8 ms·

Tether's Troubles in November 2022

164 points by picture 4y ago

kranke155 4y ago
This will be the true extinction level event for this era of crypto. I now fully expect it to happen on this bear cycle. It will be interesting to watch - potentially the FTX investigation coming off the bankruptcy will set loose enough threads we will learn the truth.
- JumpCrisscross 4y ago
  > will be the true extinction level event for this era of crypto People keep saying this, but it runs counter to the history of gambling. As long as enthusiasts have money, the game will keep going.
  - andirk 4y ago
    No one has ever said this is the end of crypto every 6 months. Never happened :) Tether is a joke but your bank also doesnt have every1s money. Oh it's FDIC insured! Yeah by the ppl who print the money. It's a solid grift, but it's also a grift.
  - Ekaros 4y ago
    If FED doesn't loosen and start pumping money. I think there might be lack of money for a while...
  - Retric 4y ago
    Enthusiasts staying long isn’t enough to keep things going, mining is a raging beast that must be satisfied or people start doing double spend attacks for the lulz.
  - grey-area 4y ago
    As long as there are enthusiasts. When the music stops, everyone is rushing for the exits at the same time. The music stopped sometime last year, now we’re in the end game.
    - super256 4y ago
      I don't believe that. Traders do trade because price action is still there. The price itself is not as important as much as the movement! LUNC (Luna Classic) is still having 1.2bn USD futures volume on OKX, although its value should be zero. Why is this happening? Because LUNC still hasmovements from 0.000184 USD to 0.00019 USD; that's around 4%. Traders will use this price action, and by doing this they add their own weight to the price action. Simple intermittent reinforcement.
  - rhino369 4y ago
    I've said this like 5 times and I've been wrong 5 times. But eventually there won't be any more bagholders.
    - dorkwood 4y ago
      New ones are born every day. We will never run out.
- yieldcrv 4y ago
  nah, just makes more resilient systems. its a ballast system, as the "marketcaps" crater, it takes much less activity to move them. so it doesn't matter that many people won't show up anymore, once they see their neighbor that's dumber than them getting richer than them - again - they'll come right back and primarily use new products with new tokens none of the top players/tokens involved existed before this cycle, or were created during the last crypto winter none of the top players/tokens from the prior bull cycle recovered to be the top ones this cycle I expect the same to continue, I don't really see anything to the contrary
chinathrow 4y ago
> Madoff lasted more than 17 years. Tether won’t. The sooner Tether is gone, the better.
- TheOsiris 4y ago
  better for whom?
  - deleted 4y ago
    [deleted]
  - zen21 4y ago
    Presumably the world in general. Just like the sooner cigarettes are gone the better.
    - acchow 4y ago
      Or coal power plants or something, since crypto energy consumption is massive
      - imglorp 4y ago
        Miners are literally buying fossil fuel generation plants to make enough power to mine. It's a direct link to global harm.
        wizeman 4y ago
        If that's the case, we should definitely ban fossil fuel generation plants. Or at least, tax them heavily. Since they're the ones actually doing the "global harm".
        zen21 4y ago
        Not necessarily. The energy generated may be used for purposes such as heating people’s homes, or industrial processes essential for creating medicine, operating schools and hospitals etc. Of course we need to move away from these energy sources, but there are reasons we don’t just ban them overnight. You can see how this is very different from using the energy simply to operate an online gambling operation or to perpetrate large scale securities fraud.
jgalt212 4y ago
I'm a huge crypto bear, but the Fed Balance sheet is still way to big for the entire space to go to zero. Where would all the money go? SPX X 2, hyperinflation? https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
- deleted 4y ago
  [deleted]
- zen21 4y ago
  Crypto isn’t money. The money has already changed hands when people speculated on the tokens. If anything, wiping crypto off the books will be deflationary to real currencies.
- acchow 4y ago
  Can you elaborate? How does crypto going to zero create money that has to go somewhere? How does crypto dropping in value in any way create money that needs to go somewhere? I think you have things backwards...
  - antoniuschan99 4y ago
    Mainstream media is saying it’s pretty much a bankrun. So massive amount of outflows (from everyones wallets on the exchange) is also what tanked the token?
- danrocks 4y ago
  Nowhere. Just like Sequoia's $240m investment - it's just marked down to $0.
- adammarples 4y ago
  There would still be the same amount of dollars, there would still be the same amount of crypto. Just nobody would want to swap dollars for crypto any more.
louwrentius 4y ago
I just hope that this is the beginning of the end for the whole crypto space. Good riddance. This fraud galore has no legal basis for existing.
- api 4y ago
