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Tether Withdrawals Top $10B
- tablespoon 4y agoDon't listen to the haters, Tether is going to the moon! Now is a great to invest, so you can get in on the ground floor. /s
- Ekaros 4y agoNo, no, it's stable coin. You see 1 USDT will always be 1 USDT. That is what stable coin means and is doesn't it? That is you can always redeem one USDT for one USDT(terms and conditions might apply)...
- cycrutchfield 4y agoNah you can also redeem 1 USDT for some Evergrande debt as well
- steve_mcdougall 4y agoThey said 1 USDT is tethered to 1 USD. They didn't tell you if it was positive 1 USD or negative 1 USD.
- fshbbdssbbgdd 4y agoWhoever got to offload their Evergrande debt for USDT sure was lucky! That trade have made Tether some friends in high places.
- Ygg2 4y agoHoldl the dip.
- Ygg2 4y agoYou know, messing with crypto anarchists never gets old despite the karma dip.
- swarnie 4y agoYou have an extremely lucrative career as a youtube finance guru in your future. Remember to only lease the Lambo for a few hours just to get the b roll you need. If you adjust the lighting you can keep using that footage for months.
- thematrixturtle 4y ago> “Whenever there’s a failure or a catastrophe in crypto, the fear is always that someone will misread the situation and overcorrect in a position that’s not helpful for the entire community writ large,” This statement is all kinds of amazing: * Casual use of the phrase "whenever there's a catastrophe in crypto", since there really is one every few days * "Misread the situation and overcorrect" --> read: taking their money out of the casino and turning it back into filthy fiat * "Not helpful for the entire community" --> read: taking money out of shitcoin X damages the valuations of all other shitcoins, so the owner of one random blockchain would very much prefer that you didn't do that
- medo-bear 4y ago> This statement is all kinds of amazing: > Casual use of the phrase "whenever there's a catastrophe in crypto", since there really is one every few days in some sense crypto's resiliance against so many catastrophies is amazing. if this was USD we would be at WW10 and two October revolutions by now
- sgammon 4y agoglad to see hn isn’t buying it but retail investors may not be so lucky.
- oblio 4y agoCrashes are ultimately almost always sad. Reality just is, it isn't fun or nice. It just exists.
- VGltZUNvbnN1 4y agoReality is that which, when you stop believing in it, doesn't go away. - Philip K. Dick
- ProfXponent 4y agoHN’s track record on stuff like this is really bad. This is a place to get interesting news on startup valuations, Rust, and what the current FE framework of choice is. For everything else it might as well be Reddit.
- dougmsmith 4y ago
- 0xy 4y agoThe most concerning thing to me about Tether is they appear to own Chinese corporate debt for some unknown reason. Isn't that an insane amount of risk? In what universe is Chinese corporate debt even remotely liquid? It could be invested in Evergrande-adjacent companies for all we know. And you know when push comes to shove the Chinese government will throw foreign investors under the bus first.
- dsl 4y agoThe “too big to fail” businesses ended up being the best investments in the US. Commercial debt in China is guaranteed by proxy of the whole Chinese economy, because the government has direct ownership. The Chinese economy is in turn stabilized by the fact everything from your toothbrush to your car tires are made in China or using raw materials they control.
- pharmakom 4y agoChina has the factories but they are hugely dependent on imports of materials and energy; technology from overseas companies; and overseas markets to export to. Throw in their demographics - which are less suited to manufacturing every year - and there could be serious problems for China on the horizon. I hope it leads to a more humane CCP.
- JumpCrisscross 4y ago> Commercial debt in China is guaranteed by proxy of the whole Chinese economy There is zero chance China prioritises offshore creditors in a crisis, a cryptocurrency exchange no less. This has precedent [1]. [1] https://www.wsj.com/articles/evergrande-is-leaving-foreign-bondholders-in-the-dark-advisers-say-11633707966 https://www.wsj.com/articles/evergrande-is-leaving-foreign-b...
- jimmydorry 4y agoWho's saying it's Chinese debt? It's more likely to be loans to crypto ventures. Until it's disclosed, it's anyone's guess, but anyone claiming anything with certaintity, is full of it.
