14 ms·
Tether minted most USDT to just 2 firms – Alameda and Cumberland
- IncRnd 5y agoIf Tether is redeemable for USD on demand, then Tether sounds suspiciously like some sort of a bond that is evading regulation. Maybe my terms are laymenesque, but I think my point still stands.
- AlexandrB 5y agoLuckily their TOS says: > "There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money." Edit: Oops this has been updated to: > Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. > Any individual who is a U.S. Person and any entity that is a U.S. Person is prohibited from using the Site or any Services, including but not limited to using a Digital Tokens Wallet on the Site [1] https://news.ycombinator.com/item?id=19793368 https://news.ycombinator.com/item?id=19793368
- freeAgent 5y agoIt amazes me that more people don't read the Tether ToS and run away.
- hackernudes 5y agoMaybe people are trying to run away from their own country's currency even more urgently? Is it really risky to get some tether for a short time to buy some other cryptocurrency? Maybe the question is why do some big exchanges still work with tether? Must be worth it to them!
- freeAgent 5y agoWho specifically are you talking about? In many countries with inflation problems, USD aren't hard to come by. In countries with no access to USD and/or capital controls...then yes, Tether kinda sorta makes sense as an intermediary to get to another asset, but that does absolutely nothing to explain why Tether's issuance exploded and continues to rise exponentially (at least through the end of March 2021 before pausing for a few months without explanation).
- jazzyjackson 5y agoWell exchanges take a percentage of each trade, so the higher the price is pumped via tether, the higher their revenue, right?
- merely-unlikely 5y agoTether volume has stagnated compared to other stablecoins like USDC
- freeAgent 5y agoTether is still growing, and I think you meant to say "supply growth" rather than volume. Tether is still, by far, the most traded "cryptocurrency" asset. It's traded about 2x more than Bitcoin.
- cowvin 5y agoHoly cow, they literally say that they reserve the right to never give you a dollar for a tether and people still trust it?
- NickM 5y agoThere are a lot of areas of crypto where I feel like I have a pretty good understanding, but I genuinely don't understand why anyone would "invest" in a stablecoin. What advantage does holding something like USDT offer over simply putting dollars in a bank account?
- vmception 5y agoYield farming with stablecoin pairs (ie USDC/USDT liquidity pool shares) has no impermanent loss and high returns, and you are liquid to buy any dips in the crypto market because you can unbundle your liquidity pool share at any time and you just have a bunch of stablecoins and dont even have to wait for custodial exchange withdrawals confirmations So you are better positioned and can act faster on a broader universe of assets, than a large portion of the crypto space.
- rfd4sgmk8u 5y agoThis -- the returns on stablecoin liquidity provision are beyond expectation, and are totally transparent. You can see the actual interest/rewards in real time from the chain. I think it is far less risky than appears on the surface, but some diligence is required. Don't drop all your capital in sketchy projects started last week. Given some additional maturity to the markets, I see this as being THE forex markets of the future.
- deleted 5y ago[deleted]
- rafale 5y agoYou can send it to any wallet. No KYC needed. You can do so programmatically thru a standardized RPC endpoint. You can send it to smart contracts (i.e. decentralized apps), to borrow against it, leverage it, lend it,... plenty if things to do once the USD makes it into a programmable blockchain. Still a scam imo.
- pjc50 5y ago> No KYC needed. That is a legal opinion not a technical one, and it's far from clear that the enforcement of KYC will be kept off coins forever.
- encryptluks2 5y agoI'd love to think something would be done about this, but like representatives and stocks, many people in politics are invested in schemes like this so I don't expect anything to actually be done that would hurt their own wallets.
- rubyist5eva 5y agoIf it wasn't obvious from the get go that Tether was a scam, what more do you need.
- crazydoggers 5y ago> Based on the information Protos has gathered, Cumberland is apparently the number one liquidity provider in crypto, period — thanks to Tether. Not saying there’s nothing nefarious occurring, but it also doesn’t scream scam. The whole point of Tether is to supply liquidity to the crypto market. So is it surprising firms specializing in it utilize an outsized share?? The thing is tether is pegged. It’s not like if you buy a million dollars worth you’ll get rich. In fact that money is now tied up in an asset that doesn’t grow and will slowly shrink due to inflation. What would be much more problematic is tether being used by large criminal organizations to help shelter or launder money, but I haven’t yet seen evidence of that.
