Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Anyone Seen Tether’s Billions?

bloomberg.com

Post reply on HN
Print view View original

431–440 of 492 posts

Re: Anyone Seen Tether’s Billions?

#431

Post by jimmydorry »

thefreeman wrote: post #385
jimmydorry wrote: post #227

Earlier quoted context omitted.

The part I have never seen elaborated on in the "Tether is a Ponzi" claims is at what point will people using Tether make money? Tethers are IOUs to facilitate moving USD between financial institutions (mainly between exchanges, and mostly used by the exchanges themselves). You can spend $1 USD to get 1 Tether that is "redeemable" (by trade, not through the Tether company) for exactly $1 USD. A Ponzi requires some ki…

The payout is the complicit exchanges wash trading Bitcoin, SOL, etc., with freely printed and unbacked tethers, in order to drive the price up. The more crypto goes up, the more people FOMO in and trade, the more money the exchanges make.

I don't see the payout. If you buy $100 of Tether, it will only ever be worth a maximum of $100.

By what you describe, the crypto purchased with Tether would be the Ponzi... but that's not the subject of this article or my question on why people insist Tether is a Ponzi.

Re: Anyone Seen Tether’s Billions?

#432

Post by jimmydorry »

thebean11 wrote: post #399
raducu wrote: post #316

Earlier quoted context omitted.

It is a ponzi/illegal bank scheme the moment they mint more tokens than they have liquid assets. Could they come clean, will there be a bank/USDT run? Depends of how much USDT real clients hold and how much USD they hold, and how likely it is that EVERYONE wants to convert USDT back to USD -- it would take a very catastrophic collapse of cryptos for that to happen. USDT has intrinsic value for money laundering, so ev…

Ponzi has a pretty specific meaning..illegal banking scheme sure.

Absolutely an illegal banking scheme

Re: Anyone Seen Tether’s Billions?

#433

Post by jdsully »

jimmydorry wrote: post #429
forgotmyoldname wrote: post #246

Earlier quoted context omitted.

Tether takes a bunch of money to facilitate users converting to Bitcoin or other currencies. The maintainers of Tether keep sucking up real money, minting Tether that they claim is backed by cash (real currency), but the real cash backing goes poof and they aren't demonstrating that there is any stable backing. But so long as other crypto isn't crashing, they can reliably take real cash, skim off some for themselves,…

If too many people decide to withdraw their money from any financial system (e.g. banks, brokers, exchanges, etc.), you can expect there to be liquidity problems. These are not Ponzis. This distinction doesn't even make sense though. The Tethers aren't redeemable directly from the Tether company. People redeem Tether for USD by market transaction. As these Tethers are just USD IOUs, it doesn't seem to matter much whe…

If there is not sufficient USD to back them then its fraud. People purchased these securities relying on the representations they made about it being backed by USD.

Re: Anyone Seen Tether’s Billions?

#434

Post by jimmydorry »

jdsully wrote: post #433
jimmydorry wrote: post #429

Earlier quoted context omitted.

If too many people decide to withdraw their money from any financial system (e.g. banks, brokers, exchanges, etc.), you can expect there to be liquidity problems. These are not Ponzis. This distinction doesn't even make sense though. The Tethers aren't redeemable directly from the Tether company. People redeem Tether for USD by market transaction. As these Tethers are just USD IOUs, it doesn't seem to matter much whe…

If there is not sufficient USD to back them then its fraud. People purchased these securities relying on the representations they made about it being backed by USD.

Fraud does not automatically make it a Ponzi, and no custodial service will have sufficient USD on-hand at all times to cover everyone withdrawing their funds.

The specific claim that was made by GP, and the claim that I see bandied around, is that Tether is a Ponzi scheme.

Tether doesn't appear to share any characteristics with a Ponzi scheme, which is why I am puzzled to see people so adament it is one.

The most important characteristic (IMO) is that there is no promise of a return. $100 of Tether will only ever be worth $100 maximum.

If anthing, Tether is basically operating as an unregulated bank. You're not calling banks Ponzis are you?

Re: Anyone Seen Tether’s Billions?