  Don't forget the utterly insane amounts of both financial and human capital that have been invested in this space with virtually nothing to show for it. The whole thing is an infinite sinkhole. Cryptocurrency kind of reminds me of that Star Trek episode where they were going to destroy the Borg by giving them this impossible n-dimensional object to ponder. It had no solution but was infinitely interesting so they would ponder it, and ponder it, enlisting more and more minds in the collective until the entire Borg were occupied doing nothing but considering this shape. Cryptocurrency kind of seems to have done that to hacker culture. It's infinitely technically fascinating and pushes all the right cyber-libertarian buttons so it sucks in more and more resources forever but amounts to nothing.
  - danrocks 4y ago
    This comment hits the nail on the head. Just this morning when I saw FTX and BlockFi's news I thought to myself "yeah all the electricity spent on this is bad, but the real problem is how many hours of human thought have been spent on coming up with these schemes just for them to blow up on our faces". Crypto is like the mental virus in the movie "Pontypool" [0] - people are infected by it and cannot think about anything else. [0] - https://www.rottentomatoes.com/m/pontypool https://www.rottentomatoes.com/m/pontypool
    - mrbombastic 4y ago
      Is there a term for this type of highly interesting problem that is ultimately a waste of time? I have been calling it a “brain sink”in my head, it is deeply sad to me how many smart people have jumped on the bandwagon and what they could have done otherwise with their potential.
      - 4y ago
dangero 4y ago
I have a theory of why Tether is able to dodge risk. If they are owned by Bitfinex can they not front-run the Bitfinex order book to guarantee their stops will hit their target? They know the bitfinex order depth for every asset so they can for example buy into bitcoin and then calculate exactly when they must get out. Its possible this could be built into the core layer of their exchange software. That’s how I would do it if I wanted max profit without the risk and didn’t care about regulation.
- gruez 4y ago
  >If they are owned by Bitfinex can they not front-run the Bitfinex order book to guarantee their stops will hit their target? They know the bitfinex order depth for every asset so they can for example buy into bitcoin and then calculate exactly when they must get out. This makes no sense to me. Can you rephrase/elaborate what you mean by this?
  - djbusby 4y ago
    Bitfinex (B) sees orders incoming for BTC or other currency. Then B acquires for $X. Then B fills the order to clients at $X.03 Boom, $0.03 free money. Multiply by scale of their client base.
    - gruez 4y ago
      That's just front running though? I'm not sure how tether has to do with it. You can pull that off with or without creating a stablecoin with questionable backing.
    - wskinner 4y ago
      1. This only applies to market orders. 2. Bitfinex is not the only exchange where people can trade BTC or other crypto. 3. How does B acquire BTC for $X at scale?
      - dangero 4y ago
        1. They can see an order match for a limit order and preempt it with a better offer before pushing it through by a micro-fraction of a penny 2. They can run trading bots on all major exchanges to keep USDT pegged —- while not foolproof it will hold in most situations provided there is enough liquidity in their accounts on every exchange.
gzer0 4y ago
> The risk-on assets are 12.86% of the reserves, via simple division. Their equity is 0.36% of assets. If their risk-on assets were impaired by more than about 2.86%, Tether must have (by their own numbers) needed recapitalization. It is not credible that they suffered no serious impairment. Bitcoin, the blue chip cryptocurrency, is down by more than 10%. > I challenge anyone to find a portfolio construction for digital token investments that possibly survived this environment with only a 2.86% impairment. Last sentence right there is the nail in the coffin. There is no such possible investment that can exist without recapitilization based on these data.
- grey-area 4y ago
  Yes tether is an obvious lie, and it’s now just a question of when, not if, they collapse.
  - jfghi 4y ago
    Also curious if it happens instantaneously or somehow drags on.
  - wmf 4y ago
    If Tether is 87% backed they'll be fine; they can find some way to hide that shortfall. (To be clear this is illegal and I want Tether to die but we need to acknowledge the realpolitik of the crypto market.)
    - grey-area 4y ago
      1. They are not backed at all, esp when coin prices collapse 2. Even if partially backed loss of confidence will be catastrophic.
  - MuffinFlavored 4y ago
    what would have to trigger the catalyst for their collapse and why hasn’t it happened yet? are they growing stronger or weaker every day?
bob234 4y ago
I love tether
diab0lic 4y ago
> [Even] in [our] darkest days, Tether has never once failed to honor a redemption request from any of [our] verified customers. Bold statement by tether given that they, if I recall correctly had a very extended period in their past (months) where they were not allowing withdrawals. Wether they openly stated that or not is irrelevant, plenty of people could not get money out.
psychlops 4y ago
