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People have been yelling about Tether for years, myself included. But nothing seems to stop it. Not lawsuits, not major news articles. The conclusion I draw is

People have been yelling about Tether for years, myself included. But nothing seems to stop it. Not lawsuits, not major news articles. The conclusion I draw is that, yes, the game is rigged - AND EVERYONE IS OK WITH IT. As long as it's making everyone money, no one will really complain. What I also find interesting, is that if tether ever DOES crash, the result might be a big boost for Bitcoin. If you hold Tether, and you want to cash out, the path leads through Bitcoin.

smabie 5y ago
There is no world in which a major tether depeg leads to a boost in BTC price. It will not happen.
- ric2b 5y ago
  That's what happened when MTGox collapsed many years ago.
- nly 5y ago
  Tether (the company) are likely huge holders of Bitcoin anyway, given that they lend worthless Tethers out in exchange for Bitcoin as collateral.
arcticbull 5y ago
Re your first claim it just takes time. Re your second claim, that’s a common misconception. The price of bitcoin would skyrocket against USDT but pancake against USD. Who in their right mind would sell their (actually worth USD) Bitcoin for your worthless Bahamian IOUs? Absolutely nobody. So you’ll see a massive skyrocket against USDT and as soon as people realize what’s going on, it’ll go no-bid. RIP. Then the ensuing panic will cause selling on USD markets, arb bots will turn off, and that selling will be accelerated by the few who got BTC from their USDT piles as they run for the exit. Then exchanges will go down for “maintenance.” You don’t need to believe me, this happens with every exchange insolvency. It happened at Gox and it happened at Quadriga.
- impostervt 5y ago
  I hope you're right. I think the major tipping point would be a major exchange deciding to no longer accept it.
  - bobthepanda 5y ago
    you would need some news that makes USDT simultaneously radioactive to everyone holding it at the same time. runs fundamentally all work the same way, whether its Greek bonds, deposits in a bank, etc.
    - arcticbull 5y ago
      What I don't think most folks realize is that USDT is heavily centralized. They have an extensive 'blacklist' of tokens they've frozen, and they add to it regularly. Far more so, I believe, than any of the other stablecoins. They were the first (only?) to freeze tokens coming out of the Poly hack. [1] I believe they even forced a change to Omni to support blacklisting after they were 'hacked' [2] a few years ago (scare quotes because it was never investigated or IMO resolved). [3] It's highly antithetical to the Satoshi white paper. If Tether gets shut down and their leadership banged up, I strongly suspect custody of the network will fall with the DoJ and they could, at their discretion, freeze all tokens pending full AML/KYC and source-of-funds of holders. Whether this is a credible fear or not, the ensuing fear and chaos would almost certainly break the $1 peg, especially once their exchange friends stop supporting the peg and turn states witness. [1] https://www.coindesk.com/tech/2021/08/11/returned-funds-blacklisted-tokens-raise-more-questions-than-answers-in-defis-biggest-hack/ https://www.coindesk.com/tech/2021/08/11/returned-funds-blac... [2] https://www.coindesk.com/markets/2017/11/21/tether-claims-30-million-in-us-dollar-token-stolen/ https://www.coindesk.com/markets/2017/11/21/tether-claims-30... [3] https://github.com/OmniLayer/omnicore/releases/tag/v0.3.0 https://github.com/OmniLayer/omnicore/releases/tag/v0.3.0
- jkhdigital 5y ago
  You bring up a very important but often overlooked point about market panics: the problem is not really everyone rushing for the door, it is market makers pulling bid liquidity so that “normal” selling volumes tank the price (which triggers the avalanche).
sbierwagen 5y ago
The most plausible conspiracy theory I've seen for the complete lack of regulatory action against Bitcoin or Tether is that they're being used to launder money by the US intelligence community.
- oars 5y ago
  Do you have any resources or links where I can learn more about this? I'm very interested in exploring this concept.
  - darkerside 5y ago
    Please be very careful. It's fun to think about this stuff, but it is very speculative. Don't end up in conspiracy theory land.
- dboreham 5y ago
  My version of this theory is less far out: just that there are now sufficient number of people in the elite with significant exposure to cryptocurrency. When you see folks on CNBC talking about trading BTC like it's pork bellies, you know something's going on...
- ragnot 5y ago
  It isn't a conspiracy theory. It happens (see the part where they buy infrastructure with bitcoin): https://www.reuters.com/investigates/special-report/usa-spying-raven/ https://www.reuters.com/investigates/special-report/usa-spyi...
mekster 5y ago
What kind of hopium is that? Once Tether collapses, the entire crypto market loses its faith as they've been trading against fraud and the market structure was as imaginative as it could be.
- ric2b 5y ago
  The collapse of MTGox already proved this theory wrong many years ago.
cryptica 5y ago
Exactly, the entire fiat financial system is rigged and yet we are forced to participate in it... Tether is probably rigged too but at least we are not forced to participate. So at least it's a more robust asset than fiat in this 1 critical way. The entire system is a fraud and the only things holding it together are people's ignorance and hypocrisy. They cannot bring down Tether without revealing the lies and hypocrisy of the entire financial system since the same arguments could be applied to either side. I would not want to be a judge or lawyer on this case. There is no logic involved, the only way to debate this are extortion threats and threats of physical violence.
xur17 5y ago
Bitfinex has a very profitable system with Tether (loaning USDT out, and earning 5-6% interest), so they're incentivized to keep it running as long as possible. If they're smart, they have liquid reserves to cover the first x% of withdrawals. Which means - you would need something like a large drop in their backing assets (crypto, commercial paper, etc) + a confidence drop in the system large enough to cause a run on the bank, burning through all of their reserves. If no catalyst like this occurs, the game could easily continue on for years.

