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If someone didn’t get their money when they tried to redeem, they would definitely scream bloody murder about that. So far, no such party has.

by SilasX 4y ago

arcticbull 4y ago
They're simply not incentivized to do that. If they did their USDT would actually become worthless. If they said nothing and simply exchanged it to the next fool, they get their money. Contractually, Tether doesn't allow redemptions from most people. New Yorkers are excluded thanks to the NYAG settlement. US persons are (or were when I checked) blanket excluded in their terms. Of the remainder, only their 'customers' as defined at their sole discretion are eligible for redemptions. Then, you have to meet minimum transaction size requirements ($100K I believe) and also pay their fees. What individual would bother doing all that when they can hit 'sell' on Coinbase? So once the retail rubes are ruled out, you've really only got gigaholders whose fate is so tied to USDT's continued existence and value that pantsing the emperor leaves them rekt.
- SilasX 4y ago
  Okay. So your argument requires no one to ever pull the trigger for mutually assured destruction in his case, over a broad universe of non-cooperating actors, and even if they had another way to benefit from the collapse of crypto that they would be causing. That still leaves it in a tenuous position. Edit: for your later addition: >What individual would bother doing all that when they can hit 'sell' on Coinbase? In addition to the above, someone doing an arb play during any one of tether’s many “it’s gonna die this time for real” depeggings.
  - arcticbull 4y ago
    The thing is it's not really speculation. 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. 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. I don't personally think that it's impossible to redeem, I think they're almost guaranteed not to be good for all outstanding Tethers. I think they keep some small pool of liquidity to satisfy certain key partners, and gamble with the rest of it hoping for yield they can take off the table for themselves. I strongly suspect they got ruined during the downturn. They had a ton of Celsius equity, for instance. I think they loan tethers to institutional players in the space without collateral, too. [edit] I'm not sure BFX actually arbs the peg, I think they stopped? I'm trying to find my source. However, I do know Alameda arbed the peg. > Edit: for your later addition: Sorry for the ninja add.
    - SilasX 4y ago
      > The thing is it's not really speculation. What's not really speculation? The new goal post you moved to, or the point I was originally contesting, before you retreated to an unrelated argument for which you could dump piles of (also unrelated) evidence? You were claiming[1] that Tether isn't honoring redemptions, based on the fact that no one's screaming "Hey, look at me, I just got some USD back for my tethers, 1:1" -- even though people could also point to tether's failure to redeem, and even profit from advance knowledge of the imminent crypto collapse it would trigger. Now, with no acknowledgement of what just happened, you're moving to this argument: >>I don't personally think that it's impossible to redeem, I think they're almost guaranteed not to be good for all outstanding Tethers. It looks like you have no aversion to making a baseless claim, and then firehosing evidence of a different one when called on it. I don't think that makes for a productive exchange of ideas. I mean, if you really believed that Tether was honoring at least some redemptions[2], why would you casually make the argument that, gosh, we don't have reports of successful redemptions, they must not be doing any at all? >I'm not sure BFX actually arbs the peg, Yep, another point I never made. [1] https://news.ycombinator.com/item?id=34635720 https://news.ycombinator.com/item?id=34635720 [2] >> I think they keep some small pool of liquidity to satisfy certain key partners,
      - arcticbull 4y ago
        Sorry maybe I was just a little confused, I'm trying to do a few things at a time. Let me try and clarify. I'm approaching this from a good faith position. > You were claiming[1] that Tether isn't honoring redemptions, based on the fact that no one's screaming "Hey, look at me, I just got some USD back for my tethers, 1:1" -- even though people could also point to tether's failure to redeem, and even profit from advance knowledge of the imminent crypto collapse it would trigger I was trying to say they claim to (or have in the recent past claimed to) allow redemptions, but in reality, they don't honor all redemptions. They don't, because their terms of service say so. They don't honor redemptions to NY residents, any US persons, to anyone requesting less than $100K, etc. This is all on their tether.to/legal site. They've updated this wording many times. I don't think in [1] I said they don't honor any redemptions. Yes, nobody's screaming about it. I think once you exclude the above group (who sell at exchanges), then the remaining are either going to be taken care of out of a small pool of liquidity, or know not to ask for cash. There's a ton we don't know. We don't know if Tethers are actually being issued in exchange for deposits. They could be issued to institutional players on faith, in which case a 'redemption' wouldn't be a cash withdrawal but instead they tear up the promisory note and return the USDT to the treasury. That seems within their capability. I further maintain no big players but Trabucco and SBF have said 'they were good for our redemption requests' so I have no reason to believe they are, given their legal issues, questionable track record, and the suspicious folks in charge. > I think they're almost guaranteed not to be good for all outstanding Tethers. There's nothing baseless about this, they have a history as detailed by the CFTC and NYAG settlements. I have no reason to trust they're suddenly good for it. So I have no reason to believe they'd be good for all redemptions in the future. I hope that clarifies my position.
- rcme 4y ago
  > They're simply not incentivized to do that. If they did their USDT would actually become worthless. If they said nothing and simply exchanged it to the next fool, they get their money. If they knew that Tether wasn't honoring redemptions, they could take out a large amount of Tether-denominated loans backed by their own collateral. Then they could go public with their information and profit.
  - lazide 4y ago
    People have been screaming about Tether being a scam for almost a decade now and it hasn’t crashed. The market can remain insane longer than you could remain solvent in that case.
    - rcme 4y ago
      > People have been screaming about Tether being a scam for almost a decade now and it hasn’t crashed. In this hypothetical situation, you have information that would apparently "crash the market" if it were to become public, so what happened for the last decade isn't really relevant. Remember, this conversation started talking about Tether redemptions failing to go through and whether or not people would go public with that information. Someone said they wouldn't go public because it would crash the value of their assets, but I was pointing out that you could profit from the crash in value as well.
      - lazide 4y ago
        As pointed out elsewhere in this thread, the counterparty risk to these shorts makes it nearly impossible to do. And this information has been public for years, including the NYAG evidence which is very damning, but no one seems to actually care - or it’s being propped up successfully regardless. Even in this thread there are folks who refuse to believe things Tether themselves have admitted to under oath and things Tether says in their own TOS now. At this point, even if you had authenticated video of the Tether founders admitting it was all a giant scam, would it change the market behavior? I kind of doubt it. It’ll keep going until it doesn’t, then who knows.
oneoff786 4y ago
Then go redeem one. We’re all watching.