It's depressing to me that there is such a vocal group of people cheerleading the demise of an industry that seeks to improve the financial system on a global scale. Truly disheartening are the financially disenfranchised (and what I believe) young voices for whom any system would be better than the current. It's to the extent that many think that attacking capitalism itself is the answer. There is an incredible amount of fraud in crypto and it should be identified, stamped out and vigorously prosecuted. But there is also genuine genius at work solving difficult problems for everyone's benefit. It is terrible that people are losing money so easily and is a reminder that crypto isn't solving the problem of fools being parted from their money. Presumably that's what laws and regulations do.
- tartoran 4y ago
  People are cheerleading the ponzi-scheme part of it.
- jakelazaroff 4y ago
  The issue is that we don't believe the crypto industry seeks to improve the financial system, on any scale. It's not just that so many of them have turned out to be scammers — it's that the industry as a whole has not put in any work to prevent that, and often has actively worked to prevent any sort of guardrails.
  - jjulius 4y ago
    Right. In many of the "OMG What Happened to SBF?" articles this week, it's mentioned over and over that SBF ran afoul of many of his industry counterparts because he cozied up to Washington and pushed for regulation. I don't know how someone can feel comfortable handing their money over to anyone who essentially says, "I don't want there to be any rules around what I can do with this, and people who can punish me for abusing this need to stay away". That's INSANE to me. I don't doubt that there are a few companies in the space that are trying to do some genuine good. But I'd wager that I can count them on one hand. Edit: And if someone's going to say, "This industry has potential, don't cheer it's demise," then show me the potential. Show me the companies doing that good stuff, because we're not seeing it.
bibabaloo 4y ago
Can someone explain why the bank run on Tether hasn't already happened? We've seen with FTX that it only takes a little FUD for people to get scared and start withdrawing. It's not like there isn't more credible stablecoin alternatives, USDC looks a lot more credible.
- wmf 4y ago
  Destroying Tether would trigger a crash that benefits no one in crypto.
  - zen21 4y ago
    A casino going bankrupt means gambling addicts will be able to seek treatment for their illness.
- evdubs 4y ago
  A (partial) bank run on Tether already happened. From May 2022 - July 2022, Tether capitalization went from $83B to $66B ($17B withdrawn). The recent bank run has so far been a lot smaller. From Nov 9th to today, the move has been from $69.75B to $67.25B ($2.5B withdrawn). Maybe if the FTX contagion extends, we'll see more redemptions. https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/
  - SilasX 4y ago
    A bank "run" where it successfully honors redemptions, and the vast majority don't need to redeem, isn't really what is meant by a run.
- lamontcg 4y ago
  There's no real offramp from Tether to USD. And its likely that Tether is all crypto and not much actual USD involved at all, and it looks more like crypto collateralized loans. I doubt that Tether dying kills crypto, but probably the other way around and crypto dying obviously kills Tether[*]. And the "redemptions" are likely loans being paid back (which is just Tether being returned and burned) rather than $USD going out the door. It is very simply not at all believable that the $17B drawdown in the float earlier this year was $17B of USD going out the door -- that interpretation of how Tether operates has to be wrong if you think about it for longer than a few seconds.
andirk 4y ago
Why do people use Tether scamcoin over Gemini stablecoin GUSD? It's supposedly backed 1:1 GUSD:USD and has US-regulated books. I get 5-8% interest on it and hasn't had an issue for its handful of years of being issued.
- shuckles 4y ago
  Do you have to prove your funds are not black money to buy "GUSD"?
  - andirk 4y ago
    No idea. I transferred a bunch of coins from Bittrex and Coinbase, sold some for USD for a nice profit, put that USD in to GUSD, and a month ago pulled out last year's interest of ~$1500 USD to buy some beautiful pendant lights, brass faucet, and a mediocre range hood for my new kitchen remodel.
    - shuckles 4y ago
      And what economic activity did the borrower engage in to pay out more than risk-free interest?
      - andirk 4y ago
        No idea but I doubt they were bombing brown people and guarding Arab oil investments for profit, nor were they attempting coups in resource-rich countries. All that happens with my USD savings account.
- xur17 4y ago
  > I get 5-8% interest on it and hasn't had an issue for its handful of years of being issued. I agree that GUSD is a good, low risk stablecoin choice, but that's only if you directly hold it. If you're depositing it into an interest earning account, note that you're taking on additional lending risk (which I'd highly recommend against right now).
EVa5I7bHFq9mnYK 4y ago
Like half of HN feed is crypto now, when will that shitfountain stop?
- trenchgun 4y ago
  https://www.urbandictionary.com/define.php?term=When%20it%27s%20done https://www.urbandictionary.com/define.php?term=When%20it%27...
ummonk 4y ago
Though it’s not clear that their “risk-on” assets are actually risky, it’s certainly weird that they haven’t built up more equity. Between interest they earn on short term treasuries, and being able to arbitrage periodic seller panics, a normal non-scammy strategy should be able to generate healthy profits.

