7 ms·

If Tether is backed, then Bitfinex could buy currently-discounted tethers off the market and redeem them for face value, pocketing the difference. The fact this

If Tether is backed, then Bitfinex could buy currently-discounted tethers off the market and redeem them for face value, pocketing the difference. The fact this is not happening means they really don't have the money, do they?

IAmEveryone 4y ago
Technically, i guess they could "have a little trouble acting so fast", buying everything at $0.9 and back up to $1, and pocket the difference, scolding people for their lack of faith. Practically? Yeah, it's goner.
nikanj 4y ago
They really do have the money, but would rather spend it on Lamborghinis and coke.
semi-extrinsic 4y ago
IDK, according to the graph on CoinMarketCap it has been down to mid-to-low 90s several times in the past, e.g. in early 2020. Sure it's been really stable for a long time now, but might this just be another "bump"?
dragontamer 4y ago
In the short term, they have the reserves for sure. In the short term, this is more of a classic bank-run. The Terra-coin + Luna scared a lot of cryptocoin holders, and now they're running away from another stablecoin. Even if Bitfinex had the money, the amount of traders leaving USDT has to be a colossal amount. The amount of money Bitfinex can transfer at any given time is limited, so the peg will bend and buckle. ------- The big question is: does Bitfinex have enough reserves to weather the storm? Not just this short-term storm, but the whole shebang that's about to happen? We will find out... eventually. UST / Luna had substantial reserves. But it clearly wasn't enough. Probably because Anchor promised 20% gains and there was simply more UST in existence than the amount of USD put into that system.
- chinathrow 4y ago
  > and now they're running away from another stablecoin. From another not so stable coin. Fixed that for you.
- CaptainZapp 4y ago
  > In the short term, they have the reserves for sure. Why for sure? Their "audits" and other information provided that they have the reserves were rather unsubstantial, if not outright dodgy.
  - dragontamer 4y ago
    Short term, USDT kept enough reserves to hold the peg steady for years. I'm not saying USDT was 100% backed. They probably could have accomplished all of this with just 20% backing, maybe even less. But in the short term, only 20% of people would ever "test" the reserves so to speak. Now I don't know how much USDT was fraudulent... I do believe a lot of it was fraud. But there's clearly a nugget of truth, a nugget of backing that kept the price steady last year and the year before. Once that "nugget" of stability runs out, its all over.
- adhesive_wombat 4y ago
  > UST / Luna had substantial reserves. Did they, or did they just claim to while minting stablecoin in order to pump the price of Bitcoin? Which these guys (Tether) would want to do because the owners of Tether are a massive exchange, and they depend on Bitcoin being high to attract customers to the market, and the first thing news customers so is bring the real objective with them: actual cash.
  - dragontamer 4y ago
    UST is Terra-coin, which collapsed 3 days ago. USDT, Tether, is a completely different coin. the one we're discussing today. --------- UST + Luna had substantial reserves. They proved it with their actions this past week. They weren't *enough* reserves mind you, but they were posting their BTC-wallets on Twitter and showing the movements.
JohnJamesRambo 4y ago
