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Tether minted most USDT to just 2 firms – Alameda and Cumberland

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Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#141

Post by jqpabc123 »

X6S1x6Okd1st wrote: post #131
jqpabc123 wrote: post #130

Earlier quoted context omitted.

The audits/attestations reveal this and Tether itself has confirmed it holds a large quantity of "commercial paper". They have steadily backed away from the claim that USDT is backed by dollars. "Commercial paper" is a loan, an IOU --- not hard currency/assets. You can't have your dollars and loan them to others too. If I give Donald Trump an unsecured loan for $1000, I can't "legally" claim to still hold the $1000 i…

Totally agree, however I haven't seen any sources saying that these mint operations were paid for by commerical paper given by Alameda or Cumberland. That's what I suspect and I'll be shorting more USDT today on AAVE.

That's what I suspect and I'll be shorting more USDT today on AAVE.

Sorry, I don't see how this can work.

USDT is a fraud. Exchanges are active participants in the fraud by pegging USDT at $1.

The only way your short can pay off is if the exchanges stop the "pegging" game. When the pegging stops, the exchanges will likely fold up and disappear.

Who will you collect from for your short?

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#142

Post by Spivak »

bostonsre wrote: post #100
Spivak wrote: post #43

Earlier quoted context omitted.

Look, Tether might be a scam in the sense that they don't actually have the backing assets they claim but that doesn't invalidate the rest of the market or the trades done with them any more than your bank having They are absolutely running afoul of banking regulations but that's not exactly catastrophic for the whole market. Unless there's a bank run the only thing Tether actually needs to do is keep the trading val…

It's all fine and good until there is a run on tether and they can't actually give customers their money back. They will throttle customer withdrawals, the issue will be magnified, and I would guess tethers would be selling for pennies on the dollar on the secondary market.

This discussion is so weird because you're to the letter describing banks and bank runs, which does make sense because Tether and other stablecoins are banks, albeit without FDIC insurance.

What is actually bad about Tether that doesn't apply to USD and the current largely functional banking system?

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#143

Post by cowvin »

X6S1x6Okd1st wrote: post #131
jqpabc123 wrote: post #130

Earlier quoted context omitted.

The audits/attestations reveal this and Tether itself has confirmed it holds a large quantity of "commercial paper". They have steadily backed away from the claim that USDT is backed by dollars. "Commercial paper" is a loan, an IOU --- not hard currency/assets. You can't have your dollars and loan them to others too. If I give Donald Trump an unsecured loan for $1000, I can't "legally" claim to still hold the $1000 i…

Totally agree, however I haven't seen any sources saying that these mint operations were paid for by commerical paper given by Alameda or Cumberland. That's what I suspect and I'll be shorting more USDT today on AAVE.

Actually, that got me curious. Couldn't a billionaire crush tether by shorting so much of it that it exceeded the cash reserves?

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#144

Post by ur-whale »

rubyist5eva wrote: post #13

If it wasn't obvious from the get go that Tether was a scam, what more do you need.

>If it wasn't obvious from the get go that Tether was a scam, what more do you need.

Not a fan of Tether, but I can't understand what your argument is here.

In what way does the fact that a huge chunk of Tether was sold to a liquidity provider and an exchange point to a scam?

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#145

Post by el-salvador »

ptero wrote: post #19
NickM wrote: post #3

There are a lot of areas of crypto where I feel like I have a pretty good understanding, but I genuinely don't understand why anyone would "invest" in a stablecoin. What advantage does holding something like USDT offer over simply putting dollars in a bank account?

I can come up with a bunch of possibilities (not sure how important they are for different people), but they revolve around using crypto for transfer, not price hedging, long term investment or short term speculation. An example often cited for El Salvador, where a US worker A sends money to a family member B at home. If A uses banks and dollars, B may need to travel to a bank (long trip on a bus through areas not ve…

> An example often cited for El Salvador, where a US worker A sends money to a family member B at home. >If A uses banks and dollars, B may need to travel to a bank (long trip on a bus through areas not very friendly to strangers), pay sizeable cross-border commission, evade gangs looking for people withdrawing money, etc.

I understand the advantages of USDT, like making crossborder transactions faster/cheaper.

However the often cited example but not 100% accurate because it ignores some of the features of the Salvadoran financial system.

