Fears grow over Tether ‘printing press’ as auditors part ways • Hacker News Board

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

#51

Post by makomk » Tue, Jan 30, 2018, 12:20 AM UTC

hbosch wrote: post #35

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 (USD…

Bitfinex have been offering real USD withdrawals to bank accounts for a few months now, in theory at least, though there's a certain amount of shadiness surrounding them.

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

#52

Post by makomk » Tue, Jan 30, 2018, 12:29 AM UTC

skybrian wrote: post #40

notahacker wrote: post #26

Earlier quoted context omitted.

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.

That is the key question, I think - especially since the people trading Bitcoin for USDT would've been doing so at prices which value USDT for slightly above face value. (That is, on all but a handful of occasions they could've got more by selling their Bitcoin for actual USD on Coinbase. The main exceptions were after the Tether hack and during this recent bout of negative news coverage, if I remember correctly.)

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

#53

Post by [deleted] » Tue, Jan 30, 2018, 12:40 AM UTC

djrogers wrote: post #9

socialist_coder wrote: post #6

I would think that the orgs / people holding Tether would be the ones to suffer the most, not the holders of BTC. And who is holding the Tether that was exchanged for BTC? Probably Bitfinex, right? So, if Tether does turn out to be not backed by USD, they would be left holding worthless Tether. The BTC is already transferred out and gone. I think this is much more realistic assessment on the risk to Bitcoin: > Julian…

> I would think that the orgs / people holding Tether would be the ones to suffer the most, not the holders of BTC They will suffer, but the ~$2.4B in tether value is tiny compared to the value of BTC that it's been driving/propping up. If tether dies BTC would only have to drop about 1% to take another $2B off the table. If it drops 10, 20, or 50% there will be blood. > > Julian Hosp, co-founder of cryptocurrency pa…

[deleted]

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

#54

Post by sethgecko » Tue, Jan 30, 2018, 9:10 AM UTC

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.

I hear the claim that tether is inflating the bubble all the time so please help me understand. This is the main use case for tether AFAIK:

Scenario A: I fear that a bear market is coming so I move my coins from binance/bitfinex to coinbase/gemini, exchange them for USD and wait for the price to drop so I can buy in at a later time.

Scenario B: I skip the step of sending to coinbase and I exchange directly with tether in binance/bitfinex and wait for the price to drop so I can buy in at a later time.

How are those two any different in their effect on coin prices?

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

#55

Post by Jasper_ » Tue, Jan 30, 2018, 11:13 AM UTC

vkou wrote: post #50

notahacker wrote: post #44

Earlier quoted context omitted.

Well there's a notional $2.2bn worth of Tether that someone's holding on to, which is certainly enough to have got the price of a perceived buy-and-hold asset like BTC moving a lot. If you can issue yourself newly minted Tether notionally worth a dollar and exchange your own BTC for it on your own exchange it's also dead easy to start pumping the price with wash trades (in theory you could do this by faking USD trans…

> Well there's a notional $2.2bn worth of Tether that someone's holding on to, which is certainly enough to have got the price of a perceived buy-and-hold asset like BTC moving a lot. This is what I don't get - who on Earth thinks that being long USDT is a good idea. Are they expecting the USD to dissapear? USDT to go to the moon? I understand having to own USDT to get your money out of exchanges that don't deal with…

People are holding Tether and don't realize it. Most BTC/USD exchanges aren't BTC/USD exchanges, they're BTC/USDT exchanges, but that "T" is stuffed behind an asterisk. People that want to make profits don't realize they're not actually cashing out for $10k, they're cashing out for 10k USDT.

As soon as they wired USD to one of these exchanges, they were stuck holding USDT. They could take the BTC and run to another exchange like Kraken, but that has transaction fees associated with it and they don't want to lose ~10% of their investment.

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

#56

Post by JohnJ71 » Tue, Jan 30, 2018, 11:28 AM UTC

qeternity wrote: post #27

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…

> 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.

Once USD Bitcoin buyers will realise that other buyers are buying Bitcoin with (possibly) fake money (USDT), they will SELL and SELL

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

#57

Post by jandrese » Tue, Jan 30, 2018, 4:10 PM UTC

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…

Who is going to sell their BTC for Tethers once it becomes obvious that Tether is insolvent and the coins are worthless?

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

#58

Post by mentat » Tue, Jan 30, 2018, 5:32 PM UTC

empath75 wrote: post #30

qeternity wrote: post #24

Earlier quoted context omitted.

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.

They can't though for compliance reasons, that's why they invented Tether.

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

#59

Post by Havoc » Tue, Jan 30, 2018, 6:17 PM UTC

astrange wrote: post #43

Havoc wrote: post #36

Earlier quoted context omitted.

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.

No, Tether fired the auditor because they were trying to actually do work. > Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of tether, it became clear that an audit would be unattainable in a reasonable time frame.

That's how Tether is spinning it. It's not confirmed who ended it. The more like version is that Friedman ended it.

Source: Auditor.

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

#60

Post by vkou » Tue, Jan 30, 2018, 6:33 PM UTC

Jasper_ wrote: post #55

vkou wrote: post #50

Earlier quoted context omitted.

> Well there's a notional $2.2bn worth of Tether that someone's holding on to, which is certainly enough to have got the price of a perceived buy-and-hold asset like BTC moving a lot. This is what I don't get - who on Earth thinks that being long USDT is a good idea. Are they expecting the USD to dissapear? USDT to go to the moon? I understand having to own USDT to get your money out of exchanges that don't deal with…

People are holding Tether and don't realize it. Most BTC/USD exchanges aren't BTC/USD exchanges, they're BTC/USDT exchanges, but that "T" is stuffed behind an asterisk. People that want to make profits don't realize they're not actually cashing out for $10k, they're cashing out for 10k USDT. As soon as they wired USD to one of these exchanges, they were stuck holding USDT. They could take the BTC and run to another e…

That is amazing. So, the exchanges turn USD into USDT, and the reason they sucker people into that trade is because you can buy more BTC on them... Because BTC is the only way that you can get wealth out of the exchange.

So, USDT is not actually useful to anyone, except people trying to fleece crypto-traders. I love we are re-inventing all the best parasitic parts of the fiat financial ecosystem.