it gonna be the most predictable catastrophe ever? How have they existed from 2012 until today, seemingly without any issue, despite all of the universally extremely negative PR? What are the odds it's somehow not a scam?
- ForHackernews 5y ago
  I think it's an obvious scam but it's a very useful scam, so there are many people with a vested interest in maintaining the illusion. From people who want to pump up the price of other cryptocurrencies, to offshore exchanges that want to avoid KYC requirements dealing with real banks, to ordinary users who like being able to transfer USDT... there's many people incentivized to look the other way and pretend that water isn't wet.
- jasoncartwright 5y ago
  It's anecdata, but none of the retail crypto speculators (five or six now) I've spoken to IRL have even heard of Tether.
  - meowface 5y ago
    Fair. Regarding my first paragraph, I just meant of the people who do know what it is, I think 80 - 90% would probably say it's likely a scam. (I'm sure a good percentage of investors know nothing at all besides the words Bitcoin, Ethereum, Dogecoin, and hodl.)
  - jiofih 5y ago
    It’s hard to imagine someone invested in the crypto market who isn’t aware of stablecoins.
deleted 5y ago
[deleted]
BelenusMordred 5y ago
I read this comment about 5 years ago on HN.
parsimoniousplb 5y ago
In case someone is interested in shorting Tether, thanks to DeFi this can now be done without explicit exposure to a crypto exchange or dangerous BTC shorts. For the uninitiated, I think this is also a good example for the kind of craziness that is possible now: Deposit a "good" stable coin (for what counts as good in this space, which is USDC) on Aave or Compound and borrow Tether against it (75% and 80% loan-to-value respectively). You can now either send it to an exchange (e.g. Kraken) and swap USDT to real USD, or go to curve.fi and swap USDT for more USDC and deposit back to Aave or Compound. Repeat until either 4x/5x leverage (theoretical max) or your personal risk tolerance is reached. Remember to service the position by depositing more USDC occasionally (otherwise will be liquidated with penalty). As of this writing, variable interest rate is ~3.5%, fixed interest rate is 11%. Scenarios: - USDT goes to zero, buy as many as needed for scrap, pay back the loan, free the original stablecoins, sell for real USD and make between 1.75x to 4x/5x, depending on which route you chose above. - Both USDT and USDC go to zero, you lose between 25 to 100%, depending on the route you chose above. - There's a USDT shortage (real or somehow engineered) and it goes way above $1 causing your position to be force-liquidated, causing you lose between 25 to 100%, depending on the route you chose above. - Only USDC falls below peg (temporarily or permanently) and you get force-liquidated (25 to 100% loss) - You forget to service the debt or a spike in the variable interest rate causes you to get force-liquidated (5% penalty) - Tether never goes to zero and you keep paying 3.5% interest (variable) - Smart contract hack / Ethereum shuts down, you lose up to 100% - Unkown scenarios While there's no explicit exposure to a crypto exchange, there's still the implicit exposure to Coinbase/Circle via USDC. DAI offers no escape here, since its 50% collateralised by USDC (the other 50% crypto would likely be in serious turmoil in case USDT collapses potentially losing its peg as well). In spite of this, I think this is a considerably better way to profit from a Tether collapse then the much more dangerous route of shorting BTC futures, or shorting via an unregulated crypto exchange where there's no guarantee that they'll pay or even be operational in such an event.
- HorizonXP 5y ago
  I like this strategy, but would seriously not recommend it to anyone that isn’t willing to lose everything they put in. This isn’t a spot play where you still have the underlying crypto asset. I know apes will ape, but seriously, don’t.
zamadatix 5y ago
I have no doubt Tether has something wrong going on in the background but: > Tether is bound to collapse soon I've literally been hearing soon™ for years on this one. I think I was sent from a post here in 2018 to http://www.untether.space/ http://www.untether.space/ because it was going to collapse any day at the time.
economusty 5y ago
It's as much of a scam as any bank is sans the fdic insurance. As long as most tether holders don't redeem at once then the shell game can go on forever, just like Bank of America. Tether should convert to a bank and get fdic insured.
kikowi 5y ago
“It's not what you don't know that kills you, it's what you know for sure that ain't true." (Mark Twain)

adflux 5y ago

I think they are partially backed, and kicking themselves back billions of dollars. It's trivial to do this for them, and their whole board is filled with crooks, ponzi schemers and "Criminal" lawyers. They hide behind anonymity and shady shell corporations. Their ceo hasn't been seen for years. Etc etc etc.

