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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

#31

Post by dragonwriter »

jcsnv wrote: post #28

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 Tethe…

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

Then that would be evident in the difference between USDT/BTC prices and USD/BTC prices and, would either also be directly reflected in the USDT/USD price or there'd be a huge arbitrage opportunity.

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

#32

Post by mattbeckman »

There are alternatives to Tether/USDT.

TrueCoin is most similar to Tether. It's new, and they promise "transparency", and hopefully they learn from Tether's mistakes. Being completely transparent is the only option for any stablecoin claiming to be backed by real USD.

Alternatively, you can look into those trying to build smart coins pegged to USD that use other means of backing.

Personally, I use bitUSD when I need to. BitUSD on the BitShares platform is backed by users staking BTS as collateral for margin trading. For example, I borrow $1,000 bitUSD from the network by putting up at least 1.75x BTS at the current exchange rate. Normally, I put up 6x due to volatility. If your collateral ratio is low, you can be "force settled" where your collateral is sold at the dropping price, so most people try to stake as much as possible to keep their margins high. bitUSD is then used for easy trading between assets on the DEX. Very transparent, but I wouldn't treat bitUSD as long term savings account. It's not like it's FDIC insurance or anything.

MakerDAO has the "Dai", which sounds promising, but I don't know enough about it to comment.

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

#33

Post by JumpCrisscross »

mattbeckman wrote: post #32

There are alternatives to Tether/USDT. TrueCoin is most similar to Tether. It's new, and they promise "transparency", and hopefully they learn from Tether's mistakes. Being completely transparent is the only option for any stablecoin claiming to be backed by real USD. Alternatively, you can look into those trying to build smart coins pegged to USD that use other means of backing. Personally, I use bitUSD when I need…

> Being completely transparent is the only option for any stablecoin claiming to be backed by real USD

U.S. dollar backed "stable coins" share an inherent flaw. There is no way to safely house large quantities of U.S. dollars without knowing their beneficial owners. It's prima facie what anti-money laundering laws are meant to prohibit. If a country wanted to flout American international jurisdiction that boldly, they'd do better simply re-permitting anonymous numbered bank accounts.

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

#34

Post by aphextron »

mattbeckman wrote: post #32

There are alternatives to Tether/USDT. TrueCoin is most similar to Tether. It's new, and they promise "transparency", and hopefully they learn from Tether's mistakes. Being completely transparent is the only option for any stablecoin claiming to be backed by real USD. Alternatively, you can look into those trying to build smart coins pegged to USD that use other means of backing. Personally, I use bitUSD when I need…

I have to say I was skeptical but this sounds pretty legit, far beyond some shady Chinese company registered in BVI at least. https://blog.trusttoken.com/trueusd-faq-18dbc563fb67

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

#35

Post by hbosch »

jcsnv wrote: post #28

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 Tethe…

I think the main trouble is centered directly on Bitfinex, the exchange that mints Tether. According to Bitcointy's charts[0], Bitfinex trading volume over the past 30 days is roughly 1.59M BTC as of this post – that equates to over 30% of the BTC trading market. As I understand it, despite this massive volume Bitfinex will not convert to/issue any fiat in the form of withdrawals. This is why they created Tether (USDT) with 1:1 parity to USD. (I'm sure you know all of this, but I am much less knowledgable about modern crypto markets so I have to explain it to myself as I type – sorry if I am coming off as patronizing.)

If Tether is not legitimate, and the price suddenly crashes, I think the effects would be hard to predict. My assumption is that Bitfinex is not liquid enough in any coin to cover the losses of a crashed Tether as trust in their entire exchange is tied to that particular coin. But at this point I have no idea what would happen, I don't think anyone really does. If there was a run on Bitfinex, the world's largest BTC exchange, I think the effects would be pretty dramatic.

0. https://data.bitcoinity.org/markets/volume/30d?c=e&t=b

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

#36

Post by Havoc »

djrogers wrote: post #7

This should be simple - either Bitfinex has ~$2.4B USD sitting in banks somewhere, or it doesn't. It should not take too much auditing to figure that out.

It's not the amount of auditing. Nobody wants to be associated with it. It's just not worth it from the auditor's perspective.

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

#37

Post by rhino369 »

elif wrote: post #4
jandrese wrote: post #2

Are there actually people in the world who think Tether's USDT pricing is legitimate? I can't figure out how in the hell it could be. It doesn't make any sense at all. I have to admit that I didn't consider it's effect on the price of Bitcoin as a whole. If it really is inflating the bubble that hard then yeah, it's going to pop at some point. Probably sooner rather than later.

It is /possible/ that their books add up, in a technical sense which would make wall street blush. They never claim that USDT are backed up by USD. They claim that every USDT is backed up 1:1 by "Assets." Here's the scene: BFX is hacked, loses banking, and has tens of thousands of crypto millionaires ready to sue them. What they /do/ have is cold storage of lots of crypto under their control. Say they start with 0 ho…

Tether claims on its main webpage to be 1:1 backed by "by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD."

If they are really just "backing" it with bitcoin then it is fraud.

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

#38

Post by bhouston »

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?

> 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.

One could unwind USDT slowly. It needs to in the end be converted to USD to actually unwind. Does Tether.io have $2.4B ready to be cashed out?

If you exchange USDT to another cryptocurrency someone is still holding USDT.

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

#39

Post by hbosch »

mattbeckman wrote: post #32

There are alternatives to Tether/USDT. TrueCoin is most similar to Tether. It's new, and they promise "transparency", and hopefully they learn from Tether's mistakes. Being completely transparent is the only option for any stablecoin claiming to be backed by real USD. Alternatively, you can look into those trying to build smart coins pegged to USD that use other means of backing. Personally, I use bitUSD when I need…

Of the 103 coins currently trading on Bitfinex[0], the exchange most likely to be full of users who need this kind of coin, I don't see TrueCoin listed. Am I missing it, or has TrueCoin not been added to Bitfinex?

0. https://coinmarketcap.com/exchanges/bitfinex/

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

#40

Post by skybrian »

notahacker wrote: post #26
dragonwriter wrote: post #16

Earlier quoted context omitted.

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 chang…

Who takes the other side of the trade? If someone is using a lot of USDT to buy Bitcoin, don't there have to be a lot of people who trade Bitcoin for USDT and then hold on to it?

On the other hand, seems like the Bitcoin price would rise due to people being skeptical about this newfangled Tether thing.

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