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> Based on the information Protos has gathered, Cumberland is apparently the number one liquidity provider in crypto, period — thanks to Tether. Not saying the

> 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 ago
The 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 ago
  Well 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 ago
    Literally most of what Tether holds is commercial paper—basically IOUs for payroll. From who? Who knows. Probably other startups.
    - crazydoggers 5y ago
      Do you have references? Edit: Haha.. asking legit question for data because I’m curious gets downvoted. Lol. I should know to avoid the crypto discussions here. Lots of emotion and not much useful information getting shared
      - themagician 5y ago
        Yes, Tether is my source: 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...
        crazydoggers 5y ago
        And that’s why I asked the question! Thank you, I hadn’t seen that before. I would say that’s definitely problematic. Still wouldn’t call it a scam. That’d be like calling Lehman Brothers a scam.
        jqpabc123 5y ago
        Still wouldn’t call it a scam. A scam is pretending something is true when it clearly is not --- for financial gain. The scam here is the fact that the exchanges cooperate to keep the price of USDT pegged at $1 USD --- even after Tether itself has admitted they do NOT have $1 USD for each USDT minted and they are NOT obligated to redeem 1 USDT for $1 USD.
        crazydoggers 5y ago
        What is being pretended as true? The link was published by Tether themselves! It’s not a scam if I can see that they’re backed by commercial paper. I can then make a decision if I want to use the service. The big miss with tether everyone makes is that it’s not an investment. It’s a tool to support liquidity. The average investor uses it then converts it, buys or sells. The companies holding it are the ones providing liquidity to investors. So if anyone is getting scammed it’s these large companies offering liquidity services.
        jqpabc123 5y ago
        What is being pretended as true? That 1 USDT is worth $1 USD. The entire crypto market is a house of cards built around this fantasy.
  - majormajor 5y ago
    Fractional reserve refers to liquid cash, vs stuff the banks lend back out, but that doesn't mean bank balance sheets don't have to balance out in terms of assets and liabilities. You can't just declare yourself a bank and turn a million dollars into ten million dollars, say.
  - IncRnd 5y ago
    > all banks function on fractional reserve, but we don’t immediately call them scams. US (and many other) Banks have capital requirements, regulations, regulators, and insurance that covers the deposits!
    - crazydoggers 5y ago
      Capital requirements mean the bank won’t go bankrupt, ie it can pay its employees etc. But does not deal with deposit reserve. FDIC insurance also covers only $200,000 and that’s insured by the US government. Reserve requirements were lowered to zero percent in 2020 to ease lending during the pandemic: https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm Also a good read on the implications… basically banks can keep loaning out to infinity.. a situation that doesn’t seem a whole lot better than tether in my opinion: https://www.forbes.com/sites/bobhaber/2020/03/16/the-fed-fires-the-big-one/?sh=790f73dd6aa8 https://www.forbes.com/sites/bobhaber/2020/03/16/the-fed-fir... And perhaps you have noticed inflation starting to creep up.. this and QE5 very likely a source https://www.usinflationcalculator.com/inflation/current-inflation-rates/ https://www.usinflationcalculator.com/inflation/current-infl...
      - IncRnd 5y ago
        One can infer from your comment that you expect people to purchase more than $200,000 in Tether. Someone who does so might want to perform more research than reading shills on the Internet. It be far more rational to start one's own crypto-currency in order to remove distrust from the equation.
        crazydoggers 5y ago
        This makes no sense
tcbawo 5y ago
I can also imagine it being used to circumvent currency controls, especially in and around Asia.
- crazydoggers 5y ago
  Yes, I’d say it probably is. That may not be a bad thing for many people depending on your outlook.
themagician 5y ago
The point of Tether is to make money—for Tether, not you. They are getting rich when you buy a million dollars worth.
- crazydoggers 5y ago
  How? They have to maintain that million dollars so I can withdraw it when I need it. Nothing has yet shown that is a problem or that’s not being done. Go deposit 1 million in a bank, and then ask for it in cash the next day. You won’t get it.
  - themagician 5y ago
    They do not maintain that million dollars as dollars. They instead buy all sorts of stuff. Only a small portion is maintained as dollars. If there is a run on Tether tomorrow it will collapse. You won’t get your money. Assets will need to be liquidated, and some of them might be junk.
  - jazzyjackson 5y ago
    The fact that tether does not hold 1:1 cash reserves was widely reported Here’s a discussion from may, “Tether says its reserves are backed by cash to the tune of 2.9%” https://news.ycombinator.com/item?id=27151370 https://news.ycombinator.com/item?id=27151370
  - IncRnd 5y ago
    > Go deposit 1 million in a bank, and then ask for it in cash the next day. You won’t get it. But, you will get it. Try that with Tether, and you might just get laughed at. They would have already put your million dollars to other uses outside of being a deposit for you.
    - crazydoggers 5y ago
      You can read about what happens when you try to withdraw that much cash from a bank. Not only do they not hold that much cash, there’s lots of hoops to jump through: https://www.linkedin.com/pulse/when-i-tried-withdraw-20000-my-own-money-from-bank-samuel-barton https://www.linkedin.com/pulse/when-i-tried-withdraw-20000-m... https://www.cleveland.com/business/2012/04/man_who_wants_to_withdraw_6000.html https://www.cleveland.com/business/2012/04/man_who_wants_to_... https://grantcardonetv.com/ever-withdraw-1000000-in-cash-from-your-bank-i-did-heres-what-happened/ https://grantcardonetv.com/ever-withdraw-1000000-in-cash-fro... https://finance.zacks.com/federal-banking-rules-withdrawing-large-sums-cash-1696.html https://finance.zacks.com/federal-banking-rules-withdrawing-...

