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Crypto Market Roiled by New Allegations Against Tether, Bitfinex

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Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#251

Post by askmike »

JumpCrisscross wrote: post #231
panarky wrote: post #126

Earlier quoted context omitted.

People have been yelling that Tether is a ponzi fraud since it launched in 2015. And yet it still trades 1:1 to USD today, after the court filing was released. So is there some magic force that keeps the fraud running, and prevents market participants from cashing out their Tether in the mother of all bank runs? If you hold Tether why wouldn't you sell? Or is there more to the story than just "Tether is an obvious fr…

> it still trades 1:1 to USD today On exchanges of questionably integrity. And where it is impossible to reliably short the instrument.

You mean Kraken? There are many OTC lending markets that allow for tether shorting.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#252

Post by askmike »

ehrtt wrote: post #243
bitreality wrote: post #236

Earlier quoted context omitted.

The only way Tether can be stablized through "arbitrage" is if there is a risk-free way to trade 1 Tether for 1 USD. For the average user, there is no direct way to cash out your Tether for 1:1 USD. I imagine that big clients do have the ability to trade Tether for USD. Because of that, they will buy up discounted Tethers on exchanges and redeem them to Tether Company for 1 USD each. HOWEVER, this clearly relies on T…

Not true. You can trade USDT for USD on Kraken.

You are right, but it's a tiny market though.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#253

Post by ccjnsn »

aedron wrote: post #249

This article goes to great alarmist lengths, past the point of being deceiving. Just the very first line: > One of the world’s most widely traded virtual currencies faces renewed doubts about its stability [...] Tether is nothing in terms of crypto currency penetration. It does not even have a percent of daily trading. Then a few paragraphs down: > [...] within an hour of the attorney general’s statement and Tether s…

For something pegged 1:1 with the US dollar a 1.4% decrease is quite unusual.

It's volume is 2nd only to Bitcoin per [1]coinmarketcap.

With your 3rd point about pricing changes, yeah correlation/causation, it's a theory that is plausible though.

1.coinmarketcap.com

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#254

Post by bitcoinbutter »

ehrtt wrote: post #243
bitreality wrote: post #236

Earlier quoted context omitted.

The only way Tether can be stablized through "arbitrage" is if there is a risk-free way to trade 1 Tether for 1 USD. For the average user, there is no direct way to cash out your Tether for 1:1 USD. I imagine that big clients do have the ability to trade Tether for USD. Because of that, they will buy up discounted Tethers on exchanges and redeem them to Tether Company for 1 USD each. HOWEVER, this clearly relies on T…

Not true. You can trade USDT for USD on Kraken.

That's not arbitrage though. Kraken has a market rate. The only way to arbitrage the USDT / USD rate is if you have a reliable place to sell USDT at 1:1.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#255

Post by appleflaxen »

patio11 wrote: post #10
berbec wrote: post #3

Is this a surprise to anyone? I was under the impression that even the most ardent HODL-er thought Tether was, at best, a very risky investment, and more likely a total scam.

This is pretty big news; the entire cryptocurrency economy relies on tethers being valued at par, given that they're how billions of dollars of liquidity are denominated. While rumors and suppositions about Tether have swirled for quite some time, that was also true of Mt. Gox before the fall, and those of us who have been saying loudly that they're insolvent have not been widely believed.

> the entire cryptocurrency economy relies on tethers being valued at par, given that they're how billions of dollars of liquidity are denominated.

this doesn't make any sense unless tether is a required intermediate step to liquidating cryptocurrency, which it's not.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#256

Post by GreaterFool »

ccjnsn wrote: post #253
aedron wrote: post #249

This article goes to great alarmist lengths, past the point of being deceiving. Just the very first line: > One of the world’s most widely traded virtual currencies faces renewed doubts about its stability [...] Tether is nothing in terms of crypto currency penetration. It does not even have a percent of daily trading. Then a few paragraphs down: > [...] within an hour of the attorney general’s statement and Tether s…

For something pegged 1:1 with the US dollar a 1.4% decrease is quite unusual. It's volume is 2nd only to Bitcoin per [1]coinmarketcap. With your 3rd point about pricing changes, yeah correlation/causation, it's a theory that is plausible though. 1.coinmarketcap.com

If the peg was actually backed by anything then yes, that'd be unusual.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#257

Post by hocuspocus »

asenna wrote: post #208
hendzen wrote: post #114

Earlier quoted context omitted.

Speaking as someone who was deeply interested in bitcoin in ~2013, cryptocurrency today is a wretched hive of scum and villainy. When someone tells me today that they are working on something related to crypto I make a mental note to never work with them or take anything they do seriously.

This quite an ignorant comment. I've been working with Blockchain tech (Crypto by extension) for a while now and there's a lot of experimenting, genuine projects being built right now. A lot of smart people are in this space building solutions. Major companies like Samsung / Facebook have teams working on PoCs. Unfair to imply that everyone in Crypto is selling snake oil.

> Major companies like Samsung / Facebook have teams working on PoCs.

Samsung has entire teams working on PoCs for just about anything. Including a lot of terrible ideas that end up in the trash (I personally worked on some of them :)

Facebook wanting to enter payments and money transfers through Whatsapp makes a lot of sense. But the fact it might be backed by some internal and centralized stablecoin is completely irrelevant to end-users.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#258

Post by askmike »

GreaterFool wrote: post #256
ccjnsn wrote: post #253

Earlier quoted context omitted.

For something pegged 1:1 with the US dollar a 1.4% decrease is quite unusual. It's volume is 2nd only to Bitcoin per [1]coinmarketcap. With your 3rd point about pricing changes, yeah correlation/causation, it's a theory that is plausible though. 1.coinmarketcap.com

If the peg was actually backed by anything then yes, that'd be unusual.

Not really no, it depends on how much liquidity of a certain type is worth compared to liquidity of another type. Given the volatility in crypto markets this tends to change drastically in different times.

Same as why lending rates for crypto & fiat can go from 0.0001% to 0.08% (per day for example) in a matter of hours based on certain sudden price action.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#259

Post by rocqua »

Felz wrote: post #29
driverdan wrote: post #16

Earlier quoted context omitted.

Anyone in the cryptocurrency space with half a brain knew something was up the minute they refused an independent audit. It was only a matter of time before someone brought charges and/or Tether collapsed.

Which does make it rather curious that the music's kept playing, so far. Is "common knowledge" that it's probably a complete fraud (like this filing should give) required to pop the tether bubble? Or will even this not be enough?

Participating in a Ponzi scheme can be profitable if you get out early enough, perhaps people are expecting Tether to stand a bit longer.

Alternatively, perhaps people expect the revelation that Tether isn't fully backed to proceed like the dollar going of the gold standard. It comes with a lot of noise, but the thing keeps working because people keep using it. In this scenario, Tether essentially becomes Bitfinex fiat. That would be a really cool dystopia.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#260

Post by b1daly »

appleflaxen wrote: post #255
patio11 wrote: post #10

Earlier quoted context omitted.

This is pretty big news; the entire cryptocurrency economy relies on tethers being valued at par, given that they're how billions of dollars of liquidity are denominated. While rumors and suppositions about Tether have swirled for quite some time, that was also true of Mt. Gox before the fall, and those of us who have been saying loudly that they're insolvent have not been widely believed.

> the entire cryptocurrency economy relies on tethers being valued at par, given that they're how billions of dollars of liquidity are denominated. this doesn't make any sense unless tether is a required intermediate step to liquidating cryptocurrency, which it's not.

That’s one of the problems. Liquidating “crypto to fiat” is not that easy.
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