Tether minted most USDT to just 2 firms – Alameda and Cumberland • Hacker News Board

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

#161

Post by vmception » Thu, Aug 12, 2021, 7:19 PM UTC

headmelted wrote: post #157

vmception wrote: post #140

Earlier quoted context omitted.

I dont care if crypto crashes 90+ Percent because Tether turned out to be highly leveraged. Let it. What do people want to hear? If the issuing organization has no liquidity for its commercial paper or literally non existent assets then people cant redeem their tether. OTC desks using bitfinex as advertised isnt news and has nothing to do with speculating on an opaque reserve issue with Tether. That was my entire poi…

If you don’t care about it crashing 95% or more than I guess it’s moot. Although I don’t know why you’d hold something you expected to lose that much of it’s value.

I don't expect it to, and I rarely hold it. When I do hold it the risk is tolerable, as it has weathered much greater crisis of confidence before in a market where most assets have crashed over 90% in value before, while Tether has not.

Knowing the answer doesn't make me a proponent of it.

If you get caught holding the bag that's what happened. Congress won't step in. A stronger variant will emerge. Nobody wants a regulatory sandbox hellbent on nothing ever going wrong, while holding up projects indefinitely because something might go wrong. Get out the market if you can't handle that. In the mean time, regarding Tether, I wish they weren't the dominate stablecoin and I don't feel I need to preface my responses with that just so crypto skeptics will respect what I wrote. I've seen greater fractional systems which I believe are very commonplace in the industries that Congress will step in on. Nobody is confused about Tether's potential to be insolvent in a bankrun or asset forefeiture.

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

#162

Post by luma » Thu, Aug 12, 2021, 7:21 PM UTC

tablespoon wrote: post #120

trutannus wrote: post #50

Earlier quoted context omitted.

> others have found ways to build and keep an understanding of the crypto ecosystem without fully going down the rabbit hole You're right on the mark. Most of the content around crypto is heavily biased and just looks untrustworthy for a number of reasons. From what I can tell, it's because they're actually unreliable sources. Not because they're trying to scam you, but because there's more money in selling you crypt…

A lot of it also has a strong "Power of Positive Thinking"-vibe. Basically people believing that if only they act and talk like something is true hard enough, it will become true (e.g. nonsense talk about NFTs representing ownership of anything besides the NFT itself). So you have the extra task of trying to distinguish between what is actually true and what some community wants to be true, when almost the only peopl…

It's a stone requirement of the ponzi scheme itself. The price only goes up if new money comes into the market, so for anyone currently "hodling" a coin, they are obliged to convince others that buying in is a good idea or they lose their initial investment.

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

#163

Post by FireBeyond » Thu, Aug 12, 2021, 7:30 PM UTC

ceejayoz wrote: post #89

Jasper_ wrote: post #76

Earlier quoted context omitted.

Because we know that Alameda and Cumberland do not, on the whole, possess $63 trillion in USD. That's the official number of "outstanding Tether" posted on the Tether website [0]. If these allegations are true, the other holders of Tether total a couple million, meaning Alameda and Cumberland together must have trillions of holdings. Which, based on filings, we know isn't what they're reporting. [0] https://wallet.te…

$63 billion, not trillion.

But still. Whilst acknowledging that revenue is not holdings, I did some looking and saw that, if looking at Tether's claimed deposits, they would be within the top 20 largest companies in the world, eclipsing Alphabet, AT&T, even Samsung and Saudi Aramco.

Which is laughable.

Apple, Microsoft, Google, Verizon Communications and Pfizer COMBINED hold $400B in reserves.

Tether can barely say who they bank with.

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

#164

Post by Spivak » Thu, Aug 12, 2021, 7:39 PM UTC

ceejayoz wrote: post #149

Spivak wrote: post #142

Earlier quoted context omitted.

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.

This doesn't follow since the argument would apply to Tether even if they weren't doing shady things. If you don't think unregulated stablecoins should exist in general that's valid but it doesn't answer the question of what specifically Tether is doing.