- deleted 4y ago[deleted]
- MisterBastahrd 4y agoI'm sure this is all just fine and we just aren't sophisticated enough to understand the big brains behind the upcoming blockchain revolution that's going to decentralize all the things and grant freedom to everybody while also making us all rich. Hell, just today I read about a new coin that was going to behave as a stand-in for gold so that we could invest in that instead of destroying the environment to pull the actual stuff out of the ground. Maybe our hopes and dreams are the conductors of the future.
- kwere 4y agoOne of the brains Giancarlo Devasini, Italian chameleon, plastic surgeon, got sued from Microsoft and Toshiba for "patents issues", got accused by UK courts of to"fraudulent tax losses",joined Bitfinex soon after its founding that year, running its trading and risk management operations [0]. Truly a self-made/self-taught men, representative of Italians business ethics. [0] https://www.ft.com/content/4da3060c-8e1a-439f-a1d7-a6a4688ad6ca https://www.ft.com/content/4da3060c-8e1a-439f-a1d7-a6a4688ad...
- deleted 4y ago[deleted]
- thkim 4y agoOK so Tether went from 83bn to 73bn... what's the big deal? It's not like LUNA.
- logifail 4y ago> what's the big deal? It's not like LUNA It's not yet like Luna. Just yesterday the Financial Times ran this story: "Binance promoted terraUSD as a 'safe' investment just weeks before the stablecoin and its counterpart luna collapsed in a $40bn wipeout that shook the crypto industry"[0] [0] https://www.ft.com/content/d459f435-edff-412c-85a5-0961d50aba69 https://www.ft.com/content/d459f435-edff-412c-85a5-0961d50ab... / https://archive.ph/OQmjW https://archive.ph/OQmjW
- thematrixturtle 4y agoThe big deal is that it's highly likely that Tether is backed up by way less than 83 billion in actual dollars. Let's say, for argument's sake, that they were 50% backed a week ago and had $40B in actual dollars. If $10B was pulled out, that was into actual US dollars or equivalent, meaning they now have $70B backed up by $30B. If another $10B drains in the next week, it'll be $60B vs $20B. This incentivizes other holders of Tether to also pull out so they're not left holding the bag (= Tether's stash of dodgy loans etc), basically kicking off a slow-motion version of the same death spiral that we saw for UST/LUNA, until Tether runs out of assets and the whole crypto economy goes poof.
- cowtools 4y agoI don't know if it will necessarily cause crypto prices to crash
- wing-_-nuts 4y agoI'm a complete layperson when it comes to crypto, but from what I have heard a good bit of the recent bitcoin volume has been done via tether. if tether crashes, I don't know how this doesn't cause a crash when volume dries up?
- 4y ago
- suyula 4y agoWasn't Tether the one that was revealed to have only had enough backing for like 3% of its coins a few months ago? Surely that must be drying up now.
- bhouston 4y agoThey likely have backing of more than 50% probably more than 80%. Although how much is liquid is unknown.
- alangibson 4y agoThey only had $4.2B in cash during their last attestation. The rest was unknown treasuries and commercial paper.
- rglullis 4y agoWho cares about their attestation? It is not a proper audit. They could just borrow money from Bitfinex, take a screenshot of them holding the money, saying "see, we have money" and then return to Bitfinex on the same day. Their attestation is as worthless as their word.
- alangibson 4y agoTotally true. That's just the closest thing to actual information we have.
- saalweachter 4y agoThey probably didn't have more cash than they claimed during their attestation, though, so it's a reasonable upper bound.
- rglullis 4y agoUpper bound, yes. Reasonable, no. They are not a reliable narrator, and they have been convicted in multiple jurisdictions over fraudulent statements. There is no "reasonable" argument that this time they should be trusted. This will only be solved when completely implode or in the miracle shot that they pass through a rigorous independent audit.
- puranjay 4y agoThis is either a good thing in that "wow, they atleast have $10B to redeem instantly" Or its a bad thing in that "welp, there's all the insiders exiting the boat first"
- dsl 4y agoRedemptions are also done when exchanges need to offload Tether to buy other crypto currencies to fulfill orders. For what it is worth I have been getting a lot of emails from OTC brokers trying to fill BTC and ETH orders over the last few days.
