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Because no one cares about random wild speculation and rumors spread across the Internet for almost a decade. What people care about is whether they can take 1

by Kranar 4y ago

Because no one cares about random wild speculation and rumors spread across the Internet for almost a decade. What people care about is whether they can take 1 USDT and exchange it for 1 USD, plain and simple. Currently Bitfinex will exchange 1 USDT for 1 USD and they hold a substantial about of USDT, they also buy up USDT when it falls below 1 USD. I'm sure Bitfinex is happy to see reports about Tether's demise spread, because it's free money for them. If at some point it's not possible to redeem 1 USDT for 1 USD, then Tether will collapse like the other stable coins and that's really all there is to it.

arcticbull 4y ago
It's literally been covered in CFTC and NYAG settlements. It's not wild speculation, it's not rumors. It's all here. [1, 2] > Currently Bitfinex will exchange 1 USDT for 1 USD and they hold a substantial about of USDT, they also buy up USDT when it falls below 1 USD. I'm sure Bitfinex is happy to see reports about Tether's demise spread, because it's free money for them. No, that's what they say they do. We have no evidence. The last people who stuck up for them in this regard, SBF and Trabucco, are in some pretty hot water. It could be Tether/Bitfinex, but it could be anyone else with an interest in perpetuating the ecosystem. Some exchanges mortally locked in perhaps? > If at some point it's not possible to redeem 1 USDT for 1 USD, then Tether will collapse like the other stable coins and that's really all there is to it. It may not be possible right now. Their terms of service say they can deny basically any redemption at their sole discretion. Anyone denied would not be incentivized to declare the emperor naked. [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-... [2] https://www.cftc.gov/PressRoom/PressReleases/8450-21 https://www.cftc.gov/PressRoom/PressReleases/8450-21
- ETH_start 4y ago
  No one has complained about being unable to convert their USDT to USD. This is baseless speculation. It's entirely fair to say there is no basis for trusting the company behind Tether, and by extension Tether. It's unfounded FUD to definitively claim that it's a scam.
  - arcticbull 4y ago
    The CFTC and NYAG statements said in no uncertain terms that there were long periods of time where Tether did not have the money to cover their obligations. You have lowered the standard to the point where it is significantly easier to meet. All they need to meet your standard is to have inflows in excess of outflows - outflows lower than inflows plus marketable securities. Letitia James says: > The OAG’s investigation found that, starting no later than mid-2017, Tether had no access to banking, anywhere in the world, and so for periods of time held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations. The CFTC says: > As found in the order, Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period from 2016 through 2018. It's literally not FUD, it's something they paid significant quantities of penalties over.
    - ETH_start 4y ago
      No access to banking is not the same thing as not having the reserves. If there was this massive shortfall/scam that you are alleging, those press releases would have spared no details in describing them. >>> As found in the order, Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period from 2016 through 2018. You're leaving out critically important context, which is that Tether held other assets as reserves: >>The order further finds that Tether failed to disclose that it included unsecured receivables and non-fiat assets in its reserves Reading your comment without this context would lead a casual observer to conclude that the assets backing the issued USDT held a value of 27.6% of the USDT's face value, which is entirely different than reserves equalling ~100% of USDT in value, but with a significant fraction of assets constituting those reserves not being of zero-risk fiat as the marketing arguably implied.
      - arcticbull 4y ago
