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Tether says its cryptocurrency is worth $2B–but its audit failed

arstechnica.com

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Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#11

Post by zitterbewegung »

koolba wrote: post #2

> But those "frequent professional audits" have been slow in coming. The accounting firm Friedman LLP had been working on an audit of Tether and Bitfinex—a cryptocurrency exchange that is closely linked to Tether—since May. But last Saturday, Tether admitted to Coindesk that its relationship with Friedman had "dissolved." In the normal business world it's a very bad sign when your auditor fires you as a customer. > S…

Tether is in the top 20 in cryptocurrencies by Market cap. What generally happens when an altcoin goes bust is that people try to cash out (buy bitcoin with tether and then sell bitcoin or HOLD). Also, miners will stop mining tether and will move to other cryptocoins. I think it will have a large measurable affect but we shall see.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#12

Post by dragonwriter »

random_rr wrote: post #9
koolba wrote: post #2

> But those "frequent professional audits" have been slow in coming. The accounting firm Friedman LLP had been working on an audit of Tether and Bitfinex—a cryptocurrency exchange that is closely linked to Tether—since May. But last Saturday, Tether admitted to Coindesk that its relationship with Friedman had "dissolved." In the normal business world it's a very bad sign when your auditor fires you as a customer. > S…

I mean... are people worried about Dogecoin blowing up? Or any other coin? There is basically no problem here. If you don't believe in USDT... don't buy it. It's like saying government-issued currencies are going to "blow up" because Zimbabwe keeps printing fat stacks. Don't hold Zimbabwe dollars - problem solved! Traders want something like USDT for the utility it provides. I don't think most traders care about the…

> I mean... are people worried about Dogecoin blowing up?

Dogecoin isn't used by exchanges as a vehicle to allow dollar-pegged ated trading without handling actual dollars, and Doge:BTC prices aren't treated by cryptocurrency price trackers as if they were, at some fixed multiple, USD:BTC prices.

USDT and Doge don't play a similar role in the ecosystem.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#13

Post by sanxiyn »

zitterbewegung wrote: post #11
koolba wrote: post #2

> But those "frequent professional audits" have been slow in coming. The accounting firm Friedman LLP had been working on an audit of Tether and Bitfinex—a cryptocurrency exchange that is closely linked to Tether—since May. But last Saturday, Tether admitted to Coindesk that its relationship with Friedman had "dissolved." In the normal business world it's a very bad sign when your auditor fires you as a customer. > S…

Tether is in the top 20 in cryptocurrencies by Market cap. What generally happens when an altcoin goes bust is that people try to cash out (buy bitcoin with tether and then sell bitcoin or HOLD). Also, miners will stop mining tether and will move to other cryptocoins. I think it will have a large measurable affect but we shall see.

Tether is issued, not mined.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#15

Post by hluska »

random_rr wrote: post #9
koolba wrote: post #2

> But those "frequent professional audits" have been slow in coming. The accounting firm Friedman LLP had been working on an audit of Tether and Bitfinex—a cryptocurrency exchange that is closely linked to Tether—since May. But last Saturday, Tether admitted to Coindesk that its relationship with Friedman had "dissolved." In the normal business world it's a very bad sign when your auditor fires you as a customer. > S…

I mean... are people worried about Dogecoin blowing up? Or any other coin? There is basically no problem here. If you don't believe in USDT... don't buy it. It's like saying government-issued currencies are going to "blow up" because Zimbabwe keeps printing fat stacks. Don't hold Zimbabwe dollars - problem solved! Traders want something like USDT for the utility it provides. I don't think most traders care about the…

There is basically no problem here?? There is an organization that claims its security is backed by an equivalent number of American dollars (thus promising relatively stable liquidity). Yet, this organization can't get through an audit and it's looking rather unlikely that that security is actually backed by anything more than website copy. And there is basically no problem here?

Tether has a special place in the cryptocurrency ecosystem that makes it completely unlike Dogecoin. This special place means that the types of sketchy things that Tether is doing could ripple through the entire ecosystem.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#16

Post by random_rr »

hluska wrote: post #15
random_rr wrote: post #9

Earlier quoted context omitted.

I mean... are people worried about Dogecoin blowing up? Or any other coin? There is basically no problem here. If you don't believe in USDT... don't buy it. It's like saying government-issued currencies are going to "blow up" because Zimbabwe keeps printing fat stacks. Don't hold Zimbabwe dollars - problem solved! Traders want something like USDT for the utility it provides. I don't think most traders care about the…

There is basically no problem here?? There is an organization that claims its security is backed by an equivalent number of American dollars (thus promising relatively stable liquidity). Yet, this organization can't get through an audit and it's looking rather unlikely that that security is actually backed by anything more than website copy. And there is basically no problem here? Tether has a special place in the cr…

Clearly there may be a massive problem for Tether. Outside of Tether - I'm not seeing the ramifications, other than exchanges are going to have to use different stable coins. I remember when LTC and FTC used to be legit trading pairs on exchange websites. Whether or not Tether is legit seems pretty uninteresting to me - my trading bots regularly go through thousands of USDT, and I've never once thought to myself "Oh, I can redeem this for 1USD." It's just a utility token, and if it dies, something will fill the void after a brief panic.

To me, this just seems very overblown.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#17

Post by sanxiyn »

Nobody seems to discuss this, so I want to mention it here: for the first time in history, Tether was revoked in January 31st. Amount was 30 million.

http://omniexplorer.info/lookuptx.aspx?txid=24db40680654b8b5...

Specifically, its transaction type is 56. https://github.com/OmniLayer/spec#field-transaction-type

I don't think this is a strong evidence, but if Tether is issued out of thin air, it is somewhat strange to make revocation. Does someone have a good explanation?

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#19

Post by hluska »

'"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," a Tether spokesperson told Ars by email.'

In my mind, this paragraph is the article's money shot. If I was a legitimate business person issuing a security meant to fill Tether's place, I would pray that my auditor was excruciatingly detailed.

And frankly, there is no way in hell that a security like Tether could have a 'relatively simple balance sheet' in light of their problems receiving US currency combined with rapidly issuing more tokens.

This is bad...and the fact that a PR person said that means things are bad beyond belief.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#20

Post by Nursie »

sanxiyn wrote: post #17

Nobody seems to discuss this, so I want to mention it here: for the first time in history, Tether was revoked in January 31st. Amount was 30 million. http://omniexplorer.info/lookuptx.aspx?txid=24db40680654b8b5... Specifically, its transaction type is 56. https://github.com/OmniLayer/spec#field-transaction-type I don't think this is a strong evidence, but if Tether is issued out of thin air, it is somewhat strange to…

Unfortunately I don't think anyone has a good explanation for any of it yet.

It's strange to issue a revocation, but then it's also strange to get subpoena'd by CTFC, and to print 850 million tethers in the same month you fail to get an audit through...

A revocation of about 1.5% is just another confounding factor at this point.

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