- CTDOCodebases 4y agoNote there no mention of redemptions, just a reduction in the circulating supply. My guess is the USDT was borrowed and Tether is holding less commercial paper now.
- charcircuit 4y ago>Note there no mention of redemptions They have mentioned paying out billions in redemptions on twitter.
- CTDOCodebases 4y agoFrom the horse's mouth: "Tether has over $70 billion dollars of collateral which it can redeem USD₮ against. No exchange’s order book has anything remotely resembling that amount of liquidity."[0] When you look up the attestation that they provide each quarter 24% of this collateral is commercial paper.[1] Companies could be redeeming USDT for their own commercial paper. If you trust these attestations they have a lot of treasury bills and have increased their cash holdings by a couple percent so fingers crossed for those holding USDT. [0] - https://tether.to/en/understanding-tethers-peg-and-reserves/ https://tether.to/en/understanding-tethers-peg-and-reserves/ [1] - https://tether.to/en/transparency/#reports https://tether.to/en/transparency/#reports
- stingraycharles 4y agoAm I correct that it’s not necessarily $10B in withdrawals, as it is that the total market cap (valuation * total coins) dropped by $10B? Seems like an important distinction?
- ShaneMcGowan 4y agoSince Tether is a stable coin™ allegedly backed by and pegged to the price of 1 USD. So if the price is still $1 but the circulation has gone down by 10 billion, that means $10B worth of it has been cached out
- JumpCrisscross 4y ago> if the price is still $1 but the circulation has gone down by 10 billion, that means $10B worth of it has been cached out Tether being caught lying is practically perennial. Unless we have records showing someone receiving $10bn from Tether, it's safe to be sceptical of the claim.
- ShaneMcGowan 4y agoExactly why I used the word "allegedly", lol
- lamontcg 4y agoI still think that Bitfinex is operating as a central bank and primarily loaning out Tether against bitcoin (and eth) cold wallets. Instead of $10B of tether being converted to USD and taken out of the crypto ecosystem, what I suspect has happened is that $10B of loans have been paid back in tether and the collateral has lost value so the borrower cannot re-borrow the tether. Bitfinex doesn't ever redeem tether for USD and that isn't how tether is burned. This means that it is predominantly crypto backed, which will at some point collapse if crypto collapses, but it is much more intrinsically stable than Terra/Luna up until crypto fails. Maybe I'm wrong and we're about to see Tether bolt for the exits and crash and take out all of crypto with it. But crypto has been through a worse crypto bear market before, and Tether has been burned before without a systemic panic.
- anonporridge 4y agoAnd in the past 2 weeks, USDC has added $5B. The much more trustworthy USDC looks like its soon going to surpass the shady OG stablecoin Tether.
- reducesuffering 4y ago1 month chart on Tether price pretty clearly shows that Tether is struggling to hold it's peg: https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/ Terra / Luna had $3b in reserves, either used to defend the peg, and/or laundered elsewhere (Do Kwon claims they only have $9m left, rest went to defend peg, with no verification. "we're checking if we can show we made these trades with a market maker." I'll let you be the judge if you think $3b got blasted into upward support of UST). The result was the same; a worthless stablecoin. Tether is no different here, just larger reserves. They will be depleted trying to hold the peg until they can't and/or they will be ran off with.
- drumhead 4y agoWe're in the get out while you still can phase. At some point they'll suspend conversion and holders will be stuck with something virtually worthless. It's like watching a landslide in its early stages, as soon as enough people realise what's going on it's going to be too late.
- Ekaros 4y agoIt is specially relevant to get out as there is no upside or very minimal upside... Why ever hold tether... If real money is an option.
- askmike 4y agoUSDT is the fuel that powers a lot the crypto ecosystem. Good luck trying to move USD around between different places in the crypto ecosystem (especially outside office hours). While possible it's complicated, slow and has terrible uptime. The biggest crypto markets in the world are quoted in tether.
- TomSwirly 4y agoYour answer is not false, but does not explain why someone would hold Tether instead of using it as an intermediate vehicle.