164 points by picture 4y ago

This will be the true extinction level event for this era of crypto. I now fully expect it to happen on this bear cycle. It will be interesting to watch - potentially the FTX investigation coming off the bankruptcy will set loose enough threads we will learn the truth.

JumpCrisscross 4y ago
> will be the true extinction level event for this era of crypto People keep saying this, but it runs counter to the history of gambling. As long as enthusiasts have money, the game will keep going.
- andirk 4y ago
  No one has ever said this is the end of crypto every 6 months. Never happened :) Tether is a joke but your bank also doesnt have every1s money. Oh it's FDIC insured! Yeah by the ppl who print the money. It's a solid grift, but it's also a grift.
- Ekaros 4y ago
  If FED doesn't loosen and start pumping money. I think there might be lack of money for a while...
- Retric 4y ago
  Enthusiasts staying long isn’t enough to keep things going, mining is a raging beast that must be satisfied or people start doing double spend attacks for the lulz.
- grey-area 4y ago
  As long as there are enthusiasts. When the music stops, everyone is rushing for the exits at the same time. The music stopped sometime last year, now we’re in the end game.
  - super256 4y ago
    I don't believe that. Traders do trade because price action is still there. The price itself is not as important as much as the movement! LUNC (Luna Classic) is still having 1.2bn USD futures volume on OKX, although its value should be zero. Why is this happening? Because LUNC still hasmovements from 0.000184 USD to 0.00019 USD; that's around 4%. Traders will use this price action, and by doing this they add their own weight to the price action. Simple intermittent reinforcement.
- rhino369 4y ago
  I've said this like 5 times and I've been wrong 5 times. But eventually there won't be any more bagholders.
  - dorkwood 4y ago
    New ones are born every day. We will never run out.
yieldcrv 4y ago
nah, just makes more resilient systems. its a ballast system, as the "marketcaps" crater, it takes much less activity to move them. so it doesn't matter that many people won't show up anymore, once they see their neighbor that's dumber than them getting richer than them - again - they'll come right back and primarily use new products with new tokens none of the top players/tokens involved existed before this cycle, or were created during the last crypto winter none of the top players/tokens from the prior bull cycle recovered to be the top ones this cycle I expect the same to continue, I don't really see anything to the contrary

chinathrow 4y ago

> Madoff lasted more than 17 years. Tether won’t. The sooner Tether is gone, the better.

