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I wonder if something similar will eventually happen to the Tether people? To my understanding they're printing money (USDT) which they claim is backed 1:1 by U

by klipt 4y ago

I wonder if something similar will eventually happen to the Tether people? To my understanding they're printing money (USDT) which they claim is backed 1:1 by USD but really isn't. These USDTs can then be spent to pump up various other crypto assets. Seems a very shady business.

danrocks 4y ago
Didn't Tether get ordered the other day to disclaim all of its reserves? What happened to that? I find it incredible they keep surviving attempts to reveal exactly how the sausage is made in their reserves. https://www.yahoo.com/video/stablecoin-issuer-tether-ordered-produce-041706661.html https://www.yahoo.com/video/stablecoin-issuer-tether-ordered...
- maria2 4y ago
  It seems like they were ordered to give the plaintiffs the documents, but they weren’t ordered to publicly release them. NYAG also looked into them last year. They were fined but it doesn’t seem like anything else came of it. > The New York Attorney General’s probe into Tether’s reserves concluded in February 2021 with an $18.5 million settlement. I don’t hold any tether, and I wouldn’t recommend it to others. But the common opinion that Tether is insolvent might be wrong. Tether, as a stable business, is a money printing machine. I’m not sure it’d be worth risking the business and jail time to pump shitcoins.
  - richbell 4y ago
    > I don’t hold any tether, and I wouldn’t recommend it to others. But the common opinion that Tether is insolvent might be wrong. Tether, as a stable business, is a money printing machine. I’m not sure it’d be worth risking the business and jail time to pump shitcoins I encourage you to watch Coffeezilla's video about Tether. There's lots of shady stuff going on behind the scenes, like them borrowing $383M from Bitfinex and showing that to an auditor to prove they were solvent (~20:00). https://youtu.be/-whuXHSL1Pg https://youtu.be/-whuXHSL1Pg
    - maria2 4y ago
      Just watched the videos, a few thoughts: Coffeezilla says that Tether doesn't need to honor your redemption by point to the TOS. The TOS that he shows in the video says that Tether reserves the right to delay the redemption and pay it in-kind securities held by Tether. So if Tether is holding a bond, they reserve the right to give you that bond instead of selling the bond and giving you the proceeds. That's very different than his claim that Tether doesn't need to honor the redemption. His discussion about whether or not it was transparent that Bitfinex and Tether were owned by the same people. He plays sound clips that sound a little misleading: Phil Potter is prompted with "Tether is Bitfinex, right?" To which Phil Potter responds: "No, it's not." Is that really misleading. If someone asked Elon Musk, Twitter is SpaceX, right? Wouldn't the answer be no, even though they're owned by the same people? All the sound clips are less than 10 seconds longs, so it's really hard to understand everything in context. The leadership team of Tether does seem a little sketch. The part about Tether lending Bitfinex money to stay solvent while Bitfinex's money was held by the state pending investigation of their bank was sketchy, but technically the currency would still be backed by the loan, assuming Bitfinex can get their money back, which seems likely given that they weren't a party in the investigation holding up the money. I think the bottom line is that you have to trust the Tether team to handle the money wisely. Usually, you can't trust people to do that so using Tether is extremely risky. As for the video, I won't say it's wrong, but it certainly picked the least charitable interpretation of events and also cherry-picked sound-bites, which is kind of a misleading tactic to use that helps suit a narrative.