onlyrealcuzzo 5y ago
By their own numbers, it is at most 2.9% backed by cash. The rest of it is supposed to mostly be commercial paper. The problem with that is, in one month, they would've needed to buy more commercial paper than was even sold. So that part is likely false, too.

oarsinsync 5y ago

I remember a lot of people (including myself) saying the same thing a few years ago, and selling a bunch of BTC at ~$8000. "The market can remain irrational longer than you can remain solvent" It's a good thing I was simply closing positions instead of taking a short position, cuz boy oh boy was I wrong. That was before institutional money started going into BTC. Will be interesting to see if the 'little guy' individual investor will be enabled to take large amounts of early stage profits and saddling the 'big guy' institutional investor (which is in a lot of cases, essentially just lots of 'little guys' money pooled together while the managers skim the profits off the top) with the late stage losses. (I am long BTC)

onethought 5y ago
How can you be “long BTC” - it’s a currency not a stock. You might say “I’m long USD” but then you are really saying you believe the US economy will grow, and the value of its currency will strengthen. Given Bitcoin isn’t attached to anything… what does long mean?
- kristofferc 5y ago
  It just means that you think people are willing to buy it from you at a higher price later in time.
- foota 5y ago
  The US dollar isn't really tied to the strength of the economy either, it's about the supply and demand for dollars on the international market. Generally, dollars are in high demand as a result of their status as a worldwide reserve currency, but otherwise the strength of the dollar should be tied to the trade deficit. Having a trade deficit, all else the same, exhibits downward pressure on the dollar because people buying foreign things in dollars give their money to people that need to then trade those dollars back to someone for their own currency.
- nl 5y ago
  When people say they are “long something” they mean they are invested in the price growth. People can be “long USD” because they expect the price to increase. That's not expressing any belief beyond that. People are long on something for many reasons.
- the_gastropod 5y ago
  Not sure why you’re being downvoted. I think it’s a fair question. Being “long” in a zero-sum game seems a bit odd to me, as well. In a zero-sum game like Bitcoin, there is necessarily a timing component at play. Being “long” seems at odds with that.
  - dtwest 5y ago
    Long simply means taking a position that would benefit if the stock/currency/commodity/bond/etc goes up in value. Similarly, being short generally means the opposite (although in specific situations it can mean selling something you do not own, like a stock, with the intention of buying it back later for a lower price). The terminology isn't limited to stocks, investors talk about being long currencies all the time. Hope this clears up some of the confusion.

cdstyh 5y ago

print tether, deposit it into an exchange, buy btc, tether is now back by an asset (btc), btc now higher in price, repeat

varajelle 5y ago

> will likely take the whole crypto market with it. I often see this repeated on HN, but this is never explained. Why will the collapse of Thether impact the whole crypto market?

dcolkitt 5y ago
If anything, it would most likely create substantial buying pressure in BTC or ETH in the short term. The whole reason people hold Tether is because they’re in an ecosystem where they can’t easily access dollars directly. Say you’re on a crypto only exchange, like BitMEX, or on blockchain. What are your exit options? You can’t buy USD on Uniswap, only stablecoins. In this case “panic-selling” Tether means a massive rush into Bitcoin and Ethereum.
- paulgb 5y ago
  > In this case “panic-selling” Tether means a massive rush into Bitcoin and Ethereum. I’m sure there would be a lot of people who would like to trade their Tethers for Bitcoin in the event of a collapse, but who is going to sell it to them?
  - deleted 5y ago
    [deleted]
  - tgsovlerkhgsel 5y ago
    Someone who thinks that they can recover 10% of the nominal value may be willing to sell BTC for Tether, at a price 10x as high as the actual-USD Bitcoin price.
- deleted 5y ago
  [deleted]
- jkhdigital 5y ago
  Yup, flight to safety in crypto means buying BTC. Nobody needs Tether—you can get into and out of nearly any fiat currency from BTC directly.

meowface 5y ago

So many people have been saying it's a scam for so long that I almost wonder if something else is going on. Like, if you polled anyone who knew what Tether is, I bet 80% or 90% would say it's a scam. It's pretty much consensus. I've never seen a single defense or counter-argument of it online. And the vague reserve disclosure didn't help. (And, to be clear, I also think it's likely a scam.) I'd perhaps think it's like the lead-up to 2008 where the people behind the scenes largely knew it was funny money but the general public didn't - but here it seems pretty unanimous from the lowest-level retail investor to the most sophisticated institutional investor that it's a scam. So what's the deal? Is it gonna be the most predictable catastrophe ever? How have they existed from 2012 until today, seemingly without any issue, despite all of the universally extremely negative PR? What are the odds it's somehow not a scam?