TheOsiris 4y ago
better for whom?
- deleted 4y ago
  [deleted]
- zen21 4y ago
  Presumably the world in general. Just like the sooner cigarettes are gone the better.
  - acchow 4y ago
    Or coal power plants or something, since crypto energy consumption is massive
    - imglorp 4y ago
      Miners are literally buying fossil fuel generation plants to make enough power to mine. It's a direct link to global harm.
      - wizeman 4y ago
        If that's the case, we should definitely ban fossil fuel generation plants. Or at least, tax them heavily. Since they're the ones actually doing the "global harm".
        zen21 4y ago
        Not necessarily. The energy generated may be used for purposes such as heating people’s homes, or industrial processes essential for creating medicine, operating schools and hospitals etc. Of course we need to move away from these energy sources, but there are reasons we don’t just ban them overnight. You can see how this is very different from using the energy simply to operate an online gambling operation or to perpetrate large scale securities fraud.

jgalt212 4y ago

I'm a huge crypto bear, but the Fed Balance sheet is still way to big for the entire space to go to zero. Where would all the money go? SPX X 2, hyperinflation? https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

deleted 4y ago
[deleted]
zen21 4y ago
Crypto isn’t money. The money has already changed hands when people speculated on the tokens. If anything, wiping crypto off the books will be deflationary to real currencies.
acchow 4y ago
Can you elaborate? How does crypto going to zero create money that has to go somewhere? How does crypto dropping in value in any way create money that needs to go somewhere? I think you have things backwards...
- antoniuschan99 4y ago
  Mainstream media is saying it’s pretty much a bankrun. So massive amount of outflows (from everyones wallets on the exchange) is also what tanked the token?
danrocks 4y ago
Nowhere. Just like Sequoia's $240m investment - it's just marked down to $0.
adammarples 4y ago
There would still be the same amount of dollars, there would still be the same amount of crypto. Just nobody would want to swap dollars for crypto any more.

louwrentius 4y ago

I just hope that this is the beginning of the end for the whole crypto space. Good riddance. This fraud galore has no legal basis for existing.

api 4y ago
Don't forget the utterly insane amounts of both financial and human capital that have been invested in this space with virtually nothing to show for it. The whole thing is an infinite sinkhole. Cryptocurrency kind of reminds me of that Star Trek episode where they were going to destroy the Borg by giving them this impossible n-dimensional object to ponder. It had no solution but was infinitely interesting so they would ponder it, and ponder it, enlisting more and more minds in the collective until the entire Borg were occupied doing nothing but considering this shape. Cryptocurrency kind of seems to have done that to hacker culture. It's infinitely technically fascinating and pushes all the right cyber-libertarian buttons so it sucks in more and more resources forever but amounts to nothing.
- danrocks 4y ago
  This comment hits the nail on the head. Just this morning when I saw FTX and BlockFi's news I thought to myself "yeah all the electricity spent on this is bad, but the real problem is how many hours of human thought have been spent on coming up with these schemes just for them to blow up on our faces". Crypto is like the mental virus in the movie "Pontypool" [0] - people are infected by it and cannot think about anything else. [0] - https://www.rottentomatoes.com/m/pontypool https://www.rottentomatoes.com/m/pontypool
  - mrbombastic 4y ago
    Is there a term for this type of highly interesting problem that is ultimately a waste of time? I have been calling it a “brain sink”in my head, it is deeply sad to me how many smart people have jumped on the bandwagon and what they could have done otherwise with their potential.
    - 4y ago

dangero 4y ago

I have a theory of why Tether is able to dodge risk. If they are owned by Bitfinex can they not front-run the Bitfinex order book to guarantee their stops will hit their target? They know the bitfinex order depth for every asset so they can for example buy into bitcoin and then calculate exactly when they must get out. Its possible this could be built into the core layer of their exchange software. That’s how I would do it if I wanted max profit without the risk and didn’t care about regulation.