Like rake them over the coals for lying about having assets they didn't but if Tether had been from the start open about holding only a small fraction in cash would it be a problem?

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

#165

Post by IncRnd » Thu, Aug 12, 2021, 7:42 PM UTC

Spivak wrote: post #43

jqpabc123 wrote: post #32

Earlier quoted context omitted.

It doesn't end there. Slightly less obvious is the fact that Tether and other "Stable coins" are the only "stability" that exists in the crypto marketplace. More than half of all crypto trades involve stable coins. And exchanges play along (wittingly or not) with the ruse for their own benefit. So if Tether is a scam, so is bitcoin and the entire crypto marketplace.

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…

> Tether might be a scam in the sense that they don't actually have the backing assets they claim

> They are absolutely running afoul of banking regulations

> the only thing Tether actually needs to do is keep the trading value of their coin near $1.

How do you propose Tether do that if they don't have financial backing to create a watermark below which the value won't fall? Increase the scam?

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

#166

Post by IncRnd » Thu, Aug 12, 2021, 7:44 PM UTC

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?

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

You answered your own question. There are no

  1. regulations
  2. regulators
  3. capital requirements
  4. backing insurance guarantees

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

#167

Post by yawaworht1978 » Thu, Aug 12, 2021, 7:45 PM UTC

kgin wrote: post #60

rubyist5eva wrote: post #13

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

And a very large chunk of BTC’s value has come from Tether buys.

How does that work? You mean wash trading? Or eli5 how tether could be abused to raise btc prices, and does it work the same way for eth?

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

#168

Post by Spivak » Thu, Aug 12, 2021, 7:47 PM UTC

turminal wrote: post #96

Spivak wrote: post #64

Earlier quoted context omitted.

But like how? I get why the SEC might have words for Tether the company but I don't get how users of tether have been scammed. You buy coin at around $1 and sell at around $1. Like from an end-user perspective as long as the thing actually functions as a stablecoin for some time interval you care about what else is there?

The problem is those two companies that bought most of it have the power to prematurely end that time interval whenever that makes financial sense for them.

Hypothetically speaking if Tether had been squeaky clean and open about holding a fraction backing assets in cash. These companies could have still bought a crap ton of it and caused a bank run if they wanted. That's just how fractional reserve works.

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

#169

Post by ceejayoz » Thu, Aug 12, 2021, 7:47 PM UTC

Spivak wrote: post #164

ceejayoz wrote: post #149

Earlier quoted context omitted.

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

This doesn't follow since the argument would apply to Tether even if they weren't doing shady things. If you don't think unregulated stablecoins should exist in general that's valid but it doesn't answer the question of what specifically Tether is doing. Like rake them over the coals for lying about having assets they didn't but if Tether had been from the start open about holding only a small fraction in cash would…

> Like rake them over the coals for lying about having assets they didn't but if Tether had been from the start open about holding only a small fraction in cash would it be a problem?

Sure. If the Nigerian prince was actually a Nigerian prince and actually gave me $100M, that changes the scenario substantially.

They acquired their dominant position via fraud. Their website claimed audits they never completed. They issued bank attestations showing funds they didn't have legal rights to; transferred from Bitfinex in the day before, and then back out the day after. To this day, there's no way of knowing if that fraud continues; they've yet to complete an audit or provide the transparency promised for years.

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

#170

Post by Spivak » Thu, Aug 12, 2021, 7:52 PM UTC

IncRnd wrote: post #166

Spivak wrote: post #142

Earlier quoted context omitted.

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?

> What is actually bad about Tether that doesn't apply to USD and the current largely functional banking system? You answered your own question. There are no 1. regulations 2. regulators 3. capital requirements 4. backing insurance guarantees

Argh I feel like I'm going mad here. What did Tether actually do that people are mad about then? Everyone knew going in that it was basically an unregulated bank! The only thing I've heard is that they used to claim they were 100% backed in cash and maybe weren't but regardless aren't now. Which is super shady and the epitome of "growth hacking" but their current state is fine, right?