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Exposing Tether [video]

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Re: Exposing Tether [video]

#31

Post by dannyw »

kwere wrote: post #9
dannyw wrote: post #5

Tether is "USD-ramp-as-a-service". In the crypto world, there are many anonymously operated exchanges, with no fiat-money banking relationships. Those exchanges tend to offer features that a lot of traders want, like providing a market for any arbitrary token (regulated exchanges tend to be slower with token listings, due to always pondering if something is a security). And yes, if your money is tainted (whether it's…

i wouldnt trust a benevolent (offshore) dictator with my money but if it suits your needs, go ahead

It's all about your risk profile. For someone looking to move capital out of China, Tether is safer than the Chinese Yuan in a bank account.

For people dealing with all the anonymously operated, no-KYC exchanges, Tether in your address is far safer than whatever balances you have on those exchanges.

The 'dark' economy is huge, and a lot of capital live in fear of seizure. It shouldn't be a surprise how big Tether's market cap is.

It's basically "USD-ramp-as-a-service", with the only fee being Tether doesn't pay interest, so obviously the operators get whatever interest there is on the float. And this service is VERY valuable, whether you are launching an exchange in a jurisdiction that prevents exchanges (e.g. China), or want to bring about traditionally regulated financial instruments (e.g. derivative swaps) into a relatively unregulated field.

Re: Exposing Tether [video]

#32

Post by albntomat0 »

fuzzybear3965 wrote: post #29
albntomat0 wrote: post #28

Earlier quoted context omitted.

In my understanding, part of the issue is that we can't value or risk assess the backing ourselves. This is due to the lack of transparency on whose commercial paper Tether is holding, etc.

For sure. I don't hold or trust Tether. But, the existential risk to the (crypto) economy at large seems pretty small, in my opinion. The unregulated, debased Tether seems less risky than holding regulated, backed-by-real-property mortgage-backed securities in 2007. It seems much a-do about not much, to me. But, I guess people need something to worry about.

Maybe? I don't think it'd be existential threat, but could be a massive shock/crash, in my opinion.

I'll guess we'll have to wait and see!

Re: Exposing Tether [video]

#33

Post by dannyw »

jMyles wrote: post #16
dannyw wrote: post #5

Tether is "USD-ramp-as-a-service". In the crypto world, there are many anonymously operated exchanges, with no fiat-money banking relationships. Those exchanges tend to offer features that a lot of traders want, like providing a market for any arbitrary token (regulated exchanges tend to be slower with token listings, due to always pondering if something is a security). And yes, if your money is tainted (whether it's…

> Tether provides a means for people and exchanges to transfer units of accounting, pegged to the US dollar, between each other without a hard AML or KYC wall; as Tether is a crypto token. Pegged by fiat, not by algorithm. Surely the future for such an oracle is an algorithmic peg, as several honest projects continue to forge. > A token that derives its utility from being shady (an unregulated way to move US dollar w…

> You may speak for your trust endorsement, but I think you go too far by translating price and liquidity into community trust. It's a calculation based on the small number of plausible available options.

You are very welcome to place a short on the USDT if you believe that view. The only cost of doing so is the interest, which is a few percentage a year. Your reward is 100% if you are right.

The market doesn't believe Tether is a fraud. The volume of Tether was $53 billion in the past 24 hours.

Re: Exposing Tether [video]

#34

Post by tiku »

albntomat0 wrote: post #30
tiku wrote: post #20

They do not need to have 100% USD at Tether. Exchanges buy UDST from Tether, that means that there is an exchange. It would be problematic if they would give it for free to the exchanges. The exchanges won't give you free USDT either, they charge something in return. The only way this could be a problem if they would use USDT from within Tether to buy crypto. I have not seen any evidence of this.

It could also be an issue if a large number of people try to redeem a large amount of Tether for USD. Ideally, it would be easy and high trust to go from Tether to USD and back. This requires high confidence that the various backings of Tether are low risk, which we cannot establish given the minimal information Tether has provided.

Only thing is that you don't ever deal with Tether directly, the exchange needs to have that amount of USD for USDT. Same goes for BTC etc. Later the exchange needs to get USD from Tether if they need liquidity in FIAT?

Re: Exposing Tether [video]

#35

Post by raesene9 »

fuzzybear3965 wrote: post #25
overtonwhy wrote: post #22

Earlier quoted context omitted.

Tether actually was forced to release a break down of their assets and they have https://www.coindesk.com/tether-first-reserve-composition-re...

All assets liquidated today, what do you think the true value of a Tether is? $.70 USD? The answer is not clear to me, but it seems like this is an important value. Also, aren't some of those assets (like treasury bills) interest-accruing? That would seem to offset some of the losses incurred by a short-term, high-volume liquidation event.

That's the key point of course, you don't know and neither do I. Nor does anyone else outside of Tether.

Tether is the No.1 most traded coin (by a decent margin) which makes it a very large part of the ecosystem.

Now if their assets are all high quality low risk treasuries, it's likely all fine.

If however their asset are loans to people who used those loans to buy other crypto currencies, things get a lot more risky.

A large shock to the ecosystem, like Tether going bust, would seem like it would have a large impact on the overall space. We've seen in the last month that something a simple as a tweet can send the market up or down by multiple percent...

Re: Exposing Tether [video]

#36

Post by qeternity »

dannyw wrote: post #27
qeternity wrote: post #10

Earlier quoted context omitted.

> No one has ever been scammed by Bitfinex or Ether. There is no monetary loss, ever. Yet. Like all frauds, they succeed until they don't. People thought they made money in Enron, Madoff, etc until it unraveled and there was nothing. > When Bitfinex got hacked a few years ago, they worked out a repayment program, and fully repaid all creditors. Tether is so monumentally different. In fact, Bitfinex repaid creditors w…

> When your core business is trust and transparency, this isn't an "oh well" type of issue. As a user, the core business prop of BFX/Tether is that they keep my money, and maintain my ability to use the platform without KYC. If I want a super-duper legit stablecoin, I'd use USDC. Tether is about bringing stability to the chaos of non-KYC, anonymously-operated exchanges, like the 100x leverage ByBit, or the various sm…

> If I want a super-duper legit stablecoin, I'd use USDC

They are morphing into Tether. Look at recent legal structure change, attestations, reserves breakdown, etc.

But your core premise (Tether as a dollar substitute for the unbankable) is predicated on there being two states of the universe (USD in risky places vs. Tether) which isn't true and ignores the key issue: all of those Tethers may not hold any value. In the real world, Tether is not the only alternative, nor is USDC. For instance, the Sci-Hub founder can hold any other major currency or frankly any non USD asset.

The crypto world constantly create false equivalencies to justify their casino. Fiat sucks long term? Yeah, by design...money velocity is a good thing, you shouldn't be holding cash, and few people do. This is why there are trillion dollar markets for other productive assets, like equities.

Re: Exposing Tether [video]

#37

Post by beforeolives »

dannyw wrote: post #8
readams wrote: post #6

Earlier quoted context omitted.

Ponzi schemes always seem great until the final collapse.

Do you really think the New York Attorney General would have settled with a "ponzi scheme" with a $62 billion market cap? The USA isn't shy about pursuing crypto operators. It's also hard to call a 0% interest, zero return token, a ponzi scheme.

> It's also hard to call a 0% interest, zero return token, a ponzi scheme.

Much easier if we mention that only 3-4% of the entire Tether supply is backed by actual dollars.

Re: Exposing Tether [video]

#38

Post by AndrewStephens »

dannyw wrote: post #5

Tether is "USD-ramp-as-a-service". In the crypto world, there are many anonymously operated exchanges, with no fiat-money banking relationships. Those exchanges tend to offer features that a lot of traders want, like providing a market for any arbitrary token (regulated exchanges tend to be slower with token listings, due to always pondering if something is a security). And yes, if your money is tainted (whether it's…

> Tether provides a means for people and exchanges to transfer units of accounting, pegged to the US dollar, between each other without a hard AML or KYC wall; as Tether is a crypto token.

That is probably why Tether was initially created but what Tether is now is a mechanism for insiders to cash out real money while leaving lots of "liquidity" in the market to keep the tasty scam going.

Retail investors (AKA suckers) buy coins from exchanges with real money. The exchanges have a net influx of real money because investors (AKA hodling rubes) will typically not want real money back when they are conducting trades, so the exchanges buy Tethers - I assume at a significant insider discount. Why not? Tethers are free to create, who cares?

Now the exchanges have some of the investors' (AKA marks) money, Tether has some money, the miners (who are actually doing real work) get some money for the relatively rare blockchain transactions. Everyone wins. All the exchanges have to do is carry enough cash so that the relatively rare customer requests for real money can be satisfied. As a quick trip to reddit will confirm, they can't even manage to do that reliably. Luckily for them nobody seems to care so long as the price remains high, which it will because the trades are mostly conducted with very cheap Tethers.

But the end result is that Bitcoin, etc are ultimately priced in Tethers - as I write, Bitcoin is currently priced at 37145 Tethers not $37145. To put it another way, the market is so distorted that bitcoin has become just a complex way for people to turn USD into Tethers. They may hodl the bitcoin for a while but that is the end result.

The situation is more complex than what I describe because there are multiple stable coins and multiple parties involved, but the end result is that real money flows from retail (AKA fools with more money than sense) to a relatively small number of groups while worthless Tethers flow the other way. And nobody seems to mind as long a numbers go up.

The next economic downturn will wipe out the whole exercise.

Re: Exposing Tether [video]

#39

Post by skylabmelody »

I agree on the massive risk associated with the usage of Tether and stable coins in general. It's working until one day the music stops.

Regarding how it would affect the market, it seems all experts automatically assume that it would impact the price of cryptos negatively however:

• Could a panic exit from Tether push people to immediately buyback cryptos at any price?

• Could a flash pump of BTC while USDT/USD is unpegging be the signature of the downfall itself?

• Since stable coins are used for day trading, would their downfall make the crypto-market behave like it was before stable coins were introduced?

Re: Exposing Tether [video]

#40

Post by dannyw »

qeternity wrote: post #36
dannyw wrote: post #27

Earlier quoted context omitted.

> When your core business is trust and transparency, this isn't an "oh well" type of issue. As a user, the core business prop of BFX/Tether is that they keep my money, and maintain my ability to use the platform without KYC. If I want a super-duper legit stablecoin, I'd use USDC. Tether is about bringing stability to the chaos of non-KYC, anonymously-operated exchanges, like the 100x leverage ByBit, or the various sm…

> If I want a super-duper legit stablecoin, I'd use USDC They are morphing into Tether. Look at recent legal structure change, attestations, reserves breakdown, etc. But your core premise (Tether as a dollar substitute for the unbankable) is predicated on there being two states of the universe (USD in risky places vs. Tether) which isn't true and ignores the key issue: all of those Tethers may not hold any value. In…

The Sci-Hub founder can hold any other major crypto, sure, but it's volatile. How do you propose she allow international donations? Via a SWIFT bank account? Via cash in the mail to a postal address?

The easiest and most liquid mechanism is for people like her to accept crypto donations (e.g. Bitcoin), and convert it to non-KYC stablecoins like USDT so the purchasing power is preserved.

It's not hard to explain the 60B market cap when you combine "non-KYC" and "stablecoin", and if you believe it's not backed by anything, you can open a short on USDT right now, using DeFi like Compound. Your upside is 100%, your downside is the cost of borrowing (about a few percentage a year).

The market believes $1 = 1 USDT, with a volume of $53 billion in the past 24 hours.

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