gruez 4y ago
>If they are owned by Bitfinex can they not front-run the Bitfinex order book to guarantee their stops will hit their target? They know the bitfinex order depth for every asset so they can for example buy into bitcoin and then calculate exactly when they must get out. This makes no sense to me. Can you rephrase/elaborate what you mean by this?
- djbusby 4y ago
  Bitfinex (B) sees orders incoming for BTC or other currency. Then B acquires for $X. Then B fills the order to clients at $X.03 Boom, $0.03 free money. Multiply by scale of their client base.
  - gruez 4y ago
    That's just front running though? I'm not sure how tether has to do with it. You can pull that off with or without creating a stablecoin with questionable backing.
  - wskinner 4y ago
    1. This only applies to market orders. 2. Bitfinex is not the only exchange where people can trade BTC or other crypto. 3. How does B acquire BTC for $X at scale?
    - dangero 4y ago
      1. They can see an order match for a limit order and preempt it with a better offer before pushing it through by a micro-fraction of a penny 2. They can run trading bots on all major exchanges to keep USDT pegged —- while not foolproof it will hold in most situations provided there is enough liquidity in their accounts on every exchange.

gzer0 4y ago

> The risk-on assets are 12.86% of the reserves, via simple division. Their equity is 0.36% of assets. If their risk-on assets were impaired by more than about 2.86%, Tether must have (by their own numbers) needed recapitalization. It is not credible that they suffered no serious impairment. Bitcoin, the blue chip cryptocurrency, is down by more than 10%. > I challenge anyone to find a portfolio construction for digital token investments that possibly survived this environment with only a 2.86% impairment. Last sentence right there is the nail in the coffin. There is no such possible investment that can exist without recapitilization based on these data.

grey-area 4y ago
Yes tether is an obvious lie, and it’s now just a question of when, not if, they collapse.
- jfghi 4y ago
  Also curious if it happens instantaneously or somehow drags on.
- wmf 4y ago
  If Tether is 87% backed they'll be fine; they can find some way to hide that shortfall. (To be clear this is illegal and I want Tether to die but we need to acknowledge the realpolitik of the crypto market.)
  - grey-area 4y ago
    1. They are not backed at all, esp when coin prices collapse 2. Even if partially backed loss of confidence will be catastrophic.
- MuffinFlavored 4y ago
  what would have to trigger the catalyst for their collapse and why hasn’t it happened yet? are they growing stronger or weaker every day?

bob234 4y ago

I love tether

diab0lic 4y ago

> [Even] in [our] darkest days, Tether has never once failed to honor a redemption request from any of [our] verified customers. Bold statement by tether given that they, if I recall correctly had a very extended period in their past (months) where they were not allowing withdrawals. Wether they openly stated that or not is irrelevant, plenty of people could not get money out.

psychlops 4y ago

It's depressing to me that there is such a vocal group of people cheerleading the demise of an industry that seeks to improve the financial system on a global scale. Truly disheartening are the financially disenfranchised (and what I believe) young voices for whom any system would be better than the current. It's to the extent that many think that attacking capitalism itself is the answer. There is an incredible amount of fraud in crypto and it should be identified, stamped out and vigorously prosecuted. But there is also genuine genius at work solving difficult problems for everyone's benefit. It is terrible that people are losing money so easily and is a reminder that crypto isn't solving the problem of fools being parted from their money. Presumably that's what laws and regulations do.

