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Tether Withdrawals Top $10B

cnbc.com

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Re: Tether Withdrawals Top $10B

#381

Post by Closi »

hbosch wrote: post #161
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…

In theory, you're correct. If 1B USDT is backed up, 1 to 1, with exactly 1B USD and no one every moves, sells, invests, or otherwise trades the underlying USD then the coin is actually stable... but it's already been established that Tether is backed by assets other than USD[0]. So... how much are you willing to trust them? 0. https://www.cnbc.com/2021/02/23/tether-bitfinex-reach-settle...

Also for it to be backed up 1 to 1 in this way, tether would require zero operating costs, which clearly isn’t the case.

Re: Tether Withdrawals Top $10B

#382

Post by evdubs »

ProjectArcturis wrote: post #257
anm89 wrote: post #99

Earlier quoted context omitted.

And I assume you are substantially short these markets then given that you know this for a fact and it's trivially easy to become wealthy one you know this for a fact? I don't even disagree that there are potentially major issues here but stating this as a fact is just silly.

I'd love to short Tether. How do I do that?

Sell short USDTUSD on an exchange that supports margin trading.

Re: Tether Withdrawals Top $10B

#383

Post by jameshart »

sudosysgen wrote: post #360
jameshart wrote: post #323

Earlier quoted context omitted.

The problem with trying to park $80bn in a bank account is not the risk that the bank might invest it. That is what banks do. You can find a legitimate bank who will be willing to hold your $80bn with reasonable terms for how fast you can access it, backed by insured guarantees and as secure as you would like. But such a bank, when you show up with your $80bn, in order to protect their ability to reliably offer those…

What prevents you from only selling the coins to US citizens with full KYC? Wouldn't that be enough?

Because the very purpose of a stablecoin is that one person buys the stablecoins with real USD; okay, you can KYC with them. But then once they have those stablecoins they go off and use them - to pay someone else for something - like some Bitcoin or something. Possibly something illegal.

This is not someone you have a direct relationship with. And now those stablecoins ‘belong’ to that new person.

Then that person uses the stablecoins to pay another person for something else, and eventually a completely different person can now come along and go through your KYC process and cash out the coins.

All above board and legitimate.

Except in the middle there’s a part where you might actually be acting as a bank for an international drug cartel or a sanctioned Russian oligarch. You just can’t be sure.

Re: Tether Withdrawals Top $10B

#384

Post by lmm »

TameAntelope wrote: post #347
optimalsolver wrote: post #344

Earlier quoted context omitted.

USDC hasn't been audited either, so how would we know that?

Because they've claimed it and we have no reason not to believe them, unlike USDT which we have many reasons not to believe them.

If your model is to trust entities until there's a specific reason to distrust them, I've got a billion dollars in USDLMM to sell you. Tether is larger and has been subject to more investigation than their competitors.

(Don't get me wrong, I assume everyone in this space is some combination of fraud, ponzi, and money laundering)

Re: Tether Withdrawals Top $10B

#385

Post by lmm »

MockObject wrote: post #191
oneoff786 wrote: post #190

Earlier quoted context omitted.

Tether is not willing to do this

So their idea of pegging is just a forcefully worded request?

"Sure, it's pegged, Anyone who fills in the right forms can get their USD back. After a few weeks. And if the request is big enough. Oh, but there was a problem with your form. Sorry. Try correcting it and resubmitting it. No, we can't tell you what the problem was."

Re: Tether Withdrawals Top $10B

#386

Post by thehappypm »

logifail wrote: post #271
__turbobrew__ wrote: post #240

Earlier quoted context omitted.

It sounds like the only way to do this is to create your own bank which directly integrates with the federal reserve.

> It sounds like the only way to do this is to create your own bank which directly integrates with the federal reserve ...but isn't the whole point of Tether to stay as far away from the traditional banking system as they can? This of course includes avoiding - as much as possible - all the KYC/AML legislation that traditional banks are obliged to follow?

Not at all, the whole point of Tether is to create a clean link to the US financial system — a tether to it.

Re: Tether Withdrawals Top $10B

#387

Post by lilyball »

jcranmer wrote: post #310
LatteLazy wrote: post #261

Earlier quoted context omitted.

They only need to have made 2% on those other investments and the 2% lost on crypto is irrelevant. Also, if 2% of outstanding tether has been lost (forgotten wallet keys etc) then those can never be redeemed and again, tether wins. Inflation is another factor worth considering here: tethers deposits are deminishing but it's investments are (or should be) shielded. I think people fail to notice how similar a (non-frau…

> They only need to have made 2% on those other investments and the 2% lost on crypto is irrelevant. A quarter of their investments are commercial paper, which hasn't averaged as high as 2% yield since a brief period in March 2020. Actual cash of course has 0% yield. US Treasuries (sub 1-year), which make up nearly half their assets, also hasn't hit 2% yield any time recently. So no, they aren't recouping their loss…

Cash has a negative yield, because rats and other vermin nibble on it.

Re: Tether Withdrawals Top $10B

#388

Post by thehappypm »

MockObject wrote: post #187
flerchin wrote: post #181

Earlier quoted context omitted.

Folks who want their fiat.

What does "pegged" even mean unless Tether is always willing to pay 1 USD for one? Then who would sell their tether for $0.99, at a loss?

This is exactly what keeps it at $1. If someone is willing to sell at $.99 then the number of buyers is gigantic. Ditto with someone buying at $1.01. That’s why it’s news when the peg drops by more than a fraction at a penny.

As for why would someone buy or sell for other than $1.00? Plenty of reasons, if a market opportunity to make 10% in a crypto investment pops up, damn right people will liquidate tether at a slight loss

Re: Tether Withdrawals Top $10B

#389

Post by vorpalhex »

leokennis wrote: post #367
oh_sigh wrote: post #317

Earlier quoted context omitted.

The transaction limit and public-ness of transactions are implementation details of certain blockchains. There are blockchains with much better TPS, and blockchains where transactions are not public.

Okay so how can you have a payment system where: - Transactions are on a decentralized blockchain - That blockchain is however not public - That blockchain allows for high(er) TPS - That blockchain isn’t vulnerable to easy fraud Am I missing a trade-off here?

Decentralization (and therefore fraud risk through things like doube spend).

Re: Tether Withdrawals Top $10B

#390

Post by TheOtherHobbes »

shadedtriangle wrote: post #218
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…

> 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…

So buyers thought they were buying some kind of novel risk-free crypto asset tied to Real Dollars™, while in reality they were mostly just buying T-Bills with unknown maturity dates and probably sound commercial paper.

Nice.

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