smabie 5y ago

There is no world in which a major tether depeg leads to a boost in BTC price. It will not happen.

ric2b 5y ago
That's what happened when MTGox collapsed many years ago.
nly 5y ago
Tether (the company) are likely huge holders of Bitcoin anyway, given that they lend worthless Tethers out in exchange for Bitcoin as collateral.

arcticbull 5y ago

Re your first claim it just takes time. Re your second claim, that’s a common misconception. The price of bitcoin would skyrocket against USDT but pancake against USD. Who in their right mind would sell their (actually worth USD) Bitcoin for your worthless Bahamian IOUs? Absolutely nobody. So you’ll see a massive skyrocket against USDT and as soon as people realize what’s going on, it’ll go no-bid. RIP. Then the ensuing panic will cause selling on USD markets, arb bots will turn off, and that selling will be accelerated by the few who got BTC from their USDT piles as they run for the exit. Then exchanges will go down for “maintenance.” You don’t need to believe me, this happens with every exchange insolvency. It happened at Gox and it happened at Quadriga.

impostervt 5y ago
I hope you're right. I think the major tipping point would be a major exchange deciding to no longer accept it.
- bobthepanda 5y ago
  you would need some news that makes USDT simultaneously radioactive to everyone holding it at the same time. runs fundamentally all work the same way, whether its Greek bonds, deposits in a bank, etc.
  - arcticbull 5y ago
    What I don't think most folks realize is that USDT is heavily centralized. They have an extensive 'blacklist' of tokens they've frozen, and they add to it regularly. Far more so, I believe, than any of the other stablecoins. They were the first (only?) to freeze tokens coming out of the Poly hack. [1] I believe they even forced a change to Omni to support blacklisting after they were 'hacked' [2] a few years ago (scare quotes because it was never investigated or IMO resolved). [3] It's highly antithetical to the Satoshi white paper. If Tether gets shut down and their leadership banged up, I strongly suspect custody of the network will fall with the DoJ and they could, at their discretion, freeze all tokens pending full AML/KYC and source-of-funds of holders. Whether this is a credible fear or not, the ensuing fear and chaos would almost certainly break the $1 peg, especially once their exchange friends stop supporting the peg and turn states witness. [1] https://www.coindesk.com/tech/2021/08/11/returned-funds-blacklisted-tokens-raise-more-questions-than-answers-in-defis-biggest-hack/ https://www.coindesk.com/tech/2021/08/11/returned-funds-blac... [2] https://www.coindesk.com/markets/2017/11/21/tether-claims-30-million-in-us-dollar-token-stolen/ https://www.coindesk.com/markets/2017/11/21/tether-claims-30... [3] https://github.com/OmniLayer/omnicore/releases/tag/v0.3.0 https://github.com/OmniLayer/omnicore/releases/tag/v0.3.0
jkhdigital 5y ago
You bring up a very important but often overlooked point about market panics: the problem is not really everyone rushing for the door, it is market makers pulling bid liquidity so that “normal” selling volumes tank the price (which triggers the avalanche).

sbierwagen 5y ago

The most plausible conspiracy theory I've seen for the complete lack of regulatory action against Bitcoin or Tether is that they're being used to launder money by the US intelligence community.

oars 5y ago
Do you have any resources or links where I can learn more about this? I'm very interested in exploring this concept.
- darkerside 5y ago
  Please be very careful. It's fun to think about this stuff, but it is very speculative. Don't end up in conspiracy theory land.
dboreham 5y ago
My version of this theory is less far out: just that there are now sufficient number of people in the elite with significant exposure to cryptocurrency. When you see folks on CNBC talking about trading BTC like it's pork bellies, you know something's going on...
ragnot 5y ago
It isn't a conspiracy theory. It happens (see the part where they buy infrastructure with bitcoin): https://www.reuters.com/investigates/special-report/usa-spying-raven/ https://www.reuters.com/investigates/special-report/usa-spyi...

mekster 5y ago

What kind of hopium is that? Once Tether collapses, the entire crypto market loses its faith as they've been trading against fraud and the market structure was as imaginative as it could be.

ric2b 5y ago
The collapse of MTGox already proved this theory wrong many years ago.

cryptica 5y ago

Exactly, the entire fiat financial system is rigged and yet we are forced to participate in it... Tether is probably rigged too but at least we are not forced to participate. So at least it's a more robust asset than fiat in this 1 critical way. The entire system is a fraud and the only things holding it together are people's ignorance and hypocrisy. They cannot bring down Tether without revealing the lies and hypocrisy of the entire financial system since the same arguments could be applied to either side. I would not want to be a judge or lawyer on this case. There is no logic involved, the only way to debate this are extortion threats and threats of physical violence.

xur17 5y ago

Bitfinex has a very profitable system with Tether (loaning USDT out, and earning 5-6% interest), so they're incentivized to keep it running as long as possible. If they're smart, they have liquid reserves to cover the first x% of withdrawals. Which means - you would need something like a large drop in their backing assets (crypto, commercial paper, etc) + a confidence drop in the system large enough to cause a run on the bank, burning through all of their reserves. If no catalyst like this occurs, the game could easily continue on for years.