#435

Post by ac29 »

ikeboy wrote: post #240
NelsonMinar wrote: post #28

I don't understand how Tether has survived this long. Bitfinex and Tether sure look transparently like a fraud, all the way back to the "no really we have $1 in the bank for every Tether but you can't audit us" days. And yet it continues to occupy its role as the underpinning of most cryptocurrency markets. Why hasn't it blown up yet? My best guess is that it's useful to everyone taking in money from new retail inves…

It's very easy to short tether, it costs around 4-5% a year. You can do it directly on FTX, or you can do it on ethereum by borrowing tether on aave against, say, USDC, and then selling it for USDC. You can do this in significant size, 8 figures+ if you'd like.

> You can do it directly on FTX

Not if you're a US citizen

Re: Anyone Seen Tether’s Billions?

#436

Post by ikeboy »

ac29 wrote: post #435
ikeboy wrote: post #240

Earlier quoted context omitted.

It's very easy to short tether, it costs around 4-5% a year. You can do it directly on FTX, or you can do it on ethereum by borrowing tether on aave against, say, USDC, and then selling it for USDC. You can do this in significant size, 8 figures+ if you'd like.

> You can do it directly on FTX Not if you're a US citizen

That is true, although if you try it's not that difficult to pass KYC and use a VPN. AAVE method works for anyone though.

Re: Anyone Seen Tether’s Billions?

#437

Post by hackingforfun »

gammarator wrote: post #413
driverdan wrote: post #393

Earlier quoted context omitted.

There are multiple alternatives that are far more trustworthy.

What I don’t understand is why market participants don’t use those rather than Tether. If I had a bunch of Tether today, why wouldn’t I move it to USDC or similar?

USDT has more supported trading pairs and liquidity, particularly for crypto exchanges in Asia. It just seems more popular there for whatever reason.

If I had to choose USDC or USDT though, I'd rather hold funds in USDC. In general I'm not much of a fan of stablecoins though, but I do acknowledge the quick, 24/7 transfers they offer is interesting, as well as the high APRs for lending them. However, I'd still rather just hold fiat vs stablecoins. I find other cryptos to be much more compelling.

Re: Anyone Seen Tether’s Billions?

#438

Post by qeternity »

SilasX wrote: post #380
qeternity wrote: post #307

Earlier quoted context omitted.

> If I buy BTC with USD and then transfer it to an exchange with a BTC/USDT pair, I'm not suddenly "short USDT". It does, it just doesn’t make you short against USD which is what you’re thinking of. It only makes you short vs. BTC which we expect to collapse in price as well. This is why you need the other leg. > So I don't see why buying BTC with USDT directly makes me short USDT either if I didn't borrow the USDT b…

This is the kind of thing that would have been helpful to explain before using the notation. At least if your goal was to help others understand.

I appreciate you have some sort of issue with me from our other comments, and for that I'm sorry.

It's not always clear when talking about complex domains, what is obvious and what isn't. My first comment in this thread explained why a simple USDT/USD short is not a good idea. I thought I had explained it in very simple terms, to help people with less experience understand.

HN has a wide spectrum of users, and obviously some people still needed more info, which I was happy to provide. I thought I had explained it plainly but obviously I hadn't. It's easier said than done to imagine a good explanation for something like this without having any experience in the area.

I may have just gotten it wrong.

Re: Anyone Seen Tether’s Billions?

#439

Post by benibela »

NelsonMinar wrote: post #378
drfxyjhdyfrhgc wrote: post #287

Earlier quoted context omitted.

The payout will be in a different stablecoin. USDC won't collapse with Tether.

That's nonsense. When something as big as Tether falls the entire sector is going to fall apart. Everyone will run for the exits, USDC holders as well. I would not coount on Coinbase having enough real money to cover USDC redemptions. https://www.bloomberg.com/news/articles/2021-08-11/coinbase-...

You could short COIN on the stock market

Re: Anyone Seen Tether’s Billions?

#440

Post by jvilleBrat »

Cthulhu_ wrote: post #386
hedberg10 wrote: post #350

Earlier quoted context omitted.

Well, I'll have you know I graduated summa cum laude from Lemönade Ständ Universität, which is a very prestigious institution in Luxemburg, when I was 6.

I'll have you know I graduated top of my class in the Navy Seals, and I've been involved in numerous secret raids on Al-Quaeda, and I have over 300 confirmed kills. I am trained in gorilla warfare and I'm the top sniper in the entire US armed forces.

I once single-handedly beat an entire US armed force at an arm-wrestling tournament.
Post reply on HN