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It's all fine and good until there is a run on tether and they can't actually give customers their money back. They will throttle customer withdrawals, the issu

It's all fine and good until there is a run on tether and they can't actually give customers their money back. They will throttle customer withdrawals, the issue will be magnified, and I would guess tethers would be selling for pennies on the dollar on the secondary market.

ceejayoz 5y ago
Yup. https://tether.to/legal/ https://tether.to/legal/ > 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. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all.
- bostonsre 5y ago
  That is pretty hilarious... "we reserve the right to be a scam".
Spivak 5y ago
This discussion is so weird because you're to the letter describing banks and bank runs, which does make sense because Tether and other stablecoins are banks, albeit without FDIC insurance. What is actually bad about Tether that doesn't apply to USD and the current largely functional banking system?
- ceejayoz 5y ago
  Banks pass audits, have specific capital requirements, and you've even helpfully highlighted the FDIC insurance that protects individuals from their fuckups.
  - Spivak 5y ago
    This doesn't follow since the argument would apply to Tether even if they weren't doing shady things. If you don't think unregulated stablecoins should exist in general that's valid but it doesn't answer the question of what specifically Tether is doing. Like rake them over the coals for lying about having assets they didn't but if Tether had been from the start open about holding only a small fraction in cash would it be a problem?
    - ceejayoz 5y ago
      > Like rake them over the coals for lying about having assets they didn't but if Tether had been from the start open about holding only a small fraction in cash would it be a problem? Sure. If the Nigerian prince was actually a Nigerian prince and actually gave me $100M, that changes the scenario substantially. They acquired their dominant position via fraud. Their website claimed audits they never completed. They issued bank attestations showing funds they didn't have legal rights to; transferred from Bitfinex in the day before, and then back out the day after. To this day, there's no way of knowing if that fraud continues; they've yet to complete an audit or provide the transparency promised for years.
- IncRnd 5y ago
  > What is actually bad about Tether that doesn't apply to USD and the current largely functional banking system? You answered your own question. There are no 1. regulations 2. regulators 3. capital requirements 4. backing insurance guarantees
  - Spivak 5y ago
    Argh I feel like I'm going mad here. What did Tether actually do that people are mad about then? Everyone knew going in that it was basically an unregulated bank! The only thing I've heard is that they used to claim they were 100% backed in cash and maybe weren't but regardless aren't now. Which is super shady and the epitome of "growth hacking" but their current state is fine, right?
    - ceejayoz 5y ago
      > their current state is fine, right? No. They still, to this day, have not completed one of their promised audits. As such, we don't know what their current state is, and they have a track record of lying about it. There are rumblings that much of their current holdings are in commercial paper that aren't worth what they're assessed as, because Tether values them at the purchase price rather than the current mark-to-market value. Even if they're solvent now, getting there via fraud is bad.
    - bostonsre 5y ago
      They are very opaque and act extremely shady. I would guess only a handful of people know the truth but they certainly don't act like they are legit and have nothing to hide. If they were legit, there would be zero reason not to do audits that show their operations are solid (it would also give them really good PR, help get more customers, and shut up the critics) and where exactly each dollar is. As someone else pointed out above, can their legal disclaimer is absolutely hilarious: > ceejayoz 4 hours ago [–] > Yup. https://tether.to/legal/ https://tether.to/legal/ >> 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. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all. To me, that disclaimer sounds like they are trying to make a scam legal later when a rug is pulled out from underneath everyone and a trap is sprung like darknet drug bazars that shutdown and take everyone's assets once there was enough money on the platform.

ceejayoz 5y ago

Yup. https://tether.to/legal/ https://tether.to/legal/ > 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. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all.

bostonsre 5y ago
That is pretty hilarious... "we reserve the right to be a scam".

Spivak 5y ago

This discussion is so weird because you're to the letter describing banks and bank runs, which does make sense because Tether and other stablecoins are banks, albeit without FDIC insurance. What is actually bad about Tether that doesn't apply to USD and the current largely functional banking system?

ceejayoz 5y ago
Banks pass audits, have specific capital requirements, and you've even helpfully highlighted the FDIC insurance that protects individuals from their fuckups.
- Spivak 5y ago
  This doesn't follow since the argument would apply to Tether even if they weren't doing shady things. If you don't think unregulated stablecoins should exist in general that's valid but it doesn't answer the question of what specifically Tether is doing. Like rake them over the coals for lying about having assets they didn't but if Tether had been from the start open about holding only a small fraction in cash would it be a problem?
  - ceejayoz 5y ago
    > Like rake them over the coals for lying about having assets they didn't but if Tether had been from the start open about holding only a small fraction in cash would it be a problem? Sure. If the Nigerian prince was actually a Nigerian prince and actually gave me $100M, that changes the scenario substantially. They acquired their dominant position via fraud. Their website claimed audits they never completed. They issued bank attestations showing funds they didn't have legal rights to; transferred from Bitfinex in the day before, and then back out the day after. To this day, there's no way of knowing if that fraud continues; they've yet to complete an audit or provide the transparency promised for years.
IncRnd 5y ago
> What is actually bad about Tether that doesn't apply to USD and the current largely functional banking system? You answered your own question. There are no 1. regulations 2. regulators 3. capital requirements 4. backing insurance guarantees
- Spivak 5y ago
  Argh I feel like I'm going mad here. What did Tether actually do that people are mad about then? Everyone knew going in that it was basically an unregulated bank! The only thing I've heard is that they used to claim they were 100% backed in cash and maybe weren't but regardless aren't now. Which is super shady and the epitome of "growth hacking" but their current state is fine, right?
  - ceejayoz 5y ago
    > their current state is fine, right? No. They still, to this day, have not completed one of their promised audits. As such, we don't know what their current state is, and they have a track record of lying about it. There are rumblings that much of their current holdings are in commercial paper that aren't worth what they're assessed as, because Tether values them at the purchase price rather than the current mark-to-market value. Even if they're solvent now, getting there via fraud is bad.
  - bostonsre 5y ago
    They are very opaque and act extremely shady. I would guess only a handful of people know the truth but they certainly don't act like they are legit and have nothing to hide. If they were legit, there would be zero reason not to do audits that show their operations are solid (it would also give them really good PR, help get more customers, and shut up the critics) and where exactly each dollar is. As someone else pointed out above, can their legal disclaimer is absolutely hilarious: > ceejayoz 4 hours ago [–] > Yup. https://tether.to/legal/ https://tether.to/legal/ >> 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. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all. To me, that disclaimer sounds like they are trying to make a scam legal later when a rug is pulled out from underneath everyone and a trap is sprung like darknet drug bazars that shutdown and take everyone's assets once there was enough money on the platform.