  - PeterisP 4y ago
    Well, FTX, as a stable business, should be a money printing machine - but that definitely wasn't an obstacle for its leaders to risk the business and jail time to speculate with customers' funds.
    - maria2 4y ago
      FTX might have been a money-printing machine, but the situation with Alameda is a lot less clear. Being a market maker is hard. If you make a mistake, you can lose a lot of money. It's probably easier to be a crook.
    - HWR_14 4y ago
      If Tether put all its money into low-yield short term US treasuries, the founders could pay every employee $10MM USD a year and still be paying themselves $1 billion USD a year. That is a phenomenal amount of risk free income. That's putting the founders somewhere high, probably first 50 names high, on the Forbes 400 list. That seems foolish to risk to commit crimes.
      - CryptoBanker 4y ago
        Tether wasn’t always that big though.
        HWR_14 4y ago
        That's even better. Let's say it was a scam for the first 5 years. Total scam, they spent all the money on drugs. It would only take a year for the short-term low-yield US treasury interest on the rest of the assets to completely pay Tether back. That's only possible because Tether has been growing. It would take more than a decade of interest if it had merely doubled in size.
        riffraff 4y ago
        The strong and risky assumption here is that tether actually received money and put it in some paper. But what many believe is that tether received crypto from the big exchanges and put it in crypto stuff that yields more crypto, so the billions of circulating tether is not backed by billions of Treasury bills or Chinese real estate: they are for a significant part backed by various tokens which have probably gone to zero since.
  - onlyrealcuzzo 4y ago
    The founder posted publicly about printing tether to pump Bitcoin I'm the earlier days of Tether (after previously being convicted of fraud) - and then tried to delete the posts - but couldn't because of Internet Archive...
  - rcxdude 4y ago
    If Tether is solvent and above board then it's being run utterly incompetently. absolutely everything they do regarding their reserves makes them look shady as hell (the most likely situation where they are solvent is that they are solvent with dirty money, which would explain why they are so unwilling to demonstrate exactly where the money is and where it came from).
  - twelve40 4y ago
    I mostly agree and I'm actually amazed at how FTX was doing crazy shit instead of just making exchange money the legal way, but... isn't it super-expensive to truly back up tether with cash? I mean, it's kind of an extraordinary claim that they have a few bil of cash stashed in a mattress just sitting there backing things up 1:1 ready to get withdrawn any second.
    - dnadler 4y ago
      It wouldn’t need to be cash per say, just cash or very liquid and low risk assets like USTs. The yield on treasuries isn’t high, but given the volumes at play it’d generate a lot of cashflow.
      - twelve40 4y ago
        so you think they really have it?
potatototoo99 4y ago
They don't claim it's backed 1:1 by USD. They claim it's backed by more or less liquid alternatives: https://tether.to/en/transparency/#reports https://tether.to/en/transparency/#reports
- richbell 4y ago
  > They don't claim it's backed 1:1 by USD. They claim it's backed by more or less liquid alternatives They used to, for several years, until they were pressured to prove it and could not (27:05). https://youtu.be/-whuXHSL1Pg https://youtu.be/-whuXHSL1Pg They were also investigated and found guilty by the New York Attorney General, and were subsequently banned from activity in New York and fined 18.5M. > Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” said Attorney General James. “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal https://ag.ny.gov/press-release/2021/attorney-general-james-...
