4 ms·

I share your opinion, although apparently over the past week Tether's market cap dropped from $83B to $74B which, if true, means that at least $9B have been red

by simias 4y ago

I share your opinion, although apparently over the past week Tether's market cap dropped from $83B to $74B which, if true, means that at least $9B have been redeemed in a few days. In other words, they had at least $9B in liquid, USD-convertible assets they could use to redeem those tokens. USDT is currently trading slightly below its peg (around $0.999) and only dipped very temporarily to $0.98 as the cryptocurrency market was crashing. Now of course they still have $74B to account for and maybe I'm just naive but I have a little more faith in USDT now than I had a week ago, I still think that it's mostly backed by monopoly money but maybe not as much as I thought.

matthewdgreen 4y ago
Or alternatively they "redeemed" a bunch of unbacked tokens that they (or a partner company) owned, in order to give the impression that their redemption window was processing large amounts successfully. I'm sure that's not actually the case, but it would be consistent with the "Tether printing unbacked tokens for its own trading" theory of Tether fraud. This may seem like a conspiracy theory, but: the reason these "conspiracy theories" are so easy to believe is that Tether is unregulated and highly non-transparent.
shkkmo 4y ago
A dropping market cap absolutely doesn't mean that liquid, easily USD convertible assets were used to redeem them. It is quite possible that a number of exhanges which had traded IOUs for Tether, Traded that Tether back to have the IOUs canceled. Edit: Now that I think about it, it really would make sense. They are fighting to keep these records secret, but they may also be cleaning up their books a little in case they lose and have to make their holdings public.
deleted 4y ago
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gitfan86 4y ago
Being only 90% backed by cash isn't the problem. A lot of people could afford to lose 10%, if the money was evenly distributed. Tether would still be a scam in that situation, but it wouldn't destroy the crypto ecosystem. The risk is that there could be a bank run. People panic and drive down the price trying to get rid of their tether. Now crypto as a whole has lost a lot of the liquidity used to buy/sell crypto. This causes a further panic across other crypto assets.
tarsinge 4y ago
No, all we know is they pushed a button to destroy $9B of Tether, just as they were "printed" in the first place. It says nothing about the transactions behind. From their infamous pie chart their cash reserves are very small (corroborated by Cayman Islands banking stats). It's way more probable they agreed to do it with exchanges to adjust for current customers balances, than Tether the microscopic company transferring real billions of dollars overnight from Cayman Islands through the banking system.

by simias 4y ago

matthewdgreen 4y ago

Or alternatively they "redeemed" a bunch of unbacked tokens that they (or a partner company) owned, in order to give the impression that their redemption window was processing large amounts successfully. I'm sure that's not actually the case, but it would be consistent with the "Tether printing unbacked tokens for its own trading" theory of Tether fraud. This may seem like a conspiracy theory, but: the reason these "conspiracy theories" are so easy to believe is that Tether is unregulated and highly non-transparent.

shkkmo 4y ago

A dropping market cap absolutely doesn't mean that liquid, easily USD convertible assets were used to redeem them. It is quite possible that a number of exhanges which had traded IOUs for Tether, Traded that Tether back to have the IOUs canceled. Edit: Now that I think about it, it really would make sense. They are fighting to keep these records secret, but they may also be cleaning up their books a little in case they lose and have to make their holdings public.

deleted 4y ago

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gitfan86 4y ago

Being only 90% backed by cash isn't the problem. A lot of people could afford to lose 10%, if the money was evenly distributed. Tether would still be a scam in that situation, but it wouldn't destroy the crypto ecosystem. The risk is that there could be a bank run. People panic and drive down the price trying to get rid of their tether. Now crypto as a whole has lost a lot of the liquidity used to buy/sell crypto. This causes a further panic across other crypto assets.

tarsinge 4y ago

No, all we know is they pushed a button to destroy $9B of Tether, just as they were "printed" in the first place. It says nothing about the transactions behind. From their infamous pie chart their cash reserves are very small (corroborated by Cayman Islands banking stats). It's way more probable they agreed to do it with exchanges to adjust for current customers balances, than Tether the microscopic company transferring real billions of dollars overnight from Cayman Islands through the banking system.