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Fears grow over Tether ‘printing press’ as auditors part ways

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Re: Fears grow over Tether ‘printing press’ as auditors part ways

#21

Post by notahacker »

argc_argv wrote: post #18
joosters wrote: post #11

Earlier quoted context omitted.

From their homepage: Every tether is always backed 1-to-1, by traditional currency held in our reserves

Read the legal fine print... They say it's backed yes, but they did not say how to redeem. (hint: they have full right of controlling how usdt is "redeemed")

The fact the small print relieves them of any contractual obligation to ever redeem USDT for anything doesn't mean they don't claim - almost certainly fraudulently - in the middle of their home page that "Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD"

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#23

Post by cryptoz »

joosters wrote: post #20
argc_argv wrote: post #18

Earlier quoted context omitted.

Read the legal fine print... They say it's backed yes, but they did not say how to redeem. (hint: they have full right of controlling how usdt is "redeemed")

I'm not arguing that they're genuine, the quote was simply to show that they do in fact claim to hold $/£/etc to back the tokens, and not just general 'assets' that the parent comment described.

Your quote says "traditional currency", but now you are claiming that it is dollars and euros. That's not what they said. Maybe they mean gold coins.

As an aside, I decided to google "traditional currency" and found that Google has absolutely no clue how to do searches any more.

https://imgur.com/a/3I5Ok

https://www.google.com/search?q=traditional+currency

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#24

Post by qeternity »

LittlePeter wrote: post #5

I don't understand why Bitcoin will crash if Tether is indeed a scam. Those who exchanged Bitcoin for Tether will be holding worthless Tether tokens and will want to quickly exchange it for something else... like Bitcoin or some other cryptocurrency. Shouldn't the converse be true: Bitcoin price starts to rise as more and more people start to realize Tether is worthless?

Yes, the price in USDT terms will rise as everyone holding USDT sells it and buys something else to transfer to another exchange. But that's only in USDT terms, not in USD terms. So let's say the BFX price doubles as people come to this realization. You pay $20k BTCUSDT and send to an exchange where it's still trading $10k (or rather, you just start marking it in BTCUSD terms). That's an instant 50% loss. And that's assuming that BTCUSD doesn't sell off as people get spooked.

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#25

Post by vinniejames »

cryptoz wrote: post #23
joosters wrote: post #20

Earlier quoted context omitted.

I'm not arguing that they're genuine, the quote was simply to show that they do in fact claim to hold $/£/etc to back the tokens, and not just general 'assets' that the parent comment described.

Your quote says "traditional currency", but now you are claiming that it is dollars and euros. That's not what they said. Maybe they mean gold coins. As an aside, I decided to google "traditional currency" and found that Google has absolutely no clue how to do searches any more. https://imgur.com/a/3I5Ok https://www.google.com/search?q=traditional+currency

Seems ok to me. There was nothing to compare "traditional currency" to before crypto currency came along, therefore no one would have been searching for it

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#26

Post by notahacker »

dragonwriter wrote: post #16
colorincorrect wrote: post #13

can someone explain to me why USDT's price is related to BTC?

A number of exchanges don't actually trade $/BTC they trade USDT/BTC. This accounts for enough of the market that the apparent $/BTC price is perceived as largely being driven by the USDT/BTC price, such that a correction in $/USDT price would see a similar correction in $/BTC price. (In theory, this could be wrong, and a correction in $/USDT price could instead be reflected in opposite motion in USDT/BTC price, but…

Tetherreport.com, for example, suggests about half of BTC's price rises last year resulted directly from newly printed USDT being converted into BTC.

If you consider the other half of that price rise from 10,000 in 2017 includes many inexperienced traders deciding to dive in after seeing big jumps in the BTC price over the course of the year, the overall contribution of Tether market manipulation to BTC's price change might be much greater than half of BTC's current price, of course

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#27

Post by qeternity »

dragonwriter wrote: post #16
colorincorrect wrote: post #13

can someone explain to me why USDT's price is related to BTC?

A number of exchanges don't actually trade $/BTC they trade USDT/BTC. This accounts for enough of the market that the apparent $/BTC price is perceived as largely being driven by the USDT/BTC price, such that a correction in $/USDT price would see a similar correction in $/BTC price. (In theory, this could be wrong, and a correction in $/USDT price could instead be reflected in opposite motion in USDT/BTC price, but…

> A number of exchanges don't actually trade $/BTC they trade USDT/BTC

It's even worse: a number of exchanges use a pegged USDT/USD price of 1 and transparently comingle BTCUSDT and BTCUSD markets.

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#28

Post by jcsnv »

If Tether is not legitimate, wouldn't Tether holders sell their Tether for BTC and other crypto assets which would increase the prices of crypto assets?

Does it matter if Tether is not backed by USD if none of the exchanges will let you trade fiat for Tether anyways? What if people just want to believe that its backed by USD?

What if Tether not being legitimate is already priced into BTC?

Wouldn't the supply of Tether need to be orders of magnitudes higher in order to be a systemic problem to BTC and other crypto assets? Its market capitalization isn't even 1% of the total crypto market.

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#29

Post by Animats »

How's Kraken doing? They have a market for USDT/USD, and claim they will do a wire transfer to a US bank for $5. Do they actually deliver on that? Or do they stall and make excuses?

It would be worthwhile for some trader to deposit a few hundred dollars worth of Bitcoin with Kraken, convert it to USD, and order a wire transfer. Repeat this every few days to see how well the process works.

(In the real world, when you order a wire transfer from a stockbroker, the money gets transferred within hours. Even for big amounts.)

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#30

Post by empath75 »

qeternity wrote: post #24
LittlePeter wrote: post #5

I don't understand why Bitcoin will crash if Tether is indeed a scam. Those who exchanged Bitcoin for Tether will be holding worthless Tether tokens and will want to quickly exchange it for something else... like Bitcoin or some other cryptocurrency. Shouldn't the converse be true: Bitcoin price starts to rise as more and more people start to realize Tether is worthless?

Yes, the price in USDT terms will rise as everyone holding USDT sells it and buys something else to transfer to another exchange. But that's only in USDT terms, not in USD terms. So let's say the BFX price doubles as people come to this realization. You pay $20k BTCUSDT and send to an exchange where it's still trading $10k (or rather, you just start marking it in BTCUSD terms). That's an instant 50% loss. And that's…

Bitfinex will likely be forced to sell bitcoin on USD markets to get dollars so they can buy tether to prop the price up.

So prices on bitfinex will go up as prices elsewhere go down.

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