- cormacrelf 4y agoThe wisdom of holding is always relative to the rest of the market and what else you could be holding. Imagine a metals exchange. If copper were going up in value compared to the other metals, you’d want to hold copper. But you can also sell all your metals for cash. You would do this when all the metals are going down in value, which means USD is the “best-performing metal” and you want to be holding it. You always want to be holding the thing going up in value the most. Sometimes it’s USD, and the fact that it is also your reference point for pricing everything else doesn’t mean it’s not front of the pack sometimes. Obviously when you buy USD with your copper, the value of USD goes up. But since it’s all denominated in USD, that just looks like “all metals go down in price but especially copper”, and because so many other markets set the value of USD, it really just looks like “copper goes down”. It’s similar to the relative velocities etc you do when you study physics. So primetime for holding cash is when there is deflation and you expect to be able to buy more for your dollars later, so you stash it in a bank account or under your mattress. This is generally bad for a regular economy because people stop spending and the economy slows down. That’s why there’s always a little bit of inflation, because better that than deflation! Inflation makes people use their money lest it lose value / gather dust sitting still, and spending money makes the economy run. Having to beat inflation with your investment is a chore, but it’s better that everybody individually decides to do something with their money. I digress. For Tether, where the only things you can really buy are other cryptocurrencies, deflation just looks like a crypto bear market. So people are likely holding USDT right now. At the same time, given that the value of USD is set by many trillions of dollars changing hands and millions of contracts priced in it every day, compared to Tether which is like a gift card for a record store that might go out of business, it’s possible for USDT to get unpegged if that record store posts bad results. The strength of the proposition that USDT can be redeemed for USD is the only thing holding it together.
- louloulou 4y ago
- User23 4y agoHow do you structure that trade such that it pays out when tether collapses?
- sickmate 4y agoI've never shorted or taken out crypto loans, but you could theoretically: - Take out a loan of USDT, using a stablecoin you trust as collateral - Immediately trade all USDT into your stablecoin - If the USDT price crashes, buy it up to repay the loan. e.g. Binance lets you borrow 800k USDT with 1.23m collateral. Over 180 days, interest paid would be 36k. Say USDT crashes and you repay your loan at 10c/USDT - you would pay at most 84k to settle the loan. You then end up with 1.94m, a 58% return on investment. It's probably not that simple however.
- alisiddiq 4y agoWhat happens if Binance goes under because of this tether crash?
- alasdair_ 4y ago>- If the USDT price crashes, buy it up to repay the loan. What happens if trading is effectively halted, so it's simply no possible to buy the USDT back later?
- SilasX 4y agoYou can do it on a decentralized finance app like compound: deposit a stablecoin you trust (which could be USDC) and borrow Tether, then immediately sell it and put it into something else that earns interest, incl outside crypto. You continue to earn interest on the deposited USDC (currently .86%, Tether borrowing cost is 3.62%, all ignoring Compound rewards). You can borrow against 82% of the deposited USDC, but 70% would be better to cover the interest accumulating and possible temporary spikes in Tether value. https://compound.finance/markets https://compound.finance/markets
- gomijacogeo 4y agoReeve Collins interviewed Monday morning on CNBC. I won't editorialize and just leave it as a data point for others to interpret. https://www.youtube.com/watch?v=3GsMPMXGzAg https://www.youtube.com/watch?v=3GsMPMXGzAg
- sub7 4y agoMy guess is these were exchange IOUs or "commercial paper" and no USD was involved in this burn. I can't really see a scenario where they aren't fucked, and it's going to make Terra look like a blip whenever it plays out. Unsure whether it'll be regulation or a rush to redemption but it really can't be that far out.
- elango 4y agowhat kind of interest income that this 70billion generate ?
