Tether Is Breaking Its Peg to the Dollar • Hacker News Board

Re: Tether Is Breaking Its Peg to the Dollar

#51

Post by Asparagirl » Sun, Jan 28, 2018, 9:07 PM UTC

How did this thread get to be 46 comments long without a single mention of or link to @Bitfinexed?!

@Bitfinexed is the anonymous Twitter account that has been publicly sounding the alarm about Tether for almost a year now. They got the receipts, they bring the fire:

https://twitter.com/bitfinexed

And longer articles at:

https://medium.com/@bitfinexed/

And as payment for his/her troubles as the Harry Markopolos of the crypto-world, he/she has been threatened with lawsuits.

If you, like me, perversely enjoy reading about or watching true financial crime stories ("The Smartest Guys in the Room", "When Genius Failed", Casey Serin's various blog exploits, "The Wizard of Lies", etc.), then @Bitfinexed's work is incredibly satisfying to read.

For example, in just the past few days, you can get the excitement of reading his/her public Twitter conversations with some of the big primary players in this Ponzi scheme, where those fraudsters brazenly deny any influence or financial benefits from this scheme, even in the face of immense evidence or screenshots.

I expect to see some of those tweets included in financial crime indictments in the near future.

Re: Tether Is Breaking Its Peg to the Dollar

#52

Post by rspeer » Sun, Jan 28, 2018, 9:07 PM UTC

gruez wrote: post #48

stefano wrote: post #24

Earlier quoted context omitted.

Yeah. Their TOS says that they're under no obligation of giving you dollars in exchange for tethers. In fact, no one has ever redeemed a single tether and there is no process in place to actually do it. Why people believe that 1 USDT = 1 USD is beyond me.

>In fact, no one has ever redeemed a single tether and there is no process in place to actually do it. It's called withdrawing at any of the exchanges that support tether.

Can you actually "withdraw" Tether as dollars at these exchanges? Or can you just pass the buck by trading Tether for other cryptocurrencies?

Re: Tether Is Breaking Its Peg to the Dollar

#53

Post by Asparagirl » Sun, Jan 28, 2018, 9:10 PM UTC

aviv wrote: post #33

It's crazy obvious that this ponzi scheme is on its way towards a massive collapse.

Yup. And the unwind is going to affect and contaminate even "innocent" crypto markets and trading platforms.

Re: Tether Is Breaking Its Peg to the Dollar

#54

Post by [deleted] » Sun, Jan 28, 2018, 10:03 PM UTC

brokensegue wrote: post #46

hidenotslide wrote: post #38

Earlier quoted context omitted.

I have no clue, you'd have to ask people who sell below par. If they are selling because they can't access the normal withdrawal mechanism (e.g. US customers or people in a rush relative to processing delays) then it is the former. If they are speculatively shorting it is more likely the latter. It could be both: people who can't do normal withdrawal and think there is at least 2% chance of fraud.

there is no normal withdrawal mechanism.

[deleted]

Re: Tether Is Breaking Its Peg to the Dollar

#55

Post by ceejayoz » Sun, Jan 28, 2018, 10:22 PM UTC

cstrat wrote: post #50

I never quite understood how tether is supposed to be pegged to the USD. If there is no liquidity in an exchange wouldn't the price just fluctuate with supply/demand. If people are wanting to buy them more than people trying to sell them, wouldn't the price just appreciate? Also - who is sitting and holding all these tethers? There are 2.2 billion of them out there...

If Tether really had $1 in the bank for every 1 USDT issued, they could set essentially infinite purchase orders at $0.99 - they'd make a penny on each purchase. They'd have a similar huge sell order at $1.01 for the same reason.

Re: Tether Is Breaking Its Peg to the Dollar

#56

Post by hidenotslide » Sun, Jan 28, 2018, 10:30 PM UTC

brokensegue wrote: post #46

hidenotslide wrote: post #38

Earlier quoted context omitted.

I have no clue, you'd have to ask people who sell below par. If they are selling because they can't access the normal withdrawal mechanism (e.g. US customers or people in a rush relative to processing delays) then it is the former. If they are speculatively shorting it is more likely the latter. It could be both: people who can't do normal withdrawal and think there is at least 2% chance of fraud.

there is no normal withdrawal mechanism.

I don't know the details. Multiple places seem to imply there is at least some planned mechanism, that's all I was referring to. E.g. from the white paper: "Tethers may be redeemable/exchangeable for the underlying fiat currency pursuant to Tether Limited’s terms of service".

I don't have a position here and no axe to grind, but parting from your auditors is in many cases a significant red flag.

Re: Tether Is Breaking Its Peg to the Dollar

#57

Post by cstrat » Sun, Jan 28, 2018, 10:43 PM UTC

ceejayoz wrote: post #55

cstrat wrote: post #50

I never quite understood how tether is supposed to be pegged to the USD. If there is no liquidity in an exchange wouldn't the price just fluctuate with supply/demand. If people are wanting to buy them more than people trying to sell them, wouldn't the price just appreciate? Also - who is sitting and holding all these tethers? There are 2.2 billion of them out there...

If Tether really had $1 in the bank for every 1 USDT issued, they could set essentially infinite purchase orders at $0.99 - they'd make a penny on each purchase. They'd have a similar huge sell order at $1.01 for the same reason.

But Tether is traded on other exchanges outside of their control, this wouldn't work... plus. if they did this, then what people are suspecting is true. They just print tethers willy nilly without proper USD backing.

Re: Tether Is Breaking Its Peg to the Dollar

#58

Post by petre » Sun, Jan 28, 2018, 10:48 PM UTC

bhouston wrote: post #7

I am reminded of this: https://en.wikipedia.org/wiki/Black_Wednesday George Soros broke the Bank of English's attempt to maintain a minimum exchange rate for the Pound against various other European currencies. It was this experience that taught me that you can not cost free fix the exchange rate between currencies unless you are using "magic". And USDT has always seemed magical to me. BTW: https://www.coindesk.com/t…

Or more recently, when the CHF/EUR peg fell three years ago.

https://www.economist.com/blogs/economist-explains/2015/01/e...

Re: Tether Is Breaking Its Peg to the Dollar

#59

Post by [deleted] » Sun, Jan 28, 2018, 10:55 PM UTC

21 wrote: post #16

bhouston wrote: post #7

I am reminded of this: https://en.wikipedia.org/wiki/Black_Wednesday George Soros broke the Bank of English's attempt to maintain a minimum exchange rate for the Pound against various other European currencies. It was this experience that taught me that you can not cost free fix the exchange rate between currencies unless you are using "magic". And USDT has always seemed magical to me. BTW: https://www.coindesk.com/t…

> It was this experience that taught me that you can not cost free fix the exchange rate between currencies unless you are using "magic". There are no two currencies here, only one - USD. So no magic is required if they don't lie about their USD holdings.

[deleted]

Re: Tether Is Breaking Its Peg to the Dollar

#60

Post by kingofpandora » Sun, Jan 28, 2018, 11:06 PM UTC

jknoepfler wrote: post #42

hawktheslayer wrote: post #9

I'm surprised they didn't go with the headline that practically wrote itself: Tether Becomes Untethered

Or Tether Untethers, if you dislike the passive voice.

Different meanings ... "Something untethered Tether" vs "Tether untethered something."