They are actually redeeming them on their website for anyone that wants to. > @paoloardoino GM Reminder that tether is honouring USDt redemptions at 1$ via http://tether.to http://tether.to . >300M redeemed in last 24h without a sweat drop. 12:38 AM · May 12, 2022·
- rtpg 4y ago
  You need to show up with $100k to do the redemption. Granted if you did the round trip with only $10k you’re looking at peanuts in arbitrage but it _is_ a way for them to prevent real arbitrage that feeds into itself. I bet the fact that people wanting to short don’t believe they have the funds doesn’t help. But hey if you are a millionaire short tether might be worth setting up the recurring trade out!
  - turtledove 4y ago
    So wait, assuming I had a hundred k, and they were willing and able to pay out, I could buy 97k of tether and redeem it for 100k? Just an instant 3% return? This seems like there's no way they are opening themselves up to arbitrage like this.
    - bhdy55 4y ago
      Perhaps they want arbitrage in this case, because once people see this opportunity, it will make folks want to buy USDT in the market, which will bring the price back up (and remove the opportunity)?
    - eterm 4y ago
      It's $95k of tether now ;) And why wouldn't they allow this arb? By committing to that arbitrage you're pricing very low the risk of not actually being able to get your money once it has collapsed.
      - rightbyte 4y ago
        Isn't the point of pegging that you allow any arbitrage to keep the value from falling from about the nominal value?
Andrew_nenakhov 4y ago
I don't think they are backed. Too many signs suggesting otherwise.
- krono 4y ago
  Are the people in charge of Tether currently moving towards an airport? If so you're probably right
  - meltedcapacitor 4y ago
    The principals disappeared long ago. The remaining visible faces can claim they did not know what the boss was doing ("I'm just a dev/lawyer").
lozenge 4y ago
"Elsewhere on the website, there’s a letter from an accounting firm stating that Tether has the reserves to back its coins, along with a pie chart showing that about $30 billion of its dollar holdings are invested in commercial paper—short-term loans to corporations. That would make Tether the seventh-largest holder of such debt, right up there with Charles Schwab and Vanguard Group." Commercial paper is not dollars, so tether effectively admits it is not backed. The risk of default on commercial paper is huge compared to dollars held in reputable banks' accounts.
- retube 4y ago
  It's actually much better for tether to be invested in CP and similar paper. You can't leave $80bn in the bank, cos then you have gigantic concentrated credit risk to the bank. It's actually imperative you invest in CP, and preferably, government bills, to diversify your risk.
  - muhammedbash 4y ago
    They don't have to stick the entire $80bn in one bank. It is the lack of transparency around the CP that is raising eyebrows. Why can't Tether list the papers they are invested in? It is such a simple thing to do. Could be all their CP holdings are in one company :)
- unmole 4y ago
  > Commercial paper is not dollars, so tether effectively admits it is not backed. What do you think backs bank deposits?
  - marcinzm 4y ago
    The government via FDIC.
    - unmole 4y ago
      FDIC is insurance, it's not a backing asset. And it's limited to 250k USD.
SamReidHughes 4y ago
Acting shifty and buying into a de-peg could have been the business plan all along. They could be waiting for it to fall more so they can pocket more money.