- Havoc 4y agoMore importantly how is 70B still in it… Not opposed to crypto in general but tether always struck me as rather questionable even pre Luna Tera collapse
- pg_bot 4y agoIf you look at the timeline for tether it seems even more suspect. In late august of 2020 there are 10 billion tethers in circulation. They supposedly grew 8x in less than 2 years while being under investigation for bank fraud and a litany of other problems. They've never had an audit of their reserves, and the public behavior of their executives does not inspire confidence. Here's how this plays out in the next few months. Tether had a first mover advantage, but now there are other competitors that are functionally equivalent but have better guarantees of their asset backing. So now anyone who holds tethers should prefer holding a purely superior product. Why would anyone take any additional risk without upside? So they now enter a death spiral, since there is no reason for them to exist. The best possible outcome is that all of their assets are liquidated and somehow everyone is paid in full. The more likely outcome is that we find out the extent of the fraud when they halt redemption of tethers to their customers.
- eldenwrong 4y agoHow much liquidity entered the financial markets since 2020....?
- pg_bot 4y agoAbout 265 billion USD entered circulation during that same time period. https://fred.stlouisfed.org/series/CURRCIR https://fred.stlouisfed.org/series/CURRCIR
- ericpauley 4y agoThis is just the total paper/coin in physical circulation. Actual money supply (M1) grew far more: https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- ineptech 4y agoSomeone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the currency right up until they buy back the last outstanding tether with their last dollar. Of course, they didn't save every dollar; they spent some and invested some, presumably in things that have lost money recently. But they should be solid as long as they have made more money on those investments than they've spent in salaries and yachts and what-not, and Tether was already huge back when BTC was below $2k. I know I'm leaving out a lot of detail here, but it seems like the only way Tether is not stable is if the people behind it have been wildly profligate. Is this about right, or am I off base?
- candiddevmike 4y agoThink the concern is the folks behind tether have printed tethers to buy/prop up Bitcoin over the years. You can see the issuance of new tethers align closely with Bitcoin rallies or sell offs.
- droopyEyelids 4y agoSomeone buys $10 tethers for $10 worth of bitcoin, then bitcoin loses value, then the original buyer wants to redeem 10 tether for $10 USD.
- lupire 4y agoThat's no problem at all. The person who bought the Bitcoin / sold the Tether loses , but that doesn't affect USDT.
- jakelazaroff 4y agoThe person who bought the Bitcoin and sold the USDT is the Tether organization itself. Here’s the same example, stated more explicitly: 1. I buy 10 USDT from Tether in exchange for $10 worth of Bitcoin. Tether now has 1:1 reserves of Bitcoin backing USDT. 2. The price of Bitcoin decreases by 50%. Tether no longer has enough reserves to cover all the USDT in circulation. 3. I want to sell my 10 USDT back to Tether and get my $10 worth of Bitcoin. But Tether only has $5 worth of Bitcoin in its reserves! USDT will lose its peg.
- swamp40 4y agoEventually, the US will figure this out and make a USD crypto that will be used as THE stablecoin. It seems obvious to me that a stablecoin needs a solid governmental backing, since there is no profit in it and you need unlimited deep pockets in case of a run. The advantage is then that the USD remains the world's premier reserve currency, even into the digital age.
- xwolfi 4y agoW...why do you want something more digital than the existing system ? I dont want each dollar to be tracked from its infancy to where I spent it, I m quite fine with withdrawing my digital money back to cash at the ATM and spending it anonymously thereafter. The system is perfect, why change it to liquefy the dumb investment a few crypto lunatics made ?
- swamp40 4y agoThe existing system would stay the same. A USD stablecoin would be something new - a cryptocurrency that is backed 1:1 by the USD and the US Government. It's too big of a job for private finances and too prone to corruption because there is zero profit if you do it properly.
- malermeister 4y agoBut why should the US government build something just so crypto folks have something to gamble with? Why does the government need to enable their habit? What benefit is there to its people?
- klyrs 4y agoWhat value does "cryptocurrency" add to a centralized currency? I can see that we'd be better off with a standardized protocol for sending money around, but plenty of countries have done that fine. The US is stuck in a technological backwater, yes, but I fail to see why "cryptocurrency" would decrease the number of problems.
- dxhdr 4y ago
- s-xyz 4y agoStill hoping on a rebound
- uptownfunk 4y agoHow can I short this
- jokoon 4y agoThe Blockchain created a new generation of capitalists, and this is their third or second baptism. Their first was mtgox, I think?