If someone didn’t get their money when they tried to redeem, they would definitely scream bloody murder about that. So far, no such party has.

by SilasX 4y ago

If someone didn’t get their money when they tried to redeem, they would definitely scream bloody murder about that. So far, no such party has.

arcticbull 4y ago

They're simply not incentivized to do that. If they did their USDT would actually become worthless. If they said nothing and simply exchanged it to the next fool, they get their money. Contractually, Tether doesn't allow redemptions from most people. New Yorkers are excluded thanks to the NYAG settlement. US persons are (or were when I checked) blanket excluded in their terms. Of the remainder, only their 'customers' as defined at their sole discretion are eligible for redemptions. Then, you have to meet minimum transaction size requirements ($100K I believe) and also pay their fees. What individual would bother doing all that when they can hit 'sell' on Coinbase? So once the retail rubes are ruled out, you've really only got gigaholders whose fate is so tied to USDT's continued existence and value that pantsing the emperor leaves them rekt.

SilasX 4y ago
Okay. So your argument requires no one to ever pull the trigger for mutually assured destruction in his case, over a broad universe of non-cooperating actors, and even if they had another way to benefit from the collapse of crypto that they would be causing. That still leaves it in a tenuous position. Edit: for your later addition: >What individual would bother doing all that when they can hit 'sell' on Coinbase? In addition to the above, someone doing an arb play during any one of tether’s many “it’s gonna die this time for real” depeggings.
- arcticbull 4y ago
  The thing is it's not really speculation. 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. 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. I don't personally think that it's impossible to redeem, I think they're almost guaranteed not to be good for all outstanding Tethers. I think they keep some small pool of liquidity to satisfy certain key partners, and gamble with the rest of it hoping for yield they can take off the table for themselves. I strongly suspect they got ruined during the downturn. They had a ton of Celsius equity, for instance. I think they loan tethers to institutional players in the space without collateral, too. [edit] I'm not sure BFX actually arbs the peg, I think they stopped? I'm trying to find my source. However, I do know Alameda arbed the peg. > Edit: for your later addition: Sorry for the ninja add.
  - SilasX 4y ago
    > The thing is it's not really speculation. What's not really speculation? The new goal post you moved to, or the point I was originally contesting, before you retreated to an unrelated argument for which you could dump piles of (also unrelated) evidence? You were claiming[1] that Tether isn't honoring redemptions, based on the fact that no one's screaming "Hey, look at me, I just got some USD back for my tethers, 1:1" -- even though people could also point to tether's failure to redeem, and even profit from advance knowledge of the imminent crypto collapse it would trigger. Now, with no acknowledgement of what just happened, you're moving to this argument: >>I don't personally think that it's impossible to redeem, I think they're almost guaranteed not to be good for all outstanding Tethers. It looks like you have no aversion to making a baseless claim, and then firehosing evidence of a different one when called on it. I don't think that makes for a productive exchange of ideas. I mean, if you really believed that Tether was honoring at least some redemptions[2], why would you casually make the argument that, gosh, we don't have reports of successful redemptions, they must not be doing any at all? >I'm not sure BFX actually arbs the peg, Yep, another point I never made. [1] https://news.ycombinator.com/item?id=34635720 https://news.ycombinator.com/item?id=34635720 [2] >> I think they keep some small pool of liquidity to satisfy certain key partners,