IAmEveryone 4y ago

Technically, i guess they could "have a little trouble acting so fast", buying everything at $0.9 and back up to $1, and pocket the difference, scolding people for their lack of faith. Practically? Yeah, it's goner.

nikanj 4y ago

They really do have the money, but would rather spend it on Lamborghinis and coke.

semi-extrinsic 4y ago

IDK, according to the graph on CoinMarketCap it has been down to mid-to-low 90s several times in the past, e.g. in early 2020. Sure it's been really stable for a long time now, but might this just be another "bump"?

dragontamer 4y ago

In the short term, they have the reserves for sure. In the short term, this is more of a classic bank-run. The Terra-coin + Luna scared a lot of cryptocoin holders, and now they're running away from another stablecoin. Even if Bitfinex had the money, the amount of traders leaving USDT has to be a colossal amount. The amount of money Bitfinex can transfer at any given time is limited, so the peg will bend and buckle. ------- The big question is: does Bitfinex have enough reserves to weather the storm? Not just this short-term storm, but the whole shebang that's about to happen? We will find out... eventually. UST / Luna had substantial reserves. But it clearly wasn't enough. Probably because Anchor promised 20% gains and there was simply more UST in existence than the amount of USD put into that system.

chinathrow 4y ago
> and now they're running away from another stablecoin. From another not so stable coin. Fixed that for you.
CaptainZapp 4y ago
> In the short term, they have the reserves for sure. Why for sure? Their "audits" and other information provided that they have the reserves were rather unsubstantial, if not outright dodgy.
- dragontamer 4y ago
  Short term, USDT kept enough reserves to hold the peg steady for years. I'm not saying USDT was 100% backed. They probably could have accomplished all of this with just 20% backing, maybe even less. But in the short term, only 20% of people would ever "test" the reserves so to speak. Now I don't know how much USDT was fraudulent... I do believe a lot of it was fraud. But there's clearly a nugget of truth, a nugget of backing that kept the price steady last year and the year before. Once that "nugget" of stability runs out, its all over.
adhesive_wombat 4y ago
> UST / Luna had substantial reserves. Did they, or did they just claim to while minting stablecoin in order to pump the price of Bitcoin? Which these guys (Tether) would want to do because the owners of Tether are a massive exchange, and they depend on Bitcoin being high to attract customers to the market, and the first thing news customers so is bring the real objective with them: actual cash.
- dragontamer 4y ago
  UST is Terra-coin, which collapsed 3 days ago. USDT, Tether, is a completely different coin. the one we're discussing today. --------- UST + Luna had substantial reserves. They proved it with their actions this past week. They weren't *enough* reserves mind you, but they were posting their BTC-wallets on Twitter and showing the movements.

JohnJamesRambo 4y ago

They are actually redeeming them on their website for anyone that wants to. > @paoloardoino GM Reminder that tether is honouring USDt redemptions at 1$ via http://tether.to http://tether.to . >300M redeemed in last 24h without a sweat drop. 12:38 AM · May 12, 2022·

rtpg 4y ago
You need to show up with $100k to do the redemption. Granted if you did the round trip with only $10k you’re looking at peanuts in arbitrage but it _is_ a way for them to prevent real arbitrage that feeds into itself. I bet the fact that people wanting to short don’t believe they have the funds doesn’t help. But hey if you are a millionaire short tether might be worth setting up the recurring trade out!
- turtledove 4y ago
  So wait, assuming I had a hundred k, and they were willing and able to pay out, I could buy 97k of tether and redeem it for 100k? Just an instant 3% return? This seems like there's no way they are opening themselves up to arbitrage like this.
  - bhdy55 4y ago
    Perhaps they want arbitrage in this case, because once people see this opportunity, it will make folks want to buy USDT in the market, which will bring the price back up (and remove the opportunity)?
  - eterm 4y ago
    It's $95k of tether now ;) And why wouldn't they allow this arb? By committing to that arbitrage you're pricing very low the risk of not actually being able to get your money once it has collapsed.
    - rightbyte 4y ago
      Isn't the point of pegging that you allow any arbitrage to keep the value from falling from about the nominal value?

Andrew_nenakhov 4y ago

I don't think they are backed. Too many signs suggesting otherwise.

krono 4y ago
Are the people in charge of Tether currently moving towards an airport? If so you're probably right
- meltedcapacitor 4y ago
  The principals disappeared long ago. The remaining visible faces can claim they did not know what the boss was doing ("I'm just a dev/lawyer").

lozenge 4y ago

"Elsewhere on the website, there’s a letter from an accounting firm stating that Tether has the reserves to back its coins, along with a pie chart showing that about $30 billion of its dollar holdings are invested in commercial paper—short-term loans to corporations. That would make Tether the seventh-largest holder of such debt, right up there with Charles Schwab and Vanguard Group." Commercial paper is not dollars, so tether effectively admits it is not backed. The risk of default on commercial paper is huge compared to dollars held in reputable banks' accounts.

retube 4y ago
It's actually much better for tether to be invested in CP and similar paper. You can't leave $80bn in the bank, cos then you have gigantic concentrated credit risk to the bank. It's actually imperative you invest in CP, and preferably, government bills, to diversify your risk.
- muhammedbash 4y ago
  They don't have to stick the entire $80bn in one bank. It is the lack of transparency around the CP that is raising eyebrows. Why can't Tether list the papers they are invested in? It is such a simple thing to do. Could be all their CP holdings are in one company :)
unmole 4y ago
> Commercial paper is not dollars, so tether effectively admits it is not backed. What do you think backs bank deposits?
- marcinzm 4y ago
  The government via FDIC.
  - unmole 4y ago
    FDIC is insurance, it's not a backing asset. And it's limited to 250k USD.

SamReidHughes 4y ago

Acting shifty and buying into a de-peg could have been the business plan all along. They could be waiting for it to fall more so they can pocket more money.