- rcxdude 4y ago
  Now they do (previously they claimed 1:1 with actual dollars in a bank account, but failed to demonstrate that). But that 80% "Commercial paper" is suspicious as hell, considering it would make up more than half the total market for said paper (so 'liquid' is already questionable), and no-one else in the market has heard of them.
  - wmf 4y ago
    They're now claiming no commercial paper. I'm not sure if that's more or less suspicious.
pearjuice 4y ago
If anything, the pressure on Sam might result in him turning on Tether/Binance/other-frauds with key insider evidence for reduced sentencing. The guy's a pvp gamer at heart so probably min-maxing with his lawyers what he can do as a criminal informant.
- quanticle 4y ago
  He's a PVP gamer who can't even get out of the bottom-most tier of League of Legends. [1] I very much doubt he's trying to game plan anything of this kind of sophistication. [1]: https://www.ft.com/content/23ab2258-ce03-4fbb-a9b2-7d9ec6e3d7f0 https://www.ft.com/content/23ab2258-ce03-4fbb-a9b2-7d9ec6e3d...
- PoignardAzur 4y ago
  > The guy's a pvp gamer at heart so probably min-maxing with his lawyers what he can do as a criminal informant. What? That's such a bizarre idea. Do you think the lawyers go "thank god this man plays Starcraft, so he understands the need to have a strategy in court!"
  - KMag 4y ago
    I think by "pvp gamer", the GP means someone who preferentially targets other players in open world games rather than grinding the quests. I think they're saying he has a sadist streak, or at least a strong streak of narcissism.
ummonk 4y ago
My conspiracy theory is that USDT is actually well backed, but the Tether people intentionally make it look shady so they can buy the dip and arbitrage against panic selling. Some volatility would actually increase their ability to profit.
- roland35 4y ago
  That's crazy. I'm thinking Hanlon's razor applies here, there is absolutely no evidence that tether is legit.
  - 323 4y ago
    Where are all the Tether holders complaining that they can't convert it into dollars?
    - arcticbull 4y ago
      To answer that question you first have to figure out who they are. Tether mostly moves around, people don't hold it. That is to say, exchanges like Binance are heavily dependent on USDT. Those are the only venues you as an individual have to exchange tethers for USD (of course this is not the same as a redemption which is solely at Tether's discretion). Why would the exchanges ever come to Tether for the cash knowing they weren't good for it when revealing the pantslessness of the emperor would take them down too? It is my opinion that Tether succeeded in doing what the Luna Foundation Guard was trying to do - they made all the 'industry' players so dependent on their continued existence that anyone blowing the whistle would take out the whole space. This in turn makes sure nobody gets within a few hundred yards of a whistle.
      - 323 4y ago
        HN has been talking about how Tether is a scam and how it will blow up AnyMomentNow(TM) for two years. Meanwhile, there was no talk on HN about Luna or FTX being a scam before they imploded. In finance, when everybody "knows" something, it's 99% likely to be false. Because there is a lot of money to be made knowing actual facts in finance.
323 4y ago
> These USDTs can then be spent to pump up various other crypto assets So why don't they do that now? Why are the crypto prices at two years low? This is the age old ZeroHedge conspiracy recycled - if the stock market goes up, it's because of WOPRs (their name for HFT algos) and the Fed plunge-protection-team, but if it goes down it's because of healthy market forces which are calling the Feds bluff.

