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So long as tether is well-enough capitalised to meet redemptions everything will be fine. Right up until they run out real dollars... In theory, slightly depeg

So long as tether is well-enough capitalised to meet redemptions everything will be fine. Right up until they run out real dollars... In theory, slightly depegged tether is actually to their advantage, assuming they have enough capital.

chii 4y ago
> In theory, slightly depegged tether is actually to their advantage, assuming they have enough capital. why is that? Do you mean that they could buy tether back at a lower price than they issued it at, and thus pocket the difference?
- deleted 4y ago
  [deleted]
- drexlspivey 4y ago
  Yes that's one way to make money. They also make currently 4.75% on $67B of issued Tether = $3B+ per year just by buying US Treasuries. Even if they were undercapitalized in the past my guess is they are fine now
  - michpoch 4y ago
    That's not exactly how it works. You can't make 4.75% of $67B if you never had $67B in real dollars. They could have as well never received any USD / fiat.
    - drexlspivey 4y ago
      > They could have as well never received any USD / fiat What do you mean by that? What do they do with the tether they issue then?
      - riffraff 4y ago
        They mean there is no proof they issued tether for real money, and instead they could have issued it for collateral in crypto or IOU by other crypto entities. Which would explain why nobody in the financial industry knows them even if they supposedly manage 60B$.
        drexlspivey 4y ago
        Why would you exchange tether for crypto or IOUs that are super risky and have no cash flow instead of risk free dollars that you get to keep the interest? First one sounds like suicide while the second is a very lucrative business.
        JumpCrisscross 4y ago
        > Why would you exchange tether for crypto or IOUs They’re your own IOUs [1]. Imagine if SBF had Tether. [1] 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-...
        oneoff786 4y ago
        Because there’s someone dumber willing to give you money for it
        lazide 4y ago
        Because no banks will work with them and the US gov’t is constantly trying to track them down - and has a stranglehold on USD banking in the world. Read the NYAG report, it’s pretty crazy.
        evdubs 4y ago
        They work with Deltec Bank. https://tether.to/en/tether-banking-relationship-announced/ https://tether.to/en/tether-banking-relationship-announced/ From https://www.deltecbank.com/2022/09/01/the-history-of-stablecoins/ https://www.deltecbank.com/2022/09/01/the-history-of-stablec... > Tether > Launched in 2014, Tether (USDT) came to extraordinary success with a current market capitalization exceeding 67 billion USD. > This stablecoin fixes the issues inherent in the previous three. It relies not upon volatile reserves or the idea of persistent arbitrage trading, but on hard reserves of fiat currency. For every Tether coin in existence, there is one US dollar in a vault backing its existence. > In this way, the stablecoin handles a complete theoretical rout with ease. Tether continues to serve the burgeoning digital asset space while garnering the implicit affection of regulators.
  - loeg 4y ago
    My impression (which may be mistaken) was that they were locked out of buying US Treasuries directly due to things like not complying with AML/KYC.
  - chollida1 4y ago
    They almost certainly don’t own treasuries in any meaningful amount. While the treasury market is large the players are small and no one claims to work with tether. You can’t roll billions in treasuries without all the major players knowing who you are. And if they did they would release their cusips and put this to bed as there is only downside for them by withholding the cusips
    - evdubs 4y ago
