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Exchanges don't maintain the peg, buyers and sellers willing to transact at that exchange rate maintain the peg. Nothing stops you from submitting a buy order f

Exchanges don't maintain the peg, buyers and sellers willing to transact at that exchange rate maintain the peg. Nothing stops you from submitting a buy order for 1.00 USDT paying 0.50 USD. There's just no guarantee there is a seller out there willing to take that deal. Unless you think exchanges are somehow misrepresenting the trades occuring or the state of their order books, but I think this fraud would be difficult to maintain for this long on any exchange that actually supports withdrawal. If you have evidence of exchange manipulation I'd be interested to read it.

jqpabc123 5y ago
Exchanges don't maintain the peg, buyers and sellers willing to transact at that exchange rate maintain the peg. How did you verify this? Has your favorite exchange ever been audited by the SEC to confirm it is actually playing by theses rules? I think this fraud would be difficult to maintain ... I think it would be incredibly easy to maintain --- simply because no one ever audits their books. The crypto market is *unregulated*.
- everfree 5y ago
  > Has your favorite exchange ever been audited by the SEC to confirm it is actually playing by theses rules? Coinbase does not trade what are currently considered securities by law, so its trading operations are not subject to SEC oversight. However, Coinbase has gone through the SEC listing process for its common stock. https://www.sec.gov/Archives/edgar/data/1679788/000162828021003168/coinbaseglobalincs-1.htm https://www.sec.gov/Archives/edgar/data/1679788/000162828021... > I think it would be incredibly easy to maintain --- simply because no one ever audits their books. "We undergo regular financial and security audits by external firms. SOC 1 Type II, SOC 2 Type II."
  - jqpabc123 5y ago
    Coinbase is the exception --- not the rule. They also fully comply with KYC so there is no pretense of anonymity with Coinbase. If the majority are colluding to game the price of USDT, Coinbase will be forced to either go along or not trade in Tether. And since Tether is used in more than half of all crypto trades, refusing the Tether fraud would place them at a serious disadvantage.
    - everfree 5y ago
      Is Kraken another exception? They also trade USDT and comply with KYC, and they undergo semiannual third party audits.
      - jqpabc123 5y ago
        Possibly. As I tried to explain above, with control of a majority of the Tether trading volume, *you* could pretty much set the price any way you want. Anyone else who wants to participate and trade would have little choice but to follow your lead. In addition, let's assume you have access to unlimited funds (by simply minting more Tethers) and *you* would have everything you need in place to control the "market price" and commit Tether fraud on a massive scale. In other words, *you* would be just like the current crypto marketplace.
        everfree 5y ago
        > Anyone else who wants to participate and trade would have little choice but to follow your lead. Honest exchanges could let individuals trade it among themselves using an order book at no particular price, which is what they do. I wouldn't call that following a lead.
        jqpabc123 5y ago
        Honest exchanges wouldn't be minting what they're marketing. The NYSE can't fabricate stocks they are a market maker for. Not legally anyway.
- dataangel 5y ago
  > How did you verify this? Because mechanically this is how an exchange order book works. Go to any exchange to place a trade and you will see this. > I think it would be incredibly easy to maintain --- simply because no one ever audits their books. Publishing an order book and the resulting trades is the entire point of an exchange. The whole purpose is to provide a venue where buyers submit bids and sellers submit asks that are advertised to each other. When they happen to agree on price a trade automatically occur. If I go on an exchange and I can see in the order book that there are only 1000 USDT available for $1.00, and the next 1000 USDT are only available for $1.01, and I submit a buy order for 2000, I will break the "peg." However, since the majority of market participants will disagree with me, they will almost certainly quickly submit new orders willing to sell USDT for $1.00 again and the "peg" will be restored. The "peg" terminology comes from currency markets like USD <-> RMB where China sets the price by law and there is no order book price discovery at all. This isn't to say it's impossible for exchanges to engage in shenanigans. They can generate wash sales at no cost. But if they see you're going to break the peg, so they magically insert 1000 more USDT available for $1.00, and they support withdrawals, they are going to have to give you that money in which case the exchange has just made itself as regular seller and can only keep it up for as long as it is willing to set money on fire. And before you suggest they have unlimited USDT and so don't care, remember it goes both directions. You could also be a seller of USDT looking to find a buyer paying you in USD. For the "peg" to function the price needs to stay the same both ways.
  - jqpabc123 5y ago
    Publishing an order book and the resulting trades is the entire point of an exchange. And there is no way to manipulate this "order book", right? Just using my imagination here, but how about this: Any offer to sell USDT for less than $1USD, the exchange itself buys it under whatever name they choose and then immediately lists it for sale at --- you guessed it $1USD. Any order to sell USDT for more than $1USD just sits there unexecuted until a suitable idiot is found or the order is cancelled. Meanwhile, any offer to buy/sell USDT at $1USD gets executed almost immediately. By doing this they are manipulating the market and making money by fixing the price of USDT at $1USD. As long as all (or most) of the exchanges follow suit --- USDT stays pegged at $1USD --- even though it may only be worth $0.30 at maybe nothing at all --- you really have no way to *know*. You have placed all your trust and blind faith in these unregulated exchanges that no one ever audits. You *assume* that they operate just like similar regulated markets but no one ever verifies this. You know what happens when you ass-u-me too much, right?