        I'm not sure why you're quibbling. At one point Bitfinex reached in and took out hundreds of millions of dollars from the reserves Tether had to cover the money they had lost to Crypto Capital Corp. At the time they had a market cap of about $2B, so that was ~25% of reserves wired out. [4, S. III pages 6-9]. That's just one example. There is, and I can't stress this enough, literally no reason for you or anyone else to trust these people. They've never published audits, one of their auditors (Friedman LLP) literally walked away once they saw their books. Then for some of the attestations, they literally wired money in the same day from Bitfinex, then wired it out the next to make it look like they had the reserves. > If there was this massive shortfall/scam that you are alleging, those press releases would have spared no details in describing them. They did. [1] Also, it was covered in the NYAG settlement and the CFTC settlement I linked. I strongly suggest you give them an actual read-through. The entirety of the section III of the PDF covers it in painstaking detail. > Reading your comment without this context would lead a casual observer to conclude that the assets backing the issued USDT held a value of 27.6% of the USDT's face value, which is entirely different than reserves equalling ~100% of USDT in value, but with a significant fraction of assets constituting those reserves not being of zero-risk fiat as the marketing arguably implied. Not only is that is than an obvious misreading of the comment, it wasn't my comment, it was a direct quote from the CFTC website - but then you go on to claim something I never claimed. Let me be clear then: 1. There periods they were physically unable to fulfill demands because they had no bank account access [4]. 2. At other times, their peer organization raided the kitty and literally took the money (because the same executives gave almost a billion dollars to a company indicted for laundering money for - among others - the Colombian cartels, without a contract, and whose execs are in prison or on trial). [2,3] 3. At other times, they invested in illiquid securities and got rekt (they invested in Celsius for instance). Stop giving these people a lick of credit, stop apologizing for them, and demand some proof. [1] https://www.coindesk.com/markets/2019/04/25/bitfinex-covered-850-million-loss-using-tether-funds-ny-prosecutors-allege/ https://www.coindesk.com/markets/2019/04/25/bitfinex-covered... [2] https://www.coindesk.com/markets/2019/10/25/polish-police-arrest-head-of-payment-processor-tied-to-bitfinex-crypto-exchange/ https://www.coindesk.com/markets/2019/10/25/polish-police-ar... [3] https://www.coindesk.com/business/2022/04/25/reggie-fowler-pleads-guilty-in-crypto-capital-corp-case-tied-to-bitfinexs-missing-millions/ https://www.coindesk.com/business/2022/04/25/reggie-fowler-p... [4] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlement_agreement_-_execution_version.b-t_signed-c2_oag_signed.pdf https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
Grimburger 4y ago
The only sensible comment here. HN has been predicting Tether's collapse for nearly 5 years now and it's simply not happening, people purchasing tether have been taking a short against bitcoin, historically that a very bad bet and certainly one you want to be on the other side of. Now they've been through very significant bear markets, some theft of funds and still are solvent. I don't understand the criticism about high amounts and verification for directly redeeming it either. If they did neither of those things it would be a money-laundering haven and they'd have men with guns raiding their homes tomorrow. You can redeem it through kraken and other domestic exchanges for cold hard cash, it's working perfectly fine. Tether will be looked back as an example of how dramatically wrong "common knowledge" can be in internet communities, some people are so mentally obstinate and committed to the idea that it is simply too hard to admit they might be wrong, this is fed by others in the community with the same affliction.
- unyttigfjelltol 4y ago
  The article makes clear that Tether is actually more like a Special Drawing Right (SDR) on overcollateralized derivatives of the crypto ecosystem. Which is to say that Tether is more like a derivative of rainbows and unicorns-- actually it's basically the IMF of rainbows and unicorns. Is Tether the equivalent of USD? No. It is not USD. Why is Tether valued at 1 USD per coin? I'm not sure. But it almost certainly will not be if the value of crypto broadly falls enough to compromise Tether's collateral. The value of that "paper" is a nonlinear function. The "collapse" would happen so very slowly... and then all at once. Good luck.
- schemescape 4y ago
  > Now they've been through very significant bear markets, some theft of funds and still are solvent. How did you determine they are solvent? Note that even a literal Ponzi scheme could honor withdrawals for a time, so producing $1 for 1 USDT (or even several billion) is not proof. The only reports I'm aware of are either paid for by Tether (e.g. the latest report from BDO--whom I know nothing about) or from governments (e.g. the NYAG and CFTC reports--which I trust--and show that Tether was, in fact, not telling the truth about reserves).

