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Tether Withdrawals Top $10B

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Re: Tether Withdrawals Top $10B

#291

Post by adhesive_wombat »

ProjectArcturis wrote: post #245
swamp40 wrote: post #212

Earlier quoted context omitted.

Why do you think any stablecoin exists? What need do they solve?

Right now they seem to mainly be used A) as a proxy for US dollars on crypto exchanges, and B) by their creators, to pump up the crypto markets.

> by their creators

Who often are the exchanges.

"When in a gold rush, sell spades" is old hat. Now it is "sell spades but also denominate everything in the SpadesRUs Prospecting Emporium in SpadeCoin scrip" and relieve people of their dollars at the door before they've even laid hands on a spade.

Re: Tether Withdrawals Top $10B

#293

Post by SparkyMcUnicorn »

ceejayoz wrote: post #232
bpodgursky wrote: post #208

Earlier quoted context omitted.

Exchange it for another coin in less than 3-5 business days

My Dad sends me money via Zelle. It shows up instantly in my account, with zero fees, even if it's 10pm on a Sunday. https://mashable.com/article/ethereum-gas-fees-skyrocket-bor... > If you were trying to complete a transaction on the Ethereum network last night, you might have been taken aback by the ridiculously high gas fees you saw. For example, one user purchased a $25 NFT on Saturday evening. Their total price?…

Zelle has strict limits on how many transactions you can do and how much you can transfer.

Yeah, ETH has high fees. Don't use it directly. Use an L2, Polygon, or something else where fees are pennies or less. ETH is not a good chain to be on for the average user, unless you have a lot of money to waste on gas.

Re: Tether Withdrawals Top $10B

#294

Post by logifail »

datadata wrote: post #272
logifail wrote: post #267

Earlier quoted context omitted.

> Regular savings account banks do typically do this, for example the bank has the right to ask for 7 days to honor a withdrawal Source? I'm familiar with savings accounts described as "instant access" or "easy access" where you can get your money out whenever you feel like it. Unless the bank actually markets an account as a "notice account", can they really ask for 7 days notice?

Here is an example: https://www.capitalone.com/bank/disclosures/savings-accounts... > Advance Notice of Withdrawal: Under federal law, we must reserve the right to require you to give us at least 7 days written notice before you take money out of your 360 Savings. (This hardly ever happens but legally we have to say it!)

> Here is an example [..]

Interesting, and this appears to be federally-mandated. Wow.

Are there other jurisdictions where this kind of rule exists?

Re: Tether Withdrawals Top $10B

#295

Post by pg_bot »

eldenwrong wrote: post #277
pg_bot wrote: post #204

Earlier quoted context omitted.

If you look at the timeline for tether it seems even more suspect. In late august of 2020 there are 10 billion tethers in circulation. They supposedly grew 8x in less than 2 years while being under investigation for bank fraud and a litany of other problems. They've never had an audit of their reserves, and the public behavior of their executives does not inspire confidence. Here's how this plays out in the next few…

How much liquidity entered the financial markets since 2020....?

About 265 billion USD entered circulation during that same time period.

https://fred.stlouisfed.org/series/CURRCIR

Re: Tether Withdrawals Top $10B

#296

Post by mikeyouse »

ceejayoz wrote: post #232
bpodgursky wrote: post #208

Earlier quoted context omitted.

Exchange it for another coin in less than 3-5 business days

My Dad sends me money via Zelle. It shows up instantly in my account, with zero fees, even if it's 10pm on a Sunday. https://mashable.com/article/ethereum-gas-fees-skyrocket-bor... > If you were trying to complete a transaction on the Ethereum network last night, you might have been taken aback by the ridiculously high gas fees you saw. For example, one user purchased a $25 NFT on Saturday evening. Their total price?…

And within the next few years, the FedNow service will be live and render Zelle and a lot of other systems obsolete;

https://www.frbservices.org/financial-services/fednow/about....

Re: Tether Withdrawals Top $10B

#297

Post by balefrost »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

The NY Attorney General successfully prosecuted the parent company of Tether and Bitfinex. They found that the two were sharing funds, transferring them back and forth to make it appear that Tether was fully backed while using the same funds to prop up Bitfinex (after they lost coins, maybe in a hack?)

https://ag.ny.gov/press-release/2021/attorney-general-james-...

That doesn't necessarily mean that Tether's assets are less than its debts. I don't know the details. I just know that the NY Attorney General finds their activities to be shady.

Re: Tether Withdrawals Top $10B

#298

Post by GreaterFool »

kolbe wrote: post #248
shadedtriangle wrote: post #218

Earlier quoted context omitted.

> All you need for a stable stablecoin is to save every dollar put in to it. That’s the issue right there. How does Tether save its dollars? We can see it in their transparency report[1]. Whether you believe them or not it’s not just cash in a bank account. * 0.41% Non-U.S. Treasury Bills * 55.53% U.S. Treasury Bills * 0.15% Reverse Repurchase Agreements * 5.81% Cash & Bank Deposits * 9.63% Money Market Funds * 28.47…

Billions is a small number in the US Treasury market. They do not move the market with that kind of size.

True. The US Treasury market is backed by war. That's solid business that you can rely on :-)

Re: Tether Withdrawals Top $10B

#299

Post by jonahbenton »

sgammon wrote: post #222
jonahbenton wrote: post #166

Earlier quoted context omitted.

There is an assumption behind your question to the effect of saying "If we assume Tether is not, ultimately, a fraud, it seems like the only way..." That is, IMHO, a questionable assumption. Now, "fraud" in this case too strong a term. The intent to defraud may not be explicit in Tether's internal conversations and practices. All business ventures by definition involve risk, and corporate structures and venues and li…

how is fraud too strong a term? what else would you call deliberate financial malfeasance?

Have just seen it many times, specifically in finance, the risk complexity of which is really hard to understand, and which has an equilibrium of stasis punctuated with earthquake-level surprises that make even careful bets into speculations into existential threats more quickly than most people are able to respond. Fraud is a catchall for a really wide range of often unintentional outcomes. Incompetence rather than malice, though the common behaviors both of information hiding and cutting customer hair rather than one's own shades awfully close to malice, even if they are in compliance with terms and disclosures.

Re: Tether Withdrawals Top $10B

#300

Post by boc »

cowtools wrote: post #227
thematrixturtle wrote: post #51

Earlier quoted context omitted.

The big deal is that it's highly likely that Tether is backed up by way less than 83 billion in actual dollars. Let's say, for argument's sake, that they were 50% backed a week ago and had $40B in actual dollars. If $10B was pulled out, that was into actual US dollars or equivalent, meaning they now have $70B backed up by $30B. If another $10B drains in the next week, it'll be $60B vs $20B. This incentivizes other ho…

I don't know if it will necessarily cause crypto prices to crash

Crypto is priced on the exchanges in terms of USDT, USDC, etc.

If USDT dies then BTC goes to like $500 on Binance. The cascade effects will cause runs on other exchanges, and then you're betting that they have enough reserves to cover a run. I'd want to be far away from the scene when that happens.

The fiat banking system is backstopped against this behavior by the FDIC, which guarantees your funds are safe even if the bank holding the funds goes under. This prevents customers from mass withdrawals in times of crisis. Crypto doesn't have anything like that, therefore it's going to look like the bad ol' days of 19th Century financial panics when a run occurs.

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