by klipt 4y ago

danrocks 4y ago

Didn't Tether get ordered the other day to disclaim all of its reserves? What happened to that? I find it incredible they keep surviving attempts to reveal exactly how the sausage is made in their reserves. https://www.yahoo.com/video/stablecoin-issuer-tether-ordered-produce-041706661.html https://www.yahoo.com/video/stablecoin-issuer-tether-ordered...

maria2 4y ago
It seems like they were ordered to give the plaintiffs the documents, but they weren’t ordered to publicly release them. NYAG also looked into them last year. They were fined but it doesn’t seem like anything else came of it. > The New York Attorney General’s probe into Tether’s reserves concluded in February 2021 with an $18.5 million settlement. I don’t hold any tether, and I wouldn’t recommend it to others. But the common opinion that Tether is insolvent might be wrong. Tether, as a stable business, is a money printing machine. I’m not sure it’d be worth risking the business and jail time to pump shitcoins.
- richbell 4y ago
  > I don’t hold any tether, and I wouldn’t recommend it to others. But the common opinion that Tether is insolvent might be wrong. Tether, as a stable business, is a money printing machine. I’m not sure it’d be worth risking the business and jail time to pump shitcoins I encourage you to watch Coffeezilla's video about Tether. There's lots of shady stuff going on behind the scenes, like them borrowing $383M from Bitfinex and showing that to an auditor to prove they were solvent (~20:00). https://youtu.be/-whuXHSL1Pg https://youtu.be/-whuXHSL1Pg
  - maria2 4y ago
    Just watched the videos, a few thoughts: Coffeezilla says that Tether doesn't need to honor your redemption by point to the TOS. The TOS that he shows in the video says that Tether reserves the right to delay the redemption and pay it in-kind securities held by Tether. So if Tether is holding a bond, they reserve the right to give you that bond instead of selling the bond and giving you the proceeds. That's very different than his claim that Tether doesn't need to honor the redemption. His discussion about whether or not it was transparent that Bitfinex and Tether were owned by the same people. He plays sound clips that sound a little misleading: Phil Potter is prompted with "Tether is Bitfinex, right?" To which Phil Potter responds: "No, it's not." Is that really misleading. If someone asked Elon Musk, Twitter is SpaceX, right? Wouldn't the answer be no, even though they're owned by the same people? All the sound clips are less than 10 seconds longs, so it's really hard to understand everything in context. The leadership team of Tether does seem a little sketch. The part about Tether lending Bitfinex money to stay solvent while Bitfinex's money was held by the state pending investigation of their bank was sketchy, but technically the currency would still be backed by the loan, assuming Bitfinex can get their money back, which seems likely given that they weren't a party in the investigation holding up the money. I think the bottom line is that you have to trust the Tether team to handle the money wisely. Usually, you can't trust people to do that so using Tether is extremely risky. As for the video, I won't say it's wrong, but it certainly picked the least charitable interpretation of events and also cherry-picked sound-bites, which is kind of a misleading tactic to use that helps suit a narrative.
- PeterisP 4y ago
  Well, FTX, as a stable business, should be a money printing machine - but that definitely wasn't an obstacle for its leaders to risk the business and jail time to speculate with customers' funds.
  - maria2 4y ago
    FTX might have been a money-printing machine, but the situation with Alameda is a lot less clear. Being a market maker is hard. If you make a mistake, you can lose a lot of money. It's probably easier to be a crook.
  - HWR_14 4y ago
    If Tether put all its money into low-yield short term US treasuries, the founders could pay every employee $10MM USD a year and still be paying themselves $1 billion USD a year. That is a phenomenal amount of risk free income. That's putting the founders somewhere high, probably first 50 names high, on the Forbes 400 list. That seems foolish to risk to commit crimes.
    - CryptoBanker 4y ago
      Tether wasn’t always that big though.
      - HWR_14 4y ago
        That's even better. Let's say it was a scam for the first 5 years. Total scam, they spent all the money on drugs. It would only take a year for the short-term low-yield US treasury interest on the rest of the assets to completely pay Tether back. That's only possible because Tether has been growing. It would take more than a decade of interest if it had merely doubled in size.
        riffraff 4y ago
        The strong and risky assumption here is that tether actually received money and put it in some paper. But what many believe is that tether received crypto from the big exchanges and put it in crypto stuff that yields more crypto, so the billions of circulating tether is not backed by billions of Treasury bills or Chinese real estate: they are for a significant part backed by various tokens which have probably gone to zero since.
- onlyrealcuzzo 4y ago
  The founder posted publicly about printing tether to pump Bitcoin I'm the earlier days of Tether (after previously being convicted of fraud) - and then tried to delete the posts - but couldn't because of Internet Archive...
- rcxdude 4y ago
  If Tether is solvent and above board then it's being run utterly incompetently. absolutely everything they do regarding their reserves makes them look shady as hell (the most likely situation where they are solvent is that they are solvent with dirty money, which would explain why they are so unwilling to demonstrate exactly where the money is and where it came from).
- twelve40 4y ago
  I mostly agree and I'm actually amazed at how FTX was doing crazy shit instead of just making exchange money the legal way, but... isn't it super-expensive to truly back up tether with cash? I mean, it's kind of an extraordinary claim that they have a few bil of cash stashed in a mattress just sitting there backing things up 1:1 ready to get withdrawn any second.
  - dnadler 4y ago
    It wouldn’t need to be cash per say, just cash or very liquid and low risk assets like USTs. The yield on treasuries isn’t high, but given the volumes at play it’d generate a lot of cashflow.
    - twelve40 4y ago
      so you think they really have it?