by Kranar 4y ago

arcticbull 4y ago

It's literally been covered in CFTC and NYAG settlements. It's not wild speculation, it's not rumors. It's all here. [1, 2] > Currently Bitfinex will exchange 1 USDT for 1 USD and they hold a substantial about of USDT, they also buy up USDT when it falls below 1 USD. I'm sure Bitfinex is happy to see reports about Tether's demise spread, because it's free money for them. No, that's what they say they do. We have no evidence. The last people who stuck up for them in this regard, SBF and Trabucco, are in some pretty hot water. It could be Tether/Bitfinex, but it could be anyone else with an interest in perpetuating the ecosystem. Some exchanges mortally locked in perhaps? > If at some point it's not possible to redeem 1 USDT for 1 USD, then Tether will collapse like the other stable coins and that's really all there is to it. It may not be possible right now. Their terms of service say they can deny basically any redemption at their sole discretion. Anyone denied would not be incentivized to declare the emperor naked. [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-... [2] https://www.cftc.gov/PressRoom/PressReleases/8450-21 https://www.cftc.gov/PressRoom/PressReleases/8450-21

ETH_start 4y ago
No one has complained about being unable to convert their USDT to USD. This is baseless speculation. It's entirely fair to say there is no basis for trusting the company behind Tether, and by extension Tether. It's unfounded FUD to definitively claim that it's a scam.
- arcticbull 4y ago
  The CFTC and NYAG statements said in no uncertain terms that there were long periods of time where Tether did not have the money to cover their obligations. You have lowered the standard to the point where it is significantly easier to meet. All they need to meet your standard is to have inflows in excess of outflows - outflows lower than inflows plus marketable securities. Letitia James says: > The OAG’s investigation found that, starting no later than mid-2017, Tether had no access to banking, anywhere in the world, and so for periods of time held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations. The CFTC says: > As found in the order, Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period from 2016 through 2018. It's literally not FUD, it's something they paid significant quantities of penalties over.
  - ETH_start 4y ago
    No access to banking is not the same thing as not having the reserves. If there was this massive shortfall/scam that you are alleging, those press releases would have spared no details in describing them. >>> As found in the order, Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period from 2016 through 2018. You're leaving out critically important context, which is that Tether held other assets as reserves: >>The order further finds that Tether failed to disclose that it included unsecured receivables and non-fiat assets in its reserves Reading your comment without this context would lead a casual observer to conclude that the assets backing the issued USDT held a value of 27.6% of the USDT's face value, which is entirely different than reserves equalling ~100% of USDT in value, but with a significant fraction of assets constituting those reserves not being of zero-risk fiat as the marketing arguably implied.
    - arcticbull 4y ago
      I'm not sure why you're quibbling. At one point Bitfinex reached in and took out hundreds of millions of dollars from the reserves Tether had to cover the money they had lost to Crypto Capital Corp. At the time they had a market cap of about $2B, so that was ~25% of reserves wired out. [4, S. III pages 6-9]. That's just one example. There is, and I can't stress this enough, literally no reason for you or anyone else to trust these people. They've never published audits, one of their auditors (Friedman LLP) literally walked away once they saw their books. Then for some of the attestations, they literally wired money in the same day from Bitfinex, then wired it out the next to make it look like they had the reserves. > If there was this massive shortfall/scam that you are alleging, those press releases would have spared no details in describing them. They did. [1] Also, it was covered in the NYAG settlement and the CFTC settlement I linked. I strongly suggest you give them an actual read-through. The entirety of the section III of the PDF covers it in painstaking detail. > Reading your comment without this context would lead a casual observer to conclude that the assets backing the issued USDT held a value of 27.6% of the USDT's face value, which is entirely different than reserves equalling ~100% of USDT in value, but with a significant fraction of assets constituting those reserves not being of zero-risk fiat as the marketing arguably implied. Not only is that is than an obvious misreading of the comment, it wasn't my comment, it was a direct quote from the CFTC website - but then you go on to claim something I never claimed. Let me be clear then: 1. There periods they were physically unable to fulfill demands because they had no bank account access [4]. 2. At other times, their peer organization raided the kitty and literally took the money (because the same executives gave almost a billion dollars to a company indicted for laundering money for - among others - the Colombian cartels, without a contract, and whose execs are in prison or on trial). [2,3] 3. At other times, they invested in illiquid securities and got rekt (they invested in Celsius for instance). Stop giving these people a lick of credit, stop apologizing for them, and demand some proof. [1] https://www.coindesk.com/markets/2019/04/25/bitfinex-covered-850-million-loss-using-tether-funds-ny-prosecutors-allege/ https://www.coindesk.com/markets/2019/04/25/bitfinex-covered... [2] https://www.coindesk.com/markets/2019/10/25/polish-police-arrest-head-of-payment-processor-tied-to-bitfinex-crypto-exchange/ https://www.coindesk.com/markets/2019/10/25/polish-police-ar... [3] https://www.coindesk.com/business/2022/04/25/reggie-fowler-pleads-guilty-in-crypto-capital-corp-case-tied-to-bitfinexs-missing-millions/ https://www.coindesk.com/business/2022/04/25/reggie-fowler-p... [4] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlement_agreement_-_execution_version.b-t_signed-c2_oag_signed.pdf https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...

Grimburger 4y ago

The only sensible comment here. HN has been predicting Tether's collapse for nearly 5 years now and it's simply not happening, people purchasing tether have been taking a short against bitcoin, historically that a very bad bet and certainly one you want to be on the other side of. Now they've been through very significant bear markets, some theft of funds and still are solvent. I don't understand the criticism about high amounts and verification for directly redeeming it either. If they did neither of those things it would be a money-laundering haven and they'd have men with guns raiding their homes tomorrow. You can redeem it through kraken and other domestic exchanges for cold hard cash, it's working perfectly fine. Tether will be looked back as an example of how dramatically wrong "common knowledge" can be in internet communities, some people are so mentally obstinate and committed to the idea that it is simply too hard to admit they might be wrong, this is fed by others in the community with the same affliction.

unyttigfjelltol 4y ago
The article makes clear that Tether is actually more like a Special Drawing Right (SDR) on overcollateralized derivatives of the crypto ecosystem. Which is to say that Tether is more like a derivative of rainbows and unicorns-- actually it's basically the IMF of rainbows and unicorns. Is Tether the equivalent of USD? No. It is not USD. Why is Tether valued at 1 USD per coin? I'm not sure. But it almost certainly will not be if the value of crypto broadly falls enough to compromise Tether's collateral. The value of that "paper" is a nonlinear function. The "collapse" would happen so very slowly... and then all at once. Good luck.
schemescape 4y ago
> Now they've been through very significant bear markets, some theft of funds and still are solvent. How did you determine they are solvent? Note that even a literal Ponzi scheme could honor withdrawals for a time, so producing $1 for 1 USDT (or even several billion) is not proof. The only reports I'm aware of are either paid for by Tether (e.g. the latest report from BDO--whom I know nothing about) or from governments (e.g. the NYAG and CFTC reports--which I trust--and show that Tether was, in fact, not telling the truth about reserves).