- jqpabc123 5y agoThe thing is tether is pegged. I think the point you're missing here is that there is no logical basis for the "pegging". It's pegged because crypto exchanges play along with the pegging fantasy.
- crazydoggers 5y agoWell it’s supposed to be pegged to the dollar by maintaining USD deposits. Nothing here or that I’ve yet seen indicated that hasn’t been happening. Banks are worse anyway, all banks function on fractional reserve, but we don’t immediately call them scams.
- themagician 5y agoLiterally most of what Tether holds is commercial paper—basically IOUs for payroll. From who? Who knows. Probably other startups.
- maxrobot 5y agoThat explains why SBF is so sheepishly shilling Tether...
- hackernudes 5y agoWho or what is SBF?
- graeme 5y agoSam bankman-fried, creator of the FTX exchange.
- penultimatebro 5y agoIf you haven’t yet, now would be a good time to get completely out of USDT on any exchanges or Celsius/BlockFi/etc
- deleted 5y ago[deleted]
- deleted 5y ago[deleted]
- X6S1x6Okd1st 5y agoIf the Commercial Paper that Tether holds to show they have enough cash on hand is issued from Alameda & Cumberland then we've closed the loop on this scam. e.g. Alameda offers to buy 20B USDT in exchange for commerical paper offered by them. It's rated as A or B in part because before the sale they have net positive assets. Tether's sheets look good at a very high level pass (https://tether.to/wp-content/uploads/2021/08/tether_assuranceconsolidated_reserves_report_2021-06-30.pdf https://tether.to/wp-content/uploads/2021/08/tether_assuranc...) Notably they have 14B in Commerical Paper rated at A-1 and 13.9B in Commerical Paper rated at A-2.
- lamontcg 5y agoI doubt those companies could have been issuing that much actual, proper commercial paper. Where are they getting the USD for those loans? My guess is that they're sitting on collectively about $45B in BTC and other crypto and they take loans out in USDT with that crypto as the collateral. Then they use that USDT to fund crypto ventures, speculate, and fuel arbitrage and wash trading bots. Maybe there's an intermediate step in there where those two companies are the originators of the crypto-backed loans, but it'll amount to basically the same thing.
- jqpabc123 5y agoWhere are they getting the USD for those loans? LOL! They're not loaning USD, they're loaning USDT which they create out of electrons --- and accept an IOU is return --- but only from select individuals/companies. The rest of the crypto marketplace are the ones who produce USD and exchange it for USDT.
- lamontcg 5y agoThat comment was in the context of the assumption that the backing was real honest-to-god commercial paper being used in the real world. That would take actual tens of billions of dollars to produce that commercial paper. It would also get noticed in the marketplace. That isn't what the commercial paper is. And there isn't $65B in USD in the crypto space anywhere to have produced all that commercial paper in loans. That is my point there. And to the extent that you're arguing that tether is backed by quite literally nothing and its printed out of entirely thin air, I'll disagree vehemently with that. Then it wouldn't be stable and would have already collapsed, and there's no mechanism to maintain the pin. USDT is pretty clearly backed by crypto one way or another, which is why USDT issuance increases as bitcoin goes up (and USDT is used to pump bitcoin up, around and around). To the extent that crypto is "just electrons" I'd agree, but I think you were making a dramatic oversimplification which isn't how it all works.
- ctur 5y agoI often find the headlines, and even stories about, crypto to be inscrutable to those looking in from the outside. The stories also seem to come from an ecosystem of sites I don't recognize so it's hard to even judge if it's reputable site (or at least guess at the biases it might have). None of this is inherently bad, but there seems to be a growing divide between "mainstream" tech and the crypto world that is harder and harder to understand if you aren't already steeping in the ecosystem. Another challenging aspect is how much of crypto (particularly non-mainstream) has somewhat shady origins. Maybe the shadiness is just subverting expected norms, but there seems also to be sufficient evidence the shadiness also often is around illicit activity. I'm curious if others have found ways to build and keep an understanding of the crypto ecosystem without fully going down the rabbit hole?