potatototoo99 4y ago

They don't claim it's backed 1:1 by USD. They claim it's backed by more or less liquid alternatives: https://tether.to/en/transparency/#reports https://tether.to/en/transparency/#reports

richbell 4y ago
> They don't claim it's backed 1:1 by USD. They claim it's backed by more or less liquid alternatives They used to, for several years, until they were pressured to prove it and could not (27:05). https://youtu.be/-whuXHSL1Pg https://youtu.be/-whuXHSL1Pg They were also investigated and found guilty by the New York Attorney General, and were subsequently banned from activity in New York and fined 18.5M. > Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” said Attorney General James. “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal https://ag.ny.gov/press-release/2021/attorney-general-james-...
rcxdude 4y ago
Now they do (previously they claimed 1:1 with actual dollars in a bank account, but failed to demonstrate that). But that 80% "Commercial paper" is suspicious as hell, considering it would make up more than half the total market for said paper (so 'liquid' is already questionable), and no-one else in the market has heard of them.
- wmf 4y ago
  They're now claiming no commercial paper. I'm not sure if that's more or less suspicious.

pearjuice 4y ago

If anything, the pressure on Sam might result in him turning on Tether/Binance/other-frauds with key insider evidence for reduced sentencing. The guy's a pvp gamer at heart so probably min-maxing with his lawyers what he can do as a criminal informant.

quanticle 4y ago
He's a PVP gamer who can't even get out of the bottom-most tier of League of Legends. [1] I very much doubt he's trying to game plan anything of this kind of sophistication. [1]: https://www.ft.com/content/23ab2258-ce03-4fbb-a9b2-7d9ec6e3d7f0 https://www.ft.com/content/23ab2258-ce03-4fbb-a9b2-7d9ec6e3d...
PoignardAzur 4y ago
> The guy's a pvp gamer at heart so probably min-maxing with his lawyers what he can do as a criminal informant. What? That's such a bizarre idea. Do you think the lawyers go "thank god this man plays Starcraft, so he understands the need to have a strategy in court!"
- KMag 4y ago
  I think by "pvp gamer", the GP means someone who preferentially targets other players in open world games rather than grinding the quests. I think they're saying he has a sadist streak, or at least a strong streak of narcissism.

ummonk 4y ago

My conspiracy theory is that USDT is actually well backed, but the Tether people intentionally make it look shady so they can buy the dip and arbitrage against panic selling. Some volatility would actually increase their ability to profit.

roland35 4y ago
That's crazy. I'm thinking Hanlon's razor applies here, there is absolutely no evidence that tether is legit.
- 323 4y ago
  Where are all the Tether holders complaining that they can't convert it into dollars?
  - arcticbull 4y ago
    To answer that question you first have to figure out who they are. Tether mostly moves around, people don't hold it. That is to say, exchanges like Binance are heavily dependent on USDT. Those are the only venues you as an individual have to exchange tethers for USD (of course this is not the same as a redemption which is solely at Tether's discretion). Why would the exchanges ever come to Tether for the cash knowing they weren't good for it when revealing the pantslessness of the emperor would take them down too? It is my opinion that Tether succeeded in doing what the Luna Foundation Guard was trying to do - they made all the 'industry' players so dependent on their continued existence that anyone blowing the whistle would take out the whole space. This in turn makes sure nobody gets within a few hundred yards of a whistle.
    - 323 4y ago
      HN has been talking about how Tether is a scam and how it will blow up AnyMomentNow(TM) for two years. Meanwhile, there was no talk on HN about Luna or FTX being a scam before they imploded. In finance, when everybody "knows" something, it's 99% likely to be false. Because there is a lot of money to be made knowing actual facts in finance.

323 4y ago

> These USDTs can then be spent to pump up various other crypto assets So why don't they do that now? Why are the crypto prices at two years low? This is the age old ZeroHedge conspiracy recycled - if the stock market goes up, it's because of WOPRs (their name for HFT algos) and the Fed plunge-protection-team, but if it goes down it's because of healthy market forces which are calling the Feds bluff.