jqpabc123 5y ago

Exchanges don't maintain the peg, buyers and sellers willing to transact at that exchange rate maintain the peg. How did you verify this? Has your favorite exchange ever been audited by the SEC to confirm it is actually playing by theses rules? I think this fraud would be difficult to maintain ... I think it would be incredibly easy to maintain --- simply because no one ever audits their books. The crypto market is *unregulated*.

everfree 5y ago
> Has your favorite exchange ever been audited by the SEC to confirm it is actually playing by theses rules? Coinbase does not trade what are currently considered securities by law, so its trading operations are not subject to SEC oversight. However, Coinbase has gone through the SEC listing process for its common stock. https://www.sec.gov/Archives/edgar/data/1679788/000162828021003168/coinbaseglobalincs-1.htm https://www.sec.gov/Archives/edgar/data/1679788/000162828021... > I think it would be incredibly easy to maintain --- simply because no one ever audits their books. "We undergo regular financial and security audits by external firms. SOC 1 Type II, SOC 2 Type II."
- jqpabc123 5y ago
  Coinbase is the exception --- not the rule. They also fully comply with KYC so there is no pretense of anonymity with Coinbase. If the majority are colluding to game the price of USDT, Coinbase will be forced to either go along or not trade in Tether. And since Tether is used in more than half of all crypto trades, refusing the Tether fraud would place them at a serious disadvantage.
  - everfree 5y ago
    Is Kraken another exception? They also trade USDT and comply with KYC, and they undergo semiannual third party audits.
    - jqpabc123 5y ago
      Possibly. As I tried to explain above, with control of a majority of the Tether trading volume, *you* could pretty much set the price any way you want. Anyone else who wants to participate and trade would have little choice but to follow your lead. In addition, let's assume you have access to unlimited funds (by simply minting more Tethers) and *you* would have everything you need in place to control the "market price" and commit Tether fraud on a massive scale. In other words, *you* would be just like the current crypto marketplace.
      - everfree 5y ago
        > Anyone else who wants to participate and trade would have little choice but to follow your lead. Honest exchanges could let individuals trade it among themselves using an order book at no particular price, which is what they do. I wouldn't call that following a lead.
        jqpabc123 5y ago
        Honest exchanges wouldn't be minting what they're marketing. The NYSE can't fabricate stocks they are a market maker for. Not legally anyway.
dataangel 5y ago
> How did you verify this? Because mechanically this is how an exchange order book works. Go to any exchange to place a trade and you will see this. > I think it would be incredibly easy to maintain --- simply because no one ever audits their books. Publishing an order book and the resulting trades is the entire point of an exchange. The whole purpose is to provide a venue where buyers submit bids and sellers submit asks that are advertised to each other. When they happen to agree on price a trade automatically occur. If I go on an exchange and I can see in the order book that there are only 1000 USDT available for $1.00, and the next 1000 USDT are only available for $1.01, and I submit a buy order for 2000, I will break the "peg." However, since the majority of market participants will disagree with me, they will almost certainly quickly submit new orders willing to sell USDT for $1.00 again and the "peg" will be restored. The "peg" terminology comes from currency markets like USD <-> RMB where China sets the price by law and there is no order book price discovery at all. This isn't to say it's impossible for exchanges to engage in shenanigans. They can generate wash sales at no cost. But if they see you're going to break the peg, so they magically insert 1000 more USDT available for $1.00, and they support withdrawals, they are going to have to give you that money in which case the exchange has just made itself as regular seller and can only keep it up for as long as it is willing to set money on fire. And before you suggest they have unlimited USDT and so don't care, remember it goes both directions. You could also be a seller of USDT looking to find a buyer paying you in USD. For the "peg" to function the price needs to stay the same both ways.
- jqpabc123 5y ago
  Publishing an order book and the resulting trades is the entire point of an exchange. And there is no way to manipulate this "order book", right? Just using my imagination here, but how about this: Any offer to sell USDT for less than $1USD, the exchange itself buys it under whatever name they choose and then immediately lists it for sale at --- you guessed it $1USD. Any order to sell USDT for more than $1USD just sits there unexecuted until a suitable idiot is found or the order is cancelled. Meanwhile, any offer to buy/sell USDT at $1USD gets executed almost immediately. By doing this they are manipulating the market and making money by fixing the price of USDT at $1USD. As long as all (or most) of the exchanges follow suit --- USDT stays pegged at $1USD --- even though it may only be worth $0.30 at maybe nothing at all --- you really have no way to *know*. You have placed all your trust and blind faith in these unregulated exchanges that no one ever audits. You *assume* that they operate just like similar regulated markets but no one ever verifies this. You know what happens when you ass-u-me too much, right?