tartoran 4y ago
People are cheerleading the ponzi-scheme part of it.
jakelazaroff 4y ago
The issue is that we don't believe the crypto industry seeks to improve the financial system, on any scale. It's not just that so many of them have turned out to be scammers — it's that the industry as a whole has not put in any work to prevent that, and often has actively worked to prevent any sort of guardrails.
- jjulius 4y ago
  Right. In many of the "OMG What Happened to SBF?" articles this week, it's mentioned over and over that SBF ran afoul of many of his industry counterparts because he cozied up to Washington and pushed for regulation. I don't know how someone can feel comfortable handing their money over to anyone who essentially says, "I don't want there to be any rules around what I can do with this, and people who can punish me for abusing this need to stay away". That's INSANE to me. I don't doubt that there are a few companies in the space that are trying to do some genuine good. But I'd wager that I can count them on one hand. Edit: And if someone's going to say, "This industry has potential, don't cheer it's demise," then show me the potential. Show me the companies doing that good stuff, because we're not seeing it.

bibabaloo 4y ago

Can someone explain why the bank run on Tether hasn't already happened? We've seen with FTX that it only takes a little FUD for people to get scared and start withdrawing. It's not like there isn't more credible stablecoin alternatives, USDC looks a lot more credible.

wmf 4y ago
Destroying Tether would trigger a crash that benefits no one in crypto.
- zen21 4y ago
  A casino going bankrupt means gambling addicts will be able to seek treatment for their illness.
evdubs 4y ago
A (partial) bank run on Tether already happened. From May 2022 - July 2022, Tether capitalization went from $83B to $66B ($17B withdrawn). The recent bank run has so far been a lot smaller. From Nov 9th to today, the move has been from $69.75B to $67.25B ($2.5B withdrawn). Maybe if the FTX contagion extends, we'll see more redemptions. https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/
- SilasX 4y ago
  A bank "run" where it successfully honors redemptions, and the vast majority don't need to redeem, isn't really what is meant by a run.
lamontcg 4y ago
There's no real offramp from Tether to USD. And its likely that Tether is all crypto and not much actual USD involved at all, and it looks more like crypto collateralized loans. I doubt that Tether dying kills crypto, but probably the other way around and crypto dying obviously kills Tether[*]. And the "redemptions" are likely loans being paid back (which is just Tether being returned and burned) rather than $USD going out the door. It is very simply not at all believable that the $17B drawdown in the float earlier this year was $17B of USD going out the door -- that interpretation of how Tether operates has to be wrong if you think about it for longer than a few seconds.

andirk 4y ago

Why do people use Tether scamcoin over Gemini stablecoin GUSD? It's supposedly backed 1:1 GUSD:USD and has US-regulated books. I get 5-8% interest on it and hasn't had an issue for its handful of years of being issued.

shuckles 4y ago
Do you have to prove your funds are not black money to buy "GUSD"?
- andirk 4y ago
  No idea. I transferred a bunch of coins from Bittrex and Coinbase, sold some for USD for a nice profit, put that USD in to GUSD, and a month ago pulled out last year's interest of ~$1500 USD to buy some beautiful pendant lights, brass faucet, and a mediocre range hood for my new kitchen remodel.
  - shuckles 4y ago
    And what economic activity did the borrower engage in to pay out more than risk-free interest?
    - andirk 4y ago
      No idea but I doubt they were bombing brown people and guarding Arab oil investments for profit, nor were they attempting coups in resource-rich countries. All that happens with my USD savings account.
xur17 4y ago
> I get 5-8% interest on it and hasn't had an issue for its handful of years of being issued. I agree that GUSD is a good, low risk stablecoin choice, but that's only if you directly hold it. If you're depositing it into an interest earning account, note that you're taking on additional lending risk (which I'd highly recommend against right now).

EVa5I7bHFq9mnYK 4y ago

Like half of HN feed is crypto now, when will that shitfountain stop?

trenchgun 4y ago
https://www.urbandictionary.com/define.php?term=When%20it%27s%20done https://www.urbandictionary.com/define.php?term=When%20it%27...

ummonk 4y ago

Though it’s not clear that their “risk-on” assets are actually risky, it’s certainly weird that they haven’t built up more equity. Between interest they earn on short term treasuries, and being able to arbitrage periodic seller panics, a normal non-scammy strategy should be able to generate healthy profits.