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Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

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Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#151

Post by dragonwriter »

v64 wrote: post #22
dheera wrote: post #15

Earlier quoted context omitted.

Sure, but nobody would hold onto USDT for a long time anyway. It's not meant to be a long-term investment. As long as it facilitates short-term transactions and people are agreeable to trading it at 1 USD, that black box system fulfills its mission as a product, and doesn't need to fulfill anything else.

> Question -- why does this matter to me? If you don't trade cryptocurrency and aren't invested in the market day to day, it very likely doesn't matter. > As long as it facilitates short-term transactions and people are agreeable to trading it at 1 USD Right now this is the case because the US AG announcements have not fundamentally changed the day to day use of the token, as you stated. However, as the lawsuit moves…

> Right now this is the case because the US AG announcements

NY AG, not the US AG.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#152

Post by arcticbull »

throwaway76524 wrote: post #74
tinco wrote: post #59

It's crazy that they messed this up, Tether is basically a money printing machine, all they had to do was be solvent. Let me start by saying I don't hold Tether nor have I ever, nor do I think it's a good idea. Tether is a fundamentally a risk free money making concept, it works just like gift certificates. The only thing Tether has to do is buy back Tether at any price lower than they sold it for and they make profi…

Kinda like the federal reserve ...

It’s time we start treating these folks for what they are: the antivaxxers of finance.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#153

Post by icelancer »

granaldo wrote: post #145

This is going to sound absurd, why is the cryptocurrency market not reacting negatively? In fact prices are green and well https://www.coingecko.com/en Market is uninformed and do not know better...

> Market is uninformed and do not know better...

The market knows and has known that Tether is a scam and not fully backed. This is not what is causing the price to be what it is. Price arbitrage is one major factor keeping it up, as well as pure old fashion faith. Plenty of currencies operate that way. Including, perhaps, the paper in your wallet right now.

This doesn't make it right, or viable, or stable, or anything else. It's just a known phenomenon.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#154

Post by gpresot »

granaldo wrote: post #145

This is going to sound absurd, why is the cryptocurrency market not reacting negatively? In fact prices are green and well https://www.coingecko.com/en Market is uninformed and do not know better...

There is some premium on the BTCUSDT pair, compared to BTC/USD pair. You can still, for a relatively small premium buy BTC with your USDT and change them back to fiat USD. And it seems that plenty of traders are ready to accept that premium and accept the risk of holding tether. This effectively solves any liquidity issues that Tether might have. And as other have noticed, 74% coverage is a lot more than many were fearing, particularly compared to other Tether news of the last 12 months. Also, this 74% would imply that if Tether had access to those 850 millions that went missing (leaving out the issue of wether Tether may or may not be responsible for the missing), then the coverage would be full and had been full during the peak of the crypto bull-run in 2017 (which was speculated to be supported by printing tether without any fiat backing).

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#155

Post by mikeyouse »

darawk wrote: post #132
village-idiot wrote: post #114

Earlier quoted context omitted.

Normally it would, if the guys behind Tether were trustworthy

It does whether or not they're trustworthy. You may think the loan will not get repaid...but it's in their interest to repay it. They're making plenty of money at Bitfinex. The idea that they're going to run some elaborate ponzi scheme to steal money, when they're making several hundred thousand dollars per day in fees is kind of silly.

Their account is over $700 million short right now.. Several hundred thousand per day isn't exactly going to move that dial.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#156

Post by Tsubasachan »

stcredzero wrote: post #26
miohtama wrote: post #23

Bitfinex money was on an account of a small Polish bank. It was confiscated by a US government when they chased Colombian drug cartels earlier in 2018. There was no proper segregation of client funds by their payment processor Crypto Capital Corp. Looks like Tether was collateral damage. Polish source: https://zaufanatrzeciastrona.pl/post/gielda-bitfinex-zgubila... (please use Google translator)

What would happen if the US Government stepped in and took over Tether? Would it be feasible for a different foreign government to do so?

Every government in the world has dissuaded its citizens to get involved with crypto. If there is a bankrun on ING or WellsFargo the government will act. With Tether you're on your own. Cryptocurrency places you outside the financial system- the system r/bitcoin professed to hate.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#157

Post by luckylion »

icelancer wrote: post #153
granaldo wrote: post #145

This is going to sound absurd, why is the cryptocurrency market not reacting negatively? In fact prices are green and well https://www.coingecko.com/en Market is uninformed and do not know better...

> Market is uninformed and do not know better... The market knows and has known that Tether is a scam and not fully backed. This is not what is causing the price to be what it is. Price arbitrage is one major factor keeping it up, as well as pure old fashion faith. Plenty of currencies operate that way. Including, perhaps, the paper in your wallet right now. This doesn't make it right, or viable, or stable, or anythi…

Another option is that 74% would be positive compared to what quite a few people believed might come out. "It's 74%, that's great news, we thought it's closer to 25%".

Of course, it's hard to trust this news, it might still be 25% or 2.5%.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#158

Post by xref »

gpresot wrote: post #154
granaldo wrote: post #145

This is going to sound absurd, why is the cryptocurrency market not reacting negatively? In fact prices are green and well https://www.coingecko.com/en Market is uninformed and do not know better...

There is some premium on the BTCUSDT pair, compared to BTC/USD pair. You can still, for a relatively small premium buy BTC with your USDT and change them back to fiat USD. And it seems that plenty of traders are ready to accept that premium and accept the risk of holding tether. This effectively solves any liquidity issues that Tether might have. And as other have noticed, 74% coverage is a lot more than many were fe…

Remember it’s simply Bitfinex saying they have 74% reserves, just like they used to say they had 100% reserves. There has still never been an audit. Nobody has seen their books. They don’t recognize the jurisdiction of the NY AG.

Bitfinex is the only one who can give a number, and a company in that position usually places themselves in the most generous light, and they still only claimed 74%.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#159

Post by simonh »

granaldo wrote: post #145

This is going to sound absurd, why is the cryptocurrency market not reacting negatively? In fact prices are green and well https://www.coingecko.com/en Market is uninformed and do not know better...

Did you honestly believe they were 100% backed? If not, why would you assume Tether users believed it?

What matters is that when someone cashes out their Tether, as people do from time to time, that there is enough money there to do so. The risk is that there is a run on Tether and they exhaust their available funds.

So the degree to which a trader is willing to trust tether is based on their judgement as to whether such a run will happen and that they will end up at the tail end of it and be one of the ones that loses out. But traders make those sorts of calculations and take those sorts of risks all the time. Of course every now and then some of them lose.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#160

Post by SimonPStevens »

Everyone talking about how tether should have profited from either investing the cash, or buying and selling tethers at slightly different rates is missing the point.

The original value propitiation of tether was... "A one to one, 100% reserved USD backed cryptocurrency that you can buy/sell any time directly from them"

They originally promised a website where you could buy/sell tethers directly for 1 USD. This is different from all the other stable type coins that achieve their pegs using various chain and exchange strategies. Tethers proposition was to maintain it's peg to USD by literally holding the cash and being the primary point of purchase/sale. Not investing it. Not operating fractional reserve. And not buying/selling with a spread. Every profit making strategy goes against their original proposition.

The reason this was the proposition was to supposedly make it easier for crypto traders. At the time everyone was having problems cashing out their cryoto. Tether was basically promising that they could fix the USD exchange problem by holding all the cash and not being an exchange.

Now they never actually delivered any of that. The website never reliably appeared and now tethers are traded on an exchange like any other crypto coin. And I suspect they did actually make a stack of profit by printing tether and selling them on exchanges. But that makes it a scam because they weren't following their own rules that they laid down at the start.

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