      > They almost certainly don’t own treasuries in any meaningful amount. Attestation reports from BDO Italia state that they hold US Treasuries and that this makes up the core of their holdings. https://tether.to/en/transparency/#reports https://tether.to/en/transparency/#reports > While the treasury market is large the players are small and no one claims to work with tether. Even firms like Cumberland who are known to participate in the Tether creation/redemption process do not talk about working with Tether https://protos.com/tether-minted-usdt-stablecoin-crypto-two-alameda-cumberland/ https://protos.com/tether-minted-usdt-stablecoin-crypto-two-... For the US Treasury market, the players are not small. Maybe that was believable for the commercial paper dealings for Tether, but you can just directly buy from the US Treasury at auction, or go through a banking partner like Deltec Bank, and none of "the players" will know anything about you. > You can’t roll billions in treasuries without all the major players knowing who you are. Of course you can. Direct and indirect bidders for US Treasury bills are routinely in the dozens of billions. No need to go through a primary dealer. > And if they did they would release their cusips and put this to bed as there is only downside for them by withholding the cusips Would you honestly be convinced if their attestation reports included CUSIPs? Do you think that people would still clamor for an audit and just move the goalposts to "anyone can look up CUSIPs for US Treasuries. Why aren't the primary dealers confirming their purchases?"
      - chollida1 4y ago
        > Would you honestly be convinced if their attestation reports included CUSIPs? Yes because that would be verifiable and we could know the counterparty holding them and ask for verification. If they verified they are holding those cusips for Tether then we're good. And I don't' think you understand the treasury market as well as you think you do. Its a very transparent market. Everyone knows all the players, especially at the 10's of billions size. If they honestly were buying treasuries through Deltec then we would know, I assure they they are not as Deltec doesn't really participate in this market
- georgeecollins 4y ago
  If they can accept a USDT for only $0.99 and sell it later for $1.00, they can make money. In theory.
  - sidewndr46 4y ago
    Yeah but you only make 1 cent. If you just create 1 tether from thin air and then sell it for $1, you just made $1.
    - chii 4y ago
      > If you just create 1 tether from thin air and then sell it for $1, you just made $1. but now you have a (theoretical) liability of $1 as well, because you have an obligation to allow redemption. Unless, of course, you assume no redemption, or you intend to not honor the redemption.
      - sidewndr46 4y ago
        My understanding is that Tether is only ever redeemed at their discretion.
      - notch898a 4y ago
        Can anyone chime in as to what the fiduciary responsibility is if you have a liability but no responsibility to pay it? If I promise to store $1 for every $1 taken but also don't agree to actually ever pay out, is it illegal to not actually store the $1, or is it just dishonest?
        dragonwriter 4y ago
        > Can anyone chime in as to what the fiduciary responsibility is if you have a liability but no responsibility to pay it? A liability is a responsibility to pay. If you have no responsibility to pay, you have no liability.
        chii 4y ago
        > If I promise to store $1 for every $1 taken but also don't agree to actually ever pay out if you can explicitly write into the contractual agreement that you don't pay out, then may be it would not be illegal not to store it. But then who would actually give you the $1?
headsoup 4y ago
Tether (and the others) don't have to make redemptions. People attempting to repeated find there are sudden issues with the network, or the oddly need to re-verify themselves (and fail) repeatedly, or some other random issue occurs. Binance is doing this heavily right now (and recommending people use P2P, which also fails).
- ETH_start 4y ago
  Do you have a source for this? The idea that Bitfinex consistently uses technical issues as an excuse to prevent redemptions is speculation and hearsay. You'd think the anti-Tether conspiracy theorists could provide solid evidence for an alleged $68 billion scam.
  - headsoup 4y ago
    But of course, the large numbers of users on reddit, twitter etc complaining of such issues is just a bot army organised by anti-Tether 'FUDders' to spread mistruths. Bitfinex don't do that because you can't withdraw directly from them...
    - ETH_start 4y ago
      Can you give me some examples of people complaining about this? And I'm not talking about people sharing hearsay. I mean people reporting that they can't redeem their USDT for USD.
    - evdubs 4y ago
      You can withdraw your money from Bitfinex. Crypto, USD, whatever is shown in their fees section. https://www.bitfinex.com/fees/#withdrawal-table https://www.bitfinex.com/fees/#withdrawal-table