    - arcticbull 4y ago
      Sorry maybe I was just a little confused, I'm trying to do a few things at a time. Let me try and clarify. I'm approaching this from a good faith position. > You were claiming[1] that Tether isn't honoring redemptions, based on the fact that no one's screaming "Hey, look at me, I just got some USD back for my tethers, 1:1" -- even though people could also point to tether's failure to redeem, and even profit from advance knowledge of the imminent crypto collapse it would trigger I was trying to say they claim to (or have in the recent past claimed to) allow redemptions, but in reality, they don't honor all redemptions. They don't, because their terms of service say so. They don't honor redemptions to NY residents, any US persons, to anyone requesting less than $100K, etc. This is all on their tether.to/legal site. They've updated this wording many times. I don't think in [1] I said they don't honor any redemptions. Yes, nobody's screaming about it. I think once you exclude the above group (who sell at exchanges), then the remaining are either going to be taken care of out of a small pool of liquidity, or know not to ask for cash. There's a ton we don't know. We don't know if Tethers are actually being issued in exchange for deposits. They could be issued to institutional players on faith, in which case a 'redemption' wouldn't be a cash withdrawal but instead they tear up the promisory note and return the USDT to the treasury. That seems within their capability. I further maintain no big players but Trabucco and SBF have said 'they were good for our redemption requests' so I have no reason to believe they are, given their legal issues, questionable track record, and the suspicious folks in charge. > I think they're almost guaranteed not to be good for all outstanding Tethers. There's nothing baseless about this, they have a history as detailed by the CFTC and NYAG settlements. I have no reason to trust they're suddenly good for it. So I have no reason to believe they'd be good for all redemptions in the future. I hope that clarifies my position.
rcme 4y ago
> They're simply not incentivized to do that. If they did their USDT would actually become worthless. If they said nothing and simply exchanged it to the next fool, they get their money. If they knew that Tether wasn't honoring redemptions, they could take out a large amount of Tether-denominated loans backed by their own collateral. Then they could go public with their information and profit.
- lazide 4y ago
  People have been screaming about Tether being a scam for almost a decade now and it hasn’t crashed. The market can remain insane longer than you could remain solvent in that case.
  - rcme 4y ago
    > People have been screaming about Tether being a scam for almost a decade now and it hasn’t crashed. In this hypothetical situation, you have information that would apparently "crash the market" if it were to become public, so what happened for the last decade isn't really relevant. Remember, this conversation started talking about Tether redemptions failing to go through and whether or not people would go public with that information. Someone said they wouldn't go public because it would crash the value of their assets, but I was pointing out that you could profit from the crash in value as well.
    - lazide 4y ago
      As pointed out elsewhere in this thread, the counterparty risk to these shorts makes it nearly impossible to do. And this information has been public for years, including the NYAG evidence which is very damning, but no one seems to actually care - or it’s being propped up successfully regardless. Even in this thread there are folks who refuse to believe things Tether themselves have admitted to under oath and things Tether says in their own TOS now. At this point, even if you had authenticated video of the Tether founders admitting it was all a giant scam, would it change the market behavior? I kind of doubt it. It’ll keep going until it doesn’t, then who knows.

oneoff786 4y ago

Then go redeem one. We’re all watching.