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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

#171

Post by IncRnd »

crazydoggers wrote: post #56
jqpabc123 wrote: post #37

Earlier quoted context omitted.

The thing is tether is pegged. I think the point you're missing here is that there is no logical basis for the "pegging". It's pegged because crypto exchanges play along with the pegging fantasy.

Well it’s supposed to be pegged to the dollar by maintaining USD deposits. Nothing here or that I’ve yet seen indicated that hasn’t been happening. Banks are worse anyway, all banks function on fractional reserve, but we don’t immediately call them scams.

> all banks function on fractional reserve, but we don’t immediately call them scams.

US (and many other) Banks have capital requirements, regulations, regulators, and insurance that covers the deposits!

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

#172

Post by IncRnd »

crazydoggers wrote: post #63
themagician wrote: post #58

Earlier quoted context omitted.

The point of Tether is to make money—for Tether, not you. They are getting rich when you buy a million dollars worth.

How? They have to maintain that million dollars so I can withdraw it when I need it. Nothing has yet shown that is a problem or that’s not being done. Go deposit 1 million in a bank, and then ask for it in cash the next day. You won’t get it.

> Go deposit 1 million in a bank, and then ask for it in cash the next day. You won’t get it.

But, you will get it. Try that with Tether, and you might just get laughed at. They would have already put your million dollars to other uses outside of being a deposit for you.

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

#173

Post by vmception »

gdvvc wrote: post #26
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?

You don't need to pay taxes. Example: You earn $1000/month. Cost of living is $500/month, labour tax is $500/month. By using cryptocurrency you can skip tax and save up $500/month, in legit employment (labour law, worker rights protection) you save up $0/month, you work for free, hand to mouth.

Weird take.

If your employer is obligated to withhold taxes from you per pay period, then they can do that and still pay you the rest in stablecoins.

If your employer is not obligated to withhold taxes because you are a contractor, then not having taxes withheld has nothing to do with earning fiat or earning stablecoins.

If you are trying to avoid the record of payment by earning stablecoins, this is neither an efficient way to do it nor is it legal.

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

#174

Post by IncRnd »

xtracto wrote: post #70
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 live in Mexico so I get paid in MXN which historically has been, let´s say less than optimal ( https://www.tradingview.com/symbols/USDMXN/ ). I have a portfolio of different risk profiles (ETFs, bonds, IRA, etc [Mexico equivalents of course]). Some of that is in stablecoins, which are pegged to the US Dollar, because it is the easiest way for me to store them, instead of going to a "casa de cambio" and exchange the…

It might be a pretty good use case but only until there is a run on Tether.

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

#175

Post by ceejayoz »

Spivak wrote: post #170
IncRnd wrote: post #166

Earlier quoted context omitted.

> 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?

> their current state is fine, right?

No.

They still, to this day, have not completed one of their promised audits. As such, we don't know what their current state is, and they have a track record of lying about it. There are rumblings that much of their current holdings are in commercial paper that aren't worth what they're assessed as, because Tether values them at the purchase price rather than the current mark-to-market value.

Even if they're solvent now, getting there via fraud is bad.

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

#176

Post by IncRnd »

purple_ferret wrote: post #15
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?

Pretty straightforward: You can currently get 8.88% APY return on lending stablecoins on Celsius[0]. It's also much easier to borrow and use in incredibly risky contracts, yield farming, etc Stablecoins let you engage in much more risk than USD without the volatility of crypto prices. [0] https://celsius.network/earn-rewards-on-your-crypto

That link currently shows 17% APY. I hope you don't believe everything you read.

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

#177

Post by ceejayoz »

ur-whale wrote: post #146
uncletammy wrote: post #123

Earlier quoted context omitted.

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.

Nope.

The Fed's powers come from Congressional legislation, and the Governors are Senate confirmed. They have substantial power over the Fed.

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

#178

Post by ceejayoz »

rfd4sgmk8u wrote: post #155
ceejayoz wrote: post #92

Earlier quoted context omitted.

Would you trust a bank that promised a 7.4% APY savings account, or would you go "hmmmmmm..."? > This is better than any bank in the universe. "If it sounds too good to be true..."

I used to believe this -- "too good to be true", then I played with the tech and realized the folk borrowing the money at a higher rate (of course) were earning 2x that via various defi contracts. Most of the defi world is a scam, however, stablecoin stablecoin liquidity pools are handling millions of dollars and paying the liquidity providers handsomely at 0.1%. It is then that you understand who exactly is making b…

> I used to believe this -- "too good to be true", then I played with the tech and realized the folk borrowing the money at a higher rate (of course) were earning 2x that via various defi contracts.

Bernie Madoff's ponzi scheme survived for decades before it was revealed to be "too good to be true".

If those defi contracts collapse, your savings that got loaned out to them are gone. You're not getting that APR, and you're out the principal too.

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

#179

Post by xtracto »

IncRnd wrote: post #174
xtracto wrote: post #70

Earlier quoted context omitted.

I live in Mexico so I get paid in MXN which historically has been, let´s say less than optimal ( https://www.tradingview.com/symbols/USDMXN/ ). I have a portfolio of different risk profiles (ETFs, bonds, IRA, etc [Mexico equivalents of course]). Some of that is in stablecoins, which are pegged to the US Dollar, because it is the easiest way for me to store them, instead of going to a "casa de cambio" and exchange the…

It might be a pretty good use case but only until there is a run on Tether.

I don't believe in Tether. I use other stablecoins (mainly DAI and USDC). And also, that's why you diversify your portfolio: All assets have risks.

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

#180

Post by Spivak »

IncRnd wrote: post #165
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…

> 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?

Is anything other than 100% cash backing a scam to you because that seems like a stretch? Oh lawdy did they defraud people by claiming to be 100% cash backed when they weren't but I don't think fractional reserve is a scam in general.

At any given moment you just need the ability to pay out the people who come to you and ask which is already teeny tiny (as evident by banks needing less than 5% cash reserves of deposits) and made even smaller since people don't typically cash Tether out directly and do it at exchanges.

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