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Fears grow over Tether ‘printing press’ as auditors part ways

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Re: Fears grow over Tether ‘printing press’ as auditors part ways

#41

Post by rhino369 »

jcsnv wrote: post #28

If Tether is not legitimate, wouldn't Tether holders sell their Tether for BTC and other crypto assets which would increase the prices of crypto assets? Does it matter if Tether is not backed by USD if none of the exchanges will let you trade fiat for Tether anyways? What if people just want to believe that its backed by USD? What if Tether not being legitimate is already priced into BTC? Wouldn't the supply of Tethe…

>If Tether is not legitimate, wouldn't Tether holders sell their Tether for BTC and other crypto assets which would increase the prices of crypto assets?

It would increase the price of BTC in tether. But the tether to dollar peg would fail. All the BTC stored in tether based exchanges would move to fiat based exhanges. If people decide to hold onto BTC because it is safer, it might cause a price increase for a short time.

But people who held tether, would likely be interested in selling BTC for real cash. The whole point of tether was to avoid the price instability of other coins.

Plus, if tether really has printed a billion dollars or more of fake dollars, the disappearnce of that will cause the price to drop over the long term.

And don't discount pure panic.

Market cap is a stupid measurement for currencies. Two billion of fake money could distort the "market cap" by hundreds of billions.

You also have to wonder if shady exchanges just decide they are better off stealing all the coins now. Because without tether, a lot of them won't survive.

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#43

Post by astrange »

Havoc wrote: post #36
djrogers wrote: post #7

This should be simple - either Bitfinex has ~$2.4B USD sitting in banks somewhere, or it doesn't. It should not take too much auditing to figure that out.

It's not the amount of auditing. Nobody wants to be associated with it. It's just not worth it from the auditor's perspective.

No, Tether fired the auditor because they were trying to actually do work.

> Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of tether, it became clear that an audit would be unattainable in a reasonable time frame.

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#44

Post by notahacker »

skybrian wrote: post #40
notahacker wrote: post #26

Earlier quoted context omitted.

Tetherreport.com, for example, suggests about half of BTC's price rises last year resulted directly from newly printed USDT being converted into BTC. If you consider the other half of that price rise from 10,000 in 2017 includes many inexperienced traders deciding to dive in after seeing big jumps in the BTC price over the course of the year, the overall contribution of Tether market manipulation to BTC's price chang…

Who takes the other side of the trade? If someone is using a lot of USDT to buy Bitcoin, don't there have to be a lot of people who trade Bitcoin for USDT and then hold on to it? On the other hand, seems like the Bitcoin price would rise due to people being skeptical about this newfangled Tether thing.

Well there's a notional $2.2bn worth of Tether that someone's holding on to, which is certainly enough to have got the price of a perceived buy-and-hold asset like BTC moving a lot.

If you can issue yourself newly minted Tether notionally worth a dollar and exchange your own BTC for it on your own exchange it's also dead easy to start pumping the price with wash trades (in theory you could do this by faking USD transactions on your exchange too, and some exchanges probably have done at various periods in the past, but printing USDT would allow you to actually increase your BTC holdings by buying from real traders at the same time, without having to worry about honouring the dollar payments)

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#45

Post by jandrese »

astrange wrote: post #43
Havoc wrote: post #36

Earlier quoted context omitted.

It's not the amount of auditing. Nobody wants to be associated with it. It's just not worth it from the auditor's perspective.

No, Tether fired the auditor because they were trying to actually do work. > Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of tether, it became clear that an audit would be unattainable in a reasonable time frame.

I swear, if this doesn't set off blaring red sirens in your head you should not be trusted with money.

"We had to fire our accountant because he was trying to do his job."

Next time they'll know better and hire Accenture like they should have in the first place.

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#46

Post by lowdest »

notahacker wrote: post #44
skybrian wrote: post #40

Earlier quoted context omitted.

Who takes the other side of the trade? If someone is using a lot of USDT to buy Bitcoin, don't there have to be a lot of people who trade Bitcoin for USDT and then hold on to it? On the other hand, seems like the Bitcoin price would rise due to people being skeptical about this newfangled Tether thing.

Well there's a notional $2.2bn worth of Tether that someone's holding on to, which is certainly enough to have got the price of a perceived buy-and-hold asset like BTC moving a lot. If you can issue yourself newly minted Tether notionally worth a dollar and exchange your own BTC for it on your own exchange it's also dead easy to start pumping the price with wash trades (in theory you could do this by faking USD trans…

How does a wash trade pump the price any differently than just using a large buy order?