chii 4y ago

> In theory, slightly depegged tether is actually to their advantage, assuming they have enough capital. why is that? Do you mean that they could buy tether back at a lower price than they issued it at, and thus pocket the difference?

deleted 4y ago
[deleted]
drexlspivey 4y ago
Yes that's one way to make money. They also make currently 4.75% on $67B of issued Tether = $3B+ per year just by buying US Treasuries. Even if they were undercapitalized in the past my guess is they are fine now
- michpoch 4y ago
  That's not exactly how it works. You can't make 4.75% of $67B if you never had $67B in real dollars. They could have as well never received any USD / fiat.
  - drexlspivey 4y ago
    > They could have as well never received any USD / fiat What do you mean by that? What do they do with the tether they issue then?
    - riffraff 4y ago
      They mean there is no proof they issued tether for real money, and instead they could have issued it for collateral in crypto or IOU by other crypto entities. Which would explain why nobody in the financial industry knows them even if they supposedly manage 60B$.
      - drexlspivey 4y ago
        Why would you exchange tether for crypto or IOUs that are super risky and have no cash flow instead of risk free dollars that you get to keep the interest? First one sounds like suicide while the second is a very lucrative business.
        JumpCrisscross 4y ago
        > Why would you exchange tether for crypto or IOUs They’re your own IOUs [1]. Imagine if SBF had Tether. [1] 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-...
        oneoff786 4y ago
        Because there’s someone dumber willing to give you money for it
        lazide 4y ago
        Because no banks will work with them and the US gov’t is constantly trying to track them down - and has a stranglehold on USD banking in the world. Read the NYAG report, it’s pretty crazy.
        evdubs 4y ago
        They work with Deltec Bank. https://tether.to/en/tether-banking-relationship-announced/ https://tether.to/en/tether-banking-relationship-announced/ From https://www.deltecbank.com/2022/09/01/the-history-of-stablecoins/ https://www.deltecbank.com/2022/09/01/the-history-of-stablec... > Tether > Launched in 2014, Tether (USDT) came to extraordinary success with a current market capitalization exceeding 67 billion USD. > This stablecoin fixes the issues inherent in the previous three. It relies not upon volatile reserves or the idea of persistent arbitrage trading, but on hard reserves of fiat currency. For every Tether coin in existence, there is one US dollar in a vault backing its existence. > In this way, the stablecoin handles a complete theoretical rout with ease. Tether continues to serve the burgeoning digital asset space while garnering the implicit affection of regulators.
- loeg 4y ago
  My impression (which may be mistaken) was that they were locked out of buying US Treasuries directly due to things like not complying with AML/KYC.
- chollida1 4y ago
  They almost certainly don’t own treasuries in any meaningful amount. While the treasury market is large the players are small and no one claims to work with tether. You can’t roll billions in treasuries without all the major players knowing who you are. And if they did they would release their cusips and put this to bed as there is only downside for them by withholding the cusips
  - evdubs 4y ago
    > They almost certainly don’t own treasuries in any meaningful amount. Attestation reports from BDO Italia state that they hold US Treasuries and that this makes up the core of their holdings. https://tether.to/en/transparency/#reports https://tether.to/en/transparency/#reports > While the treasury market is large the players are small and no one claims to work with tether. Even firms like Cumberland who are known to participate in the Tether creation/redemption process do not talk about working with Tether https://protos.com/tether-minted-usdt-stablecoin-crypto-two-alameda-cumberland/ https://protos.com/tether-minted-usdt-stablecoin-crypto-two-... For the US Treasury market, the players are not small. Maybe that was believable for the commercial paper dealings for Tether, but you can just directly buy from the US Treasury at auction, or go through a banking partner like Deltec Bank, and none of "the players" will know anything about you. > You can’t roll billions in treasuries without all the major players knowing who you are. Of course you can. Direct and indirect bidders for US Treasury bills are routinely in the dozens of billions. No need to go through a primary dealer. > And if they did they would release their cusips and put this to bed as there is only downside for them by withholding the cusips Would you honestly be convinced if their attestation reports included CUSIPs? Do you think that people would still clamor for an audit and just move the goalposts to "anyone can look up CUSIPs for US Treasuries. Why aren't the primary dealers confirming their purchases?"
    - chollida1 4y ago
      > Would you honestly be convinced if their attestation reports included CUSIPs? Yes because that would be verifiable and we could know the counterparty holding them and ask for verification. If they verified they are holding those cusips for Tether then we're good. And I don't' think you understand the treasury market as well as you think you do. Its a very transparent market. Everyone knows all the players, especially at the 10's of billions size. If they honestly were buying treasuries through Deltec then we would know, I assure they they are not as Deltec doesn't really participate in this market
georgeecollins 4y ago
If they can accept a USDT for only $0.99 and sell it later for $1.00, they can make money. In theory.
- sidewndr46 4y ago
  Yeah but you only make 1 cent. If you just create 1 tether from thin air and then sell it for $1, you just made $1.
  - chii 4y ago
    > If you just create 1 tether from thin air and then sell it for $1, you just made $1. but now you have a (theoretical) liability of $1 as well, because you have an obligation to allow redemption. Unless, of course, you assume no redemption, or you intend to not honor the redemption.
    - sidewndr46 4y ago
      My understanding is that Tether is only ever redeemed at their discretion.
    - notch898a 4y ago
      Can anyone chime in as to what the fiduciary responsibility is if you have a liability but no responsibility to pay it? If I promise to store $1 for every $1 taken but also don't agree to actually ever pay out, is it illegal to not actually store the $1, or is it just dishonest?
      - dragonwriter 4y ago
        > Can anyone chime in as to what the fiduciary responsibility is if you have a liability but no responsibility to pay it? A liability is a responsibility to pay. If you have no responsibility to pay, you have no liability.
      - chii 4y ago
        > If I promise to store $1 for every $1 taken but also don't agree to actually ever pay out if you can explicitly write into the contractual agreement that you don't pay out, then may be it would not be illegal not to store it. But then who would actually give you the $1?

headsoup 4y ago

Tether (and the others) don't have to make redemptions. People attempting to repeated find there are sudden issues with the network, or the oddly need to re-verify themselves (and fail) repeatedly, or some other random issue occurs. Binance is doing this heavily right now (and recommending people use P2P, which also fails).

ETH_start 4y ago
Do you have a source for this? The idea that Bitfinex consistently uses technical issues as an excuse to prevent redemptions is speculation and hearsay. You'd think the anti-Tether conspiracy theorists could provide solid evidence for an alleged $68 billion scam.
- headsoup 4y ago
  But of course, the large numbers of users on reddit, twitter etc complaining of such issues is just a bot army organised by anti-Tether 'FUDders' to spread mistruths. Bitfinex don't do that because you can't withdraw directly from them...
  - ETH_start 4y ago
    Can you give me some examples of people complaining about this? And I'm not talking about people sharing hearsay. I mean people reporting that they can't redeem their USDT for USD.
  - evdubs 4y ago
    You can withdraw your money from Bitfinex. Crypto, USD, whatever is shown in their fees section. https://www.bitfinex.com/fees/#withdrawal-table https://www.bitfinex.com/fees/#withdrawal-table