- trutannus 5y ago> others have found ways to build and keep an understanding of the crypto ecosystem without fully going down the rabbit hole You're right on the mark. Most of the content around crypto is heavily biased and just looks untrustworthy for a number of reasons. From what I can tell, it's because they're actually unreliable sources. Not because they're trying to scam you, but because there's more money in selling you crypto services than there is in crypto itself. So what you end up finding is pretty much all content marketing. Basically, you're looking for how to mine gold, and all you can find are websites from shovel companies telling you about how great gold mining is. The sites that are not content marketing tend to come off as amateurish, often times because on deeper inspection they are actually run by amateurs. A strategy I tend to use for vetting information is to give the site a scan and look for technical inaccuracies (ie: confused/wrong/bizarre/shallow explanations about technical topics). From that, you can get a good picture of how knowledgeable the source actually is.
- tablespoon 5y agoA lot of it also has a strong "Power of Positive Thinking"-vibe. Basically people believing that if only they act and talk like something is true hard enough, it will become true (e.g. nonsense talk about NFTs representing ownership of anything besides the NFT itself). So you have the extra task of trying to distinguish between what is actually true and what some community wants to be true, when almost the only people talking about it are in the latter category.
- skybrian 5y agoThat’s somewhat interesting but doesn’t tell us very much. It seems like the next question is what assets these firms trade for Tether, are those assets reliable or are they tainted in some way, and where did they get them from?
- gringoDan 5y agoI'm no Tether apologist, but this doesn't seem like an issue to me? Alameda and Cumberland are the 2 biggest liquidity providers in crypto trading. Tether is the source of liquidity for many of the exchanges that they trade on. So of course they'd use Tether to on-ramp into the crypto ecosystem and trade. I suppose the real news here is that Alameda and Cumberland haven't redeemed much Tether (proportionally), so if Tether collapses, it could blow them up?
- Wizrad 5y agoMost likely they trade out of the USDT position shortly after creating it which would minimise their exposure.
- gringoDan 5y agoI don't think this would be the case, since these firms are actively market-making using USDT. I.e., they're not just turning fiat into crypto using USDT, but they are also market-making in USDT/BTC, USDT/ETH, etc. My understanding is that Alameda is trading with fairly high frequency, so they would keep funds in USDT in order to facilitate those trades. Further, the on-chain data suggests that they don't trade out of USDT to USD – otherwise we'd see high corresponding USDT burns.
- vmception 5y agohmm no OTC traders here? When you call the OTC desk and wire them dollars they mint stablecoins using their account with - presumably - Bitfinex. Bitfinex issues Tethers no different than Coinbase/Circle issues USDC in a just in time transaction. You either receive the Tether you asked for to make your own trades, or they keep the Tether and purchase the crypto you really wanted. In either scenario, someone besides the OTC has the Tether now. There is no reason to use custodial exchanges for your fiat onramps. They put you at a major disadvantage in speed. It is strange that this is to be the smoking gun for people against Tether. These kind of juvenile inexperienced arguments (seen in other comments) are why more serious scrutiny of Tether takes so long, because its mixed up with all this benign stuff put in front of regulators who have a huge learning curve already.
- dalbasal 5y ago>> Over $60 billion worth of USDT now circulates through the crypto ecosystem... Tether has historically never faced a large amount of redemptions. Issuances have outpaced redemptions by more than 20:1. Does that mean that $60bn in net Tether has been sold by the "mint?"
- slaman 5y agoIf you print 30 billion and give it to your buddy at an exchange for an IOU/commercial paper. I guess that counts as a sale, even if the exchange mostly uses it to wash trade the price of cryptocurrencies up.
- X6S1x6Okd1st 5y agoFor anyone that is willing to engage in DeFi: AAVE on polygon currently has USDT borrowing at 3.75% with 4.74% being returned as MATIC to incentivize borrowing & lending. You can borrow up to 50% of your locked collateral. So if you deposit 1 ETH into AAVE you can borrow 1.5k USDT Trade that USDT for ETH & deposit it back in AAVE. You are now shorting USDT and long on ETH for only 3.5% APY.
- henron 5y agoIt is so sketchy that one of the biggest crypto exchanges and one of the biggest trading shops are run by the same people.
- acesup93 5y agoAs a guy that has spent years in the crypto space I can say that crypto is all bots. Blockchain transactions and general activity is powered by bots. Crypto Twitter is powered by bots. Offshore exchanges are wash traded by bots. Coinbase can be considered the cleanest thing out there. On the other hand their employee Charlie Lee without any trouble did inside trading with the knowledge of CEO.