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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

#21

Post by simias »

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…

What surprises me most is that despite all these red flags USDT still holds its peg mostly well. Right now it trades less than a cent below the dollar on kraken for instance. It seems like cryptocurrency traders are paradoxically pretty trusting.

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

#22

Post by random_rr »

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Nobody seems to discuss this, so I want to mention it here: for the first time in history, Tether was revoked in January 31st.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

Keeping pace with the market. Tether burning coins is an expected and healthy part of their supply management strategy. Think about how you'd keep a finite-supply coin pegged to a value - you'd print and burn tokens as needed to stabilize the value of the coin.

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

#23

Post by random_rr »

dragonwriter wrote: post #12
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…

> 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.

That's interesting, my Cryptopia DOGE trading pairs (and LTC) beg to differ. Will there be a crisis of confidence if Doge crashes to 0 on Cryptopia? Of course not.

USDT is one of many trading pairs offered by crypto exchanges. It matters no more or less than NZDT, Dogecoin, Litecoin, Bitcoin, Ethereum, or any other common trading pair in the crypto world.

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

#24

Post by pandacat »

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…

Those were stolen tokens https://www.coindesk.com/tether-claims-30-million-stable-tok...

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

#25

Post by Maert »

aviv wrote: post #6
bhouston wrote: post #4

> In the normal business world it's a very bad sign when your auditor fires you as a customer. My wife is a professional auditor and she said that this would only happen if the client was pushing for the auditor to certify something that the auditor wasn't comfortable with. Of course she has no direct knowledge of this case. She said it was a really bad sign and she almost never sees this happen.

We also don't usually see a private company literally print money.

To be fair, isn't FED a private, non-federal company? :)

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

#26

Post by jobigoud »

aviv wrote: post #6
bhouston wrote: post #4

> In the normal business world it's a very bad sign when your auditor fires you as a customer. My wife is a professional auditor and she said that this would only happen if the client was pushing for the auditor to certify something that the auditor wasn't comfortable with. Of course she has no direct knowledge of this case. She said it was a really bad sign and she almost never sees this happen.

We also don't usually see a private company literally print money.

Banks are private companies and they create money all the time when they make loans.

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

#27

Post by Nursie »

random_rr wrote: post #16
hluska wrote: post #15

Earlier quoted context omitted.

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,…

>> Outside of Tether - I'm not seeing the ramifications

Total liquidity in the market is probably a very small fraction of the market cap. If Tether has been pumping in fake liquidity, in effect creating fake demand, there could be a relative demand crash as that leaves the market, and there would be a relative fall in the (apparent) availability of USD.

That would add to the effect of people desperately trying to flee tether to the comparative safety of real US dollars, which is likely to mean the tether/BTC, tether/ETH tether/whatever rates rocket as people try to get out of positions on tether exchanges. Then a fall in the coin prices as said folks transfer to other exchanges and try to cash out to dollars. And given there are now fewer dollars in circulation than was thought, it could be a bloodbath.

If other exchanges are above board in their dealings, and the coins and cash are where they should be, and withdrawals don't grind to a halt, then that could be as far as it goes. If they aren't, and if they have trouble paying out, it could take exchanges down.

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

#28

Post by conanbatt »

simias wrote: post #21
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…

What surprises me most is that despite all these red flags USDT still holds its peg mostly well. Right now it trades less than a cent below the dollar on kraken for instance. It seems like cryptocurrency traders are paradoxically pretty trusting.

I think bitfinex is holding the peg on where you can see it (kraken). Nobody else can buy /sell tether. Even a guy saying tether probably has the money on twitter was only willing to buy at 45% premium.

Now, bitfinex looks super solvent though, so its not like the exchange can dissolve like mtgox.

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

#29

Post by pavlov »

random_rr wrote: post #16
hluska wrote: post #15

Earlier quoted context omitted.

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,…

Did the Lehman Brothers collapse affect anyone who wasn't their customer or employee?

Tether is big enough that it could send similar shockwaves.

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

#30

Post by simias »

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…

The bigger conspiracy is that Tether might have been used to pump the price of bitcoin and other cryptocurrencies. The theory goes something like this:

- Bitcoin starts dipping.

- Bitfinex/Tether generates millions of USDT out of thin air.

- They use them to buy Bitcoins, sending the price back up.

- Once the price is high enough they can sell a few of these Bitcoins they effectively got "for free" and make a ton of money.

A big proponent of this theory is "Bitfinex'ed": https://medium.com/@bitfinexed

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