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Tether Withdrawals Top $10B

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Re: Tether Withdrawals Top $10B

#451

Post by sudosysgen »

jerf wrote: post #448
sudosysgen wrote: post #358

Earlier quoted context omitted.

Why couldn't you use short-term fed paper? Even a 0.5% yearly yield would be more than enough.

But why would you use short-term fed paper to make money with your stake, when you could just plain buy short-term fed paper, without the risk of people "redeeming" it from you? Backing a currency isn't about taking deposits from people. You can't back with deposits because your liabilities = assets then. You have to put your own stuff up, but then all you are doing is running the risk that people will redeem it away…

Because you can get interest on the fed paper from money that isn't yours?

And if people redeem from you, just add a clause where if the liquidity pool is gone you have to wait X days before getting it redeemed.

Re: Tether Withdrawals Top $10B

#452

Post by randomhodler84 »

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?

It’s simple. You are going to need collateral — BTC or ETH will do. Use this to borrow USDT from the open source money markets. Sell the USDT for BTC or ETH. You can double down by cycling this recursively and borrowing up some percentage of to your collateral if you wish to increase your leverage.

Meanwhile, you are paying 3-4% to whomever you are borrowing from. Addendum Meanwhile, you are probably funding an ecosystem something you are do not understand and against in the first place. :-)

Re: Tether Withdrawals Top $10B

#453

Post by X6S1x6Okd1st »

lmm wrote: post #409
randomhodler84 wrote: post #327

Earlier quoted context omitted.

The counter party is a smart contract AMM like curve or aave. Your only issue is liquidity and chain reliability.

Both of which are pretty big issues in the scenario we're talking about. When Tether crashes it will take down a significant chunk of the crypto world with it.

I wouldn't be surprised if congestion is extremely high on ETH if USDT collapses, but I'd be shocked if the chain started missing blocks.

Do you think that USDC would depeg as well?

Re: Tether Withdrawals Top $10B

#454

Post by X6S1x6Okd1st »

initplus wrote: post #316
X6S1x6Okd1st wrote: post #275

Earlier quoted context omitted.

UST trading only halted on some centralized exchanges. If you are willing to expose yourself to DeFi then trading continued. You can short USDT on AAVE for 3% APY at current variable rates.

The actual UST blockchain was halted for a time.

fair enough, def a reminder that not all L1s are sufficiently secure

Re: Tether Withdrawals Top $10B

#455

Post by randomhodler84 »

fleddr wrote: post #402
robonerd wrote: post #234

Earlier quoted context omitted.

Most of these are just "do a thing you can already do with money, but shittier"

You're starting to get it. A government-backed crypto currency would come with a wallet. The central bank becomes both the issuer of money as well as host your account. This makes other banks largely obsolete. Assuming it to be the main and only currency, transaction privacy fully ends. Transaction blocking and censorship would be the push of a button, pretty much your entire digital existence and access to things ca…

Algorithmic enforcement of social norms to confer an ideology of the state. I recall a historical tiff between Jefferson and Hamilton on the powers of the central bank a few years ago. Unfortunately CBDC is how a majority of humans will transact in 2030, history has demonstrated this. What we have up our sleeve is specific codified internet protocols that allow state-less money. Really, this point is still lost on most people, in that they have the ability to transact over the internet with no trusted third party. Blows my mind every day.

Re: Tether Withdrawals Top $10B

#456

Post by randomhodler84 »

ProjectArcturis wrote: post #392
randomhodler84 wrote: post #373

Earlier quoted context omitted.

We do you need to seek permission by default to save, spend and transact over the internet? Do we need permission to send TCP packets? To send an email? Consider that the internet works because it is permissive in what it accepts. What if money was abstracted from the states monetary policy, and it was as frictionless as any other internet protocol. The internet experiment changes our lives every day, in ways we cann…

So, for crime then.

Only if you believe anything done without permission of an authority is criminal, which IMHO is no way to live the finite days we have trapped on this rock.

Re: Tether Withdrawals Top $10B

#457

Post by balefrost »

smoovb wrote: post #422
balefrost wrote: post #297

Earlier quoted context omitted.

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 a…

The outcome was a $18.5 settlement with no admission of wrong doing. If there was really shady activity, would NYAG disclose it?

They did disclose it; it was in the press release:

In the case of Tether, the company represented that each of its stablecoins were backed one-to-one by U.S. dollars in reserve. However, an investigation by the Office of the Attorney General (OAG) found that iFinex — the operator of Bitfinex — and Tether made false statements about the backing of the “tether” stablecoin, and about the movement of hundreds of millions of dollars between the two companies to cover up the truth about massive losses by Bitfinex.

also

Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.

The settlement also bars Tether from trading with New Yorkers, and the must submit regular reports about their compliance with this prohibition.

I suspect the AG got what they wanted, they just managed to do so without taking time in the court system. I would assume that Tether realized that it wasn't worth trying to defend themselves and so agreed to settle. My use of "successfully prosecuted" might not have been the right way to phrase it.

Re: Tether Withdrawals Top $10B

#458

Post by jerf »

sudosysgen wrote: post #451
jerf wrote: post #448

Earlier quoted context omitted.

But why would you use short-term fed paper to make money with your stake, when you could just plain buy short-term fed paper, without the risk of people "redeeming" it from you? Backing a currency isn't about taking deposits from people. You can't back with deposits because your liabilities = assets then. You have to put your own stuff up, but then all you are doing is running the risk that people will redeem it away…

Because you can get interest on the fed paper from money that isn't yours? And if people redeem from you, just add a clause where if the liquidity pool is gone you have to wait X days before getting it redeemed.

It is yours. Again, you can't back with "deposits". If you have deposits, the depositors have a claim that encumbers the assets; you can't then "back" something with encumbered assets. You can only back a currency with unencumbered assets. And if you have unencumbered assets, why would you use them to back a currency?

Re: Tether Withdrawals Top $10B

#459

Post by User23 »

logifail wrote: post #432
User23 wrote: post #335

Earlier quoted context omitted.

Of