5 ms·

They don't allow redemption of tether for dollars. There is no withdrawal pressure, right?

markonen 5y ago
Who's "they" here? Remember, Bitfinex == Tether
graeme 5y ago
Reduces pressure to withdraw USDT for fiat on exchanges. Tether has to support those pegs or they break. Same difference
- spywaregorilla 5y ago
  Do they? Genuine question. How much does bitfinex support the price at $1 on exchanges?
  - graeme 5y ago
    I’m not sure if they do, but if there was sell pressure they would have to or peg would break. Possible there is not sufficient sell pressure at moment. When you sell USDT for USD on exchange, someone is providing that dollar. If no private market participant willing, then peg slips. You would expect fiat withdrawals in downturns and peg slippage absent support.
  - sbierwagen 5y ago
    >How much does bitfinex support the price at $1 on exchanges? An open question. Several attorneys general have ongoing investigations regarding the tether peg. A really grim and cynical person might make the case that exchanges want something like tether to exist, and are incentivized to fudge the public-facing numbers regarding tether trade volume and its order book.
    - _3u10 5y ago
      Ask the Bank of England about their desire to maintain Breton Woods
    - spywaregorilla 5y ago
      I think what you're saying here is that if there was a run on tether, bitfinex might stop supporting it. And sure, I think that's probably true. But I'm asking how much of a role do they play in actively supporting it day to day. Are they the principle buyer of the currency when people want to liquidate? Or is it other people?
      - sbierwagen 5y ago
        If you asked Bernie Madoff on December 10th 2008 how well his investment fund was doing, he would say "Excellent, thank you." The set of people who have inside information on how tether functions and the set of people who would actually tell the truth about it are entirely disjoint.
  - onlyrealcuzzo 5y ago
    Theoretically, what is stopping BitFinex from supporting the peg predominately on BitFinex and letting arbitrage traders take care of the rest?
  - Bombthecat 5y ago
    Kraken.com smelled the bad fish years ago. They made tether a normal exchange rate. If there is a "rush out of the door". The value would just drop :)
threevox 5y ago
Well, they officially don't guarantee that they will redeem Tethers, but in practice they do, at least for the time being. So any withdrawal pressure would be de facto rather than de jure
- FireBeyond 5y ago
  In practice they do? Last time I checked, there were significant "limitations" (to be charitable... that you could only redeem holdings above $100K, only if you were a non-US person, and subject to 90-180 day holding periods. People have also offered bounties for proof of people having redeemed Tether, and those bounties are still outstanding. My suspicion is that if anyone has actually redeemed Tether, they are either institutional (and Bitfinex doesn't want to piss them off) or an insider/"friend".
  - type02 5y ago
    The founders of CMS holdings talk about redeeming tether all the time. It's literally just the same as redeeming USDC or any other stable coin. And before you say they're insiders, Dan (one of the founders) used to work with the creators of USDC.
    - FireBeyond 5y ago
      So they're an institutional investor. Like I said.
      - type02 5y ago
        An institutional investor with ties to their biggest competitor, bit different.
        FireBeyond 5y ago
        Yes and no. Yes, USDC and USDT are different "securities". But that's like saying that in the regular market that because Charles Schwab and Fidelity are competitors, they don't have a whole lot of cooperation - they do, because at that scale (and with the amount of arbitrage and speculation in crypto), you need to cooperate with your competitors, or you will be iced out.
sbierwagen 5y ago
You can't redeem tether for dollars from Tether themselves, yes, but when you swap tether for dollars at a third party exchange then Tether has to pump some dollars into the trade to support the peg.
- nly 5y ago
  Do they? Anyone who believes in the peg could provide that liquidity.

Who's "they" here? Remember, Bitfinex == Tether

Reduces pressure to withdraw USDT for fiat on exchanges. Tether has to support those pegs or they break. Same difference

spywaregorilla 5y ago
Do they? Genuine question. How much does bitfinex support the price at $1 on exchanges?
- graeme 5y ago
  I’m not sure if they do, but if there was sell pressure they would have to or peg would break. Possible there is not sufficient sell pressure at moment. When you sell USDT for USD on exchange, someone is providing that dollar. If no private market participant willing, then peg slips. You would expect fiat withdrawals in downturns and peg slippage absent support.
- sbierwagen 5y ago
  >How much does bitfinex support the price at $1 on exchanges? An open question. Several attorneys general have ongoing investigations regarding the tether peg. A really grim and cynical person might make the case that exchanges want something like tether to exist, and are incentivized to fudge the public-facing numbers regarding tether trade volume and its order book.
  - _3u10 5y ago
    Ask the Bank of England about their desire to maintain Breton Woods
  - spywaregorilla 5y ago
    I think what you're saying here is that if there was a run on tether, bitfinex might stop supporting it. And sure, I think that's probably true. But I'm asking how much of a role do they play in actively supporting it day to day. Are they the principle buyer of the currency when people want to liquidate? Or is it other people?
    - sbierwagen 5y ago
      If you asked Bernie Madoff on December 10th 2008 how well his investment fund was doing, he would say "Excellent, thank you." The set of people who have inside information on how tether functions and the set of people who would actually tell the truth about it are entirely disjoint.
- onlyrealcuzzo 5y ago
  Theoretically, what is stopping BitFinex from supporting the peg predominately on BitFinex and letting arbitrage traders take care of the rest?
- Bombthecat 5y ago
  Kraken.com smelled the bad fish years ago. They made tether a normal exchange rate. If there is a "rush out of the door". The value would just drop :)

threevox 5y ago

Well, they officially don't guarantee that they will redeem Tethers, but in practice they do, at least for the time being. So any withdrawal pressure would be de facto rather than de jure

FireBeyond 5y ago
In practice they do? Last time I checked, there were significant "limitations" (to be charitable... that you could only redeem holdings above $100K, only if you were a non-US person, and subject to 90-180 day holding periods. People have also offered bounties for proof of people having redeemed Tether, and those bounties are still outstanding. My suspicion is that if anyone has actually redeemed Tether, they are either institutional (and Bitfinex doesn't want to piss them off) or an insider/"friend".
- type02 5y ago
  The founders of CMS holdings talk about redeeming tether all the time. It's literally just the same as redeeming USDC or any other stable coin. And before you say they're insiders, Dan (one of the founders) used to work with the creators of USDC.
  - FireBeyond 5y ago
    So they're an institutional investor. Like I said.
    - type02 5y ago
      An institutional investor with ties to their biggest competitor, bit different.
      - FireBeyond 5y ago
        Yes and no. Yes, USDC and USDT are different "securities". But that's like saying that in the regular market that because Charles Schwab and Fidelity are competitors, they don't have a whole lot of cooperation - they do, because at that scale (and with the amount of arbitrage and speculation in crypto), you need to cooperate with your competitors, or you will be iced out.

sbierwagen 5y ago

You can't redeem tether for dollars from Tether themselves, yes, but when you swap tether for dollars at a third party exchange then Tether has to pump some dollars into the trade to support the peg.

nly 5y ago
Do they? Anyone who believes in the peg could provide that liquidity.