jqpabc123 5y ago

The 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 ago
Well 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 ago
  Literally most of what Tether holds is commercial paper—basically IOUs for payroll. From who? Who knows. Probably other startups.
  - crazydoggers 5y ago
    Do you have references? Edit: Haha.. asking legit question for data because I’m curious gets downvoted. Lol. I should know to avoid the crypto discussions here. Lots of emotion and not much useful information getting shared
    - themagician 5y ago
      Yes, Tether is my source: 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...
      - crazydoggers 5y ago
        And that’s why I asked the question! Thank you, I hadn’t seen that before. I would say that’s definitely problematic. Still wouldn’t call it a scam. That’d be like calling Lehman Brothers a scam.
        jqpabc123 5y ago
        Still wouldn’t call it a scam. A scam is pretending something is true when it clearly is not --- for financial gain. The scam here is the fact that the exchanges cooperate to keep the price of USDT pegged at $1 USD --- even after Tether itself has admitted they do NOT have $1 USD for each USDT minted and they are NOT obligated to redeem 1 USDT for $1 USD.
        crazydoggers 5y ago
        What is being pretended as true? The link was published by Tether themselves! It’s not a scam if I can see that they’re backed by commercial paper. I can then make a decision if I want to use the service. The big miss with tether everyone makes is that it’s not an investment. It’s a tool to support liquidity. The average investor uses it then converts it, buys or sells. The companies holding it are the ones providing liquidity to investors. So if anyone is getting scammed it’s these large companies offering liquidity services.
        jqpabc123 5y ago
        What is being pretended as true? That 1 USDT is worth $1 USD. The entire crypto market is a house of cards built around this fantasy.
- majormajor 5y ago
  Fractional reserve refers to liquid cash, vs stuff the banks lend back out, but that doesn't mean bank balance sheets don't have to balance out in terms of assets and liabilities. You can't just declare yourself a bank and turn a million dollars into ten million dollars, say.
- IncRnd 5y ago
  > all banks function on fractional reserve, but we don’t immediately call them scams. US (and many other) Banks have capital requirements, regulations, regulators, and insurance that covers the deposits!
  - crazydoggers 5y ago
    Capital requirements mean the bank won’t go bankrupt, ie it can pay its employees etc. But does not deal with deposit reserve. FDIC insurance also covers only $200,000 and that’s insured by the US government. Reserve requirements were lowered to zero percent in 2020 to ease lending during the pandemic: https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm Also a good read on the implications… basically banks can keep loaning out to infinity.. a situation that doesn’t seem a whole lot better than tether in my opinion: https://www.forbes.com/sites/bobhaber/2020/03/16/the-fed-fires-the-big-one/?sh=790f73dd6aa8 https://www.forbes.com/sites/bobhaber/2020/03/16/the-fed-fir... And perhaps you have noticed inflation starting to creep up.. this and QE5 very likely a source https://www.usinflationcalculator.com/inflation/current-inflation-rates/ https://www.usinflationcalculator.com/inflation/current-infl...
    - IncRnd 5y ago
      One can infer from your comment that you expect people to purchase more than $200,000 in Tether. Someone who does so might want to perform more research than reading shills on the Internet. It be far more rational to start one's own crypto-currency in order to remove distrust from the equation.
      - crazydoggers 5y ago
        This makes no sense

tcbawo 5y ago

I can also imagine it being used to circumvent currency controls, especially in and around Asia.

crazydoggers 5y ago
Yes, I’d say it probably is. That may not be a bad thing for many people depending on your outlook.

themagician 5y ago

The point of Tether is to make money—for Tether, not you. They are getting rich when you buy a million dollars worth.

crazydoggers 5y ago
How? They have to maintain that million dollars so I can withdraw it when I need it. Nothing has yet shown that is a problem or that’s not being done. Go deposit 1 million in a bank, and then ask for it in cash the next day. You won’t get it.
- themagician 5y ago
  They do not maintain that million dollars as dollars. They instead buy all sorts of stuff. Only a small portion is maintained as dollars. If there is a run on Tether tomorrow it will collapse. You won’t get your money. Assets will need to be liquidated, and some of them might be junk.
- jazzyjackson 5y ago
  The fact that tether does not hold 1:1 cash reserves was widely reported Here’s a discussion from may, “Tether says its reserves are backed by cash to the tune of 2.9%” https://news.ycombinator.com/item?id=27151370 https://news.ycombinator.com/item?id=27151370
- IncRnd 5y ago
  > Go deposit 1 million in a bank, and then ask for it in cash the next day. You won’t get it. But, you will get it. Try that with Tether, and you might just get laughed at. They would have already put your million dollars to other uses outside of being a deposit for you.
  - crazydoggers 5y ago
    You can read about what happens when you try to withdraw that much cash from a bank. Not only do they not hold that much cash, there’s lots of hoops to jump through: https://www.linkedin.com/pulse/when-i-tried-withdraw-20000-my-own-money-from-bank-samuel-barton https://www.linkedin.com/pulse/when-i-tried-withdraw-20000-m... https://www.cleveland.com/business/2012/04/man_who_wants_to_withdraw_6000.html https://www.cleveland.com/business/2012/04/man_who_wants_to_... https://grantcardonetv.com/ever-withdraw-1000000-in-cash-from-your-bank-i-did-heres-what-happened/ https://grantcardonetv.com/ever-withdraw-1000000-in-cash-fro... https://finance.zacks.com/federal-banking-rules-withdrawing-large-sums-cash-1696.html https://finance.zacks.com/federal-banking-rules-withdrawing-...