- X6S1x6Okd1st 4y agoImportant context if you want to start spinning what might happen if X: > Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. https://tether.to/en/legal/ https://tether.to/en/legal/
- cpach 4y agoRelated thread: https://news.ycombinator.com/item?id=31448819 https://news.ycombinator.com/item?id=31448819
- Barrera 4y ago> Tether, the world’s largest stablecoin, has seen its circulating supply plunge from a record $84.2 billion on May 11 to around $73.3 billion as of Monday, according to data from CoinGecko. About $1 billion was withdrawn late Friday evening. At first blush this looks bad. That's about 12% of Tether's market cap. On the other hand, the exchange rate is at this moment is 0.999:1. So the drawdown did not "break the bank." This means that Tether had at least that much capital that it could cough up in the space of less than 30 days. This may seem like a good thing for bulls because Tether is demonstrating resilience under stress. Or it can be viewed as a bad thing for bulls because it means that Tether is getter closer to the limit of its (widely-ridiculed) reserve claims. Given that Tether has every incentive to cheat and has demonstrated sleazy behavior, it's safe to assume they're cheating. The question is not whether or not they're cheating, it's how much. It will be very interesting indeed if Tether manages to keep its peg given another 10, 20, or 50% drawdown. This essay [1], discussed on HN a few days ago, claims to have made some predictions about Tether worth preserving for posterity. Conspicuously absent from those predictions was the market capitalization at which Tether falls days-on-end below 90% of its 1:1 dollar peg. For those who claim to know exactly what's happening behind the scenes at Tether, I think that's a prediction worth making. [1] https://www.kalzumeus.com/2022/05/20/tether-required-recapitalization/ https://www.kalzumeus.com/2022/05/20/tether-required-recapit...
- ryanSrich 4y agoWhat’s the concern here? Seems like Tether actually did have the money to fulfill the withdrawals, so this seems like a nothingburger.
- red_phone 4y agoThe bigger concern is whether there will be funds to process the next $10B of withdrawals.
- boc 4y agoWell they had the first $10B, but Lehman also probably had the first $10B when things moved south. It's the final $10B that really matters here. They may have burned their real currency reserves first to avoid really sparking a panic, and are just standing naked hoping the crypto meltdown subsides before they have to start selling their less liquid/valuable reserves.
- lysecret 4y agoFound this explainer video it's quite good as someone who never heard of tether. https://youtu.be/-whuXHSL1Pg https://youtu.be/-whuXHSL1Pg
- leokennis 4y agoI know it’s probably too simplistic, but this interview really resonated with me: https://www.currentaffairs.org/2022/05/why-this-computer-scientist-says-all-cryptocurrency-should-die-in-a-fire https://www.currentaffairs.org/2022/05/why-this-computer-sci... In all honesty I can see people being enthusiastic about crypto as a “get rich quick” scheme (at the expense of less fortunate people but soit) - but how people can see crypto as the future of money with a worldwide ~10 TPS throughput and every transaction on a public blockchain is beyond me.
- oh_sigh 4y agoThe transaction limit and public-ness of transactions are implementation details of certain blockchains. There are blockchains with much better TPS, and blockchains where transactions are not public.
- leokennis 4y agoOkay so how can you have a payment system where: - Transactions are on a decentralized blockchain - That blockchain is however not public - That blockchain allows for high(er) TPS - That blockchain isn’t vulnerable to easy fraud Am I missing a trade-off here?
- oh_sigh 4y agoYes - you're missing "mathemagic" :) And a variety of independent engineering solutions which are largely independent of the mathemagic(think sharding or something like the lightning network). Check out ZCash for an example of non-public, decentralized block chain.
- deleted 4y ago[deleted]
- vorpalhex 4y agoDecentralization (and therefore fraud risk through things like doube spend).
- pcj-github 4y agoEvery article I read about this says something like "Unlike tether, UST wasn’t backed by fiat currency held in a reserve". Which assumes tether is actually backed by enough real value to cover its calls in the case of a selloff, which it absolutely is not. If I had any money in crypto (I don't), I would get the hell out of tether ASAP.
- wmf 4y agoI think it's worth distinguishing between "they say it's not backed and it's definitely not backed" vs. "they say it's backed but it's probably not". These are different problems.