ForHackernews 5y ago
I think it's an obvious scam but it's a very useful scam, so there are many people with a vested interest in maintaining the illusion. From people who want to pump up the price of other cryptocurrencies, to offshore exchanges that want to avoid KYC requirements dealing with real banks, to ordinary users who like being able to transfer USDT... there's many people incentivized to look the other way and pretend that water isn't wet.
jasoncartwright 5y ago
It's anecdata, but none of the retail crypto speculators (five or six now) I've spoken to IRL have even heard of Tether.
- meowface 5y ago
  Fair. Regarding my first paragraph, I just meant of the people who do know what it is, I think 80 - 90% would probably say it's likely a scam. (I'm sure a good percentage of investors know nothing at all besides the words Bitcoin, Ethereum, Dogecoin, and hodl.)
- jiofih 5y ago
  It’s hard to imagine someone invested in the crypto market who isn’t aware of stablecoins.

deleted 5y ago

[deleted]

BelenusMordred 5y ago

I read this comment about 5 years ago on HN.

parsimoniousplb 5y ago

In case someone is interested in shorting Tether, thanks to DeFi this can now be done without explicit exposure to a crypto exchange or dangerous BTC shorts. For the uninitiated, I think this is also a good example for the kind of craziness that is possible now: Deposit a "good" stable coin (for what counts as good in this space, which is USDC) on Aave or Compound and borrow Tether against it (75% and 80% loan-to-value respectively). You can now either send it to an exchange (e.g. Kraken) and swap USDT to real USD, or go to curve.fi and swap USDT for more USDC and deposit back to Aave or Compound. Repeat until either 4x/5x leverage (theoretical max) or your personal risk tolerance is reached. Remember to service the position by depositing more USDC occasionally (otherwise will be liquidated with penalty). As of this writing, variable interest rate is ~3.5%, fixed interest rate is 11%. Scenarios: - USDT goes to zero, buy as many as needed for scrap, pay back the loan, free the original stablecoins, sell for real USD and make between 1.75x to 4x/5x, depending on which route you chose above. - Both USDT and USDC go to zero, you lose between 25 to 100%, depending on the route you chose above. - There's a USDT shortage (real or somehow engineered) and it goes way above $1 causing your position to be force-liquidated, causing you lose between 25 to 100%, depending on the route you chose above. - Only USDC falls below peg (temporarily or permanently) and you get force-liquidated (25 to 100% loss) - You forget to service the debt or a spike in the variable interest rate causes you to get force-liquidated (5% penalty) - Tether never goes to zero and you keep paying 3.5% interest (variable) - Smart contract hack / Ethereum shuts down, you lose up to 100% - Unkown scenarios While there's no explicit exposure to a crypto exchange, there's still the implicit exposure to Coinbase/Circle via USDC. DAI offers no escape here, since its 50% collateralised by USDC (the other 50% crypto would likely be in serious turmoil in case USDT collapses potentially losing its peg as well). In spite of this, I think this is a considerably better way to profit from a Tether collapse then the much more dangerous route of shorting BTC futures, or shorting via an unregulated crypto exchange where there's no guarantee that they'll pay or even be operational in such an event.

HorizonXP 5y ago
I like this strategy, but would seriously not recommend it to anyone that isn’t willing to lose everything they put in. This isn’t a spot play where you still have the underlying crypto asset. I know apes will ape, but seriously, don’t.

zamadatix 5y ago

I have no doubt Tether has something wrong going on in the background but: > Tether is bound to collapse soon I've literally been hearing soon™ for years on this one. I think I was sent from a post here in 2018 to http://www.untether.space/ http://www.untether.space/ because it was going to collapse any day at the time.

economusty 5y ago

It's as much of a scam as any bank is sans the fdic insurance. As long as most tether holders don't redeem at once then the shell game can go on forever, just like Bank of America. Tether should convert to a bank and get fdic insured.

kikowi 5y ago

“It's not what you don't know that kills you, it's what you know for sure that ain't true." (Mark Twain)