There is a a system of "financial agents/correspnondents". There is no need to visit a branch of the bank to receive a remmittance if it is under US$ 500. That can be done in a Supermarket, pharmacy or the main tienda in town. It can even be done with an app (like the one used by the largest credit union).

This is the map of one of just one of the networks, this network owned by cooperatives owned by its users, like a credit union, and not a private company like a bank or multinational bank.: https://www.fedecredito.com.sv/puntos-de-atencion

> With crypto, they could receive it at home.

Remmittances can be received using finantial apps too. The largest private bank in El Salvador has a simple bank account. It can be opened with a selfie, a photo of the ID card. Other banks also offer this simple bank accounts.

Currently the transaction costs via the normal remmittance system, are lower, than by using the only three bitcoin atms in the country. Twitter users reported that recently when the bitcoin price reached $40,000, the only Bitcoin ATM in San Salvador ran out of cash. And that the only way to contact their technical support was via Whatsapp message to a phone number based in another country, Colombia.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#146

Post by ur-whale »

uncletammy wrote: post #123
Bombthecat wrote: post #99

Earlier quoted context omitted.

I call it again and again and again :tether is the fed of crypto

It's worse. At least the Fed is checked to some degree by Congress. Tether is outside of the control of any goverment. It's just another faceless shell company.

> At least the Fed is checked to some degree by Congress

I believe you have it the wrong way around.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#147

Post by cowvin »

AlexandrB wrote: post #10
IncRnd wrote: post #2

If Tether is redeemable for USD on demand, then Tether sounds suspiciously like some sort of a bond that is evading regulation. Maybe my terms are laymenesque, but I think my point still stands.

Luckily their TOS says: > "There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money." Edit: Oops this has been updated to: > Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves th…

Holy cow, they literally say that they reserve the right to never give you a dollar for a tether and people still trust it?

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#148

Post by FireBeyond »

PragmaticPulp wrote: post #126
vmception wrote: post #109

Earlier quoted context omitted.

hmm no OTC traders here? When you call the OTC desk and wire them dollars they mint stablecoins using their account with - presumably - Bitfinex. Bitfinex issues Tethers no different than Coinbase/Circle issues USDC in a just in time transaction. You either receive the Tether you asked for to make your own trades, or they keep the Tether and purchase the crypto you really wanted. In either scenario, someone besides t…

> You either receive the Tether you asked for to make your own trades, or they keep the Tether and purchase the crypto you really wanted. In either scenario, someone besides the OTC has the Tether now. So instead of buying coins directly, people are buying Tether then immediately selling that Tether to… someone? Who apparently is okay holding on to huge quantities of Tether? It’s weird that crypto proponents always a…

They're not even 'tightly coupled'. They're literally the same people.

The Bitfinex loan to Tether literally had the same two signatories on both sides of the loan.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#149

Post by ceejayoz »

Spivak wrote: post #142
bostonsre wrote: post #100

Earlier quoted context omitted.

It's all fine and good until there is a run on tether and they can't actually give customers their money back. They will throttle customer withdrawals, the issue will be magnified, and I would guess tethers would be selling for pennies on the dollar on the secondary market.

This discussion is so weird because you're to the letter describing banks and bank runs, which does make sense because Tether and other stablecoins are banks, albeit without FDIC insurance. What is actually bad about Tether that doesn't apply to USD and the current largely functional banking system?

Banks pass audits, have specific capital requirements, and you've even helpfully highlighted the FDIC insurance that protects individuals from their fuckups.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#150

Post by lamontcg »

X6S1x6Okd1st wrote: post #28

If the Commercial Paper that Tether holds to show they have enough cash on hand is issued from Alameda & Cumberland then we've closed the loop on this scam. e.g. Alameda offers to buy 20B USDT in exchange for commerical paper offered by them. It's rated as A or B in part because before the sale they have net positive assets. Tether's sheets look good at a very high level pass ( https://tether.to/wp-content/uploads/20…

I doubt those companies could have been issuing that much actual, proper commercial paper. Where are they getting the USD for those loans?

My guess is that they're sitting on collectively about $45B in BTC and other crypto and they take loans out in USDT with that crypto as the collateral. Then they use that USDT to fund crypto ventures, speculate, and fuel arbitrage and wash trading bots.

Maybe there's an intermediate step in there where those two companies are the originators of the crypto-backed loans, but it'll amount to basically the same thing.

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