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#47

Post by Pyxl101 »

astrange wrote: post #43
Havoc wrote: post #36

Earlier quoted context omitted.

It's not the amount of auditing. Nobody wants to be associated with it. It's just not worth it from the auditor's perspective.

No, Tether fired the auditor because they were trying to actually do work. > Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of tether, it became clear that an audit would be unattainable in a reasonable time frame.

Yeah, it's because competent auditors aren't just going to verify the current balance, they'll look at where all the money came from and where it went, and so on. Auditing does take a lot of effort, but that's what it takes to prove legitimacy. Firing an auditor is a big red flag.

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#48

Post by notahacker »

lowdest wrote: post #46
notahacker wrote: post #44

Earlier quoted context omitted.

Well there's a notional $2.2bn worth of Tether that someone's holding on to, which is certainly enough to have got the price of a perceived buy-and-hold asset like BTC moving a lot. If you can issue yourself newly minted Tether notionally worth a dollar and exchange your own BTC for it on your own exchange it's also dead easy to start pumping the price with wash trades (in theory you could do this by faking USD trans…

How does a wash trade pump the price any differently than just using a large buy order?

Much easier to generate a pattern or even a sustained history of price rises and trading volume increases via fake trades than try to nudge the price up by spoofing buy orders. Of course, if you're printing your own dollars you can actually execute large buy orders as well, but if you can pump the price some more afterwards, then why not?

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#49

Post by skybrian »

notahacker wrote: post #44
skybrian wrote: post #40

Earlier quoted context omitted.

Who takes the other side of the trade? If someone is using a lot of USDT to buy Bitcoin, don't there have to be a lot of people who trade Bitcoin for USDT and then hold on to it? On the other hand, seems like the Bitcoin price would rise due to people being skeptical about this newfangled Tether thing.

Well there's a notional $2.2bn worth of Tether that someone's holding on to, which is certainly enough to have got the price of a perceived buy-and-hold asset like BTC moving a lot. If you can issue yourself newly minted Tether notionally worth a dollar and exchange your own BTC for it on your own exchange it's also dead easy to start pumping the price with wash trades (in theory you could do this by faking USD trans…

Hmm. I get that except the part about "without having to worry about honouring the dollar payments." Wash trades aside, as soon as they buy Bitcoin from someone else, they have to give them something.

Or really, since it's all accounting entries in the exchange's database, what it means is a number in that trader's account needs to go up. If the Bitcoin price is high, this number has to go up a lot. And they'll expect to cash that out someday.

I don't see why Tether makes this any easier or harder? The basic security flaw is using an untrustworthy exchange.

Re: Fears grow over Tether ‘printing press’ as auditors part ways

#50

Post by vkou »

notahacker wrote: post #44
skybrian wrote: post #40

Earlier quoted context omitted.

Who takes the other side of the trade? If someone is using a lot of USDT to buy Bitcoin, don't there have to be a lot of people who trade Bitcoin for USDT and then hold on to it? On the other hand, seems like the Bitcoin price would rise due to people being skeptical about this newfangled Tether thing.

Well there's a notional $2.2bn worth of Tether that someone's holding on to, which is certainly enough to have got the price of a perceived buy-and-hold asset like BTC moving a lot. If you can issue yourself newly minted Tether notionally worth a dollar and exchange your own BTC for it on your own exchange it's also dead easy to start pumping the price with wash trades (in theory you could do this by faking USD trans…

> Well there's a notional $2.2bn worth of Tether that someone's holding on to, which is certainly enough to have got the price of a perceived buy-and-hold asset like BTC moving a lot.

This is what I don't get - who on Earth thinks that being long USDT is a good idea. Are they expecting the USD to dissapear? USDT to go to the moon?

I understand having to own USDT to get your money out of exchanges that don't deal with fiat... But you need a counterparty on the other side of the trade - someone who will give you perfectly good USD for USDT. How has that ecosystem managed to absorb $2.2bn?

Is anyone on Hacker News long USDT? If so, why?

Every time Bitcoin/Eth/etc is discussed, there's always people admitting to holding on to it because they expect it to increase in price. I don't agree with them, but that's speculation - you can still make money, even if you disagree with the fundamentals.

Why Tether? There's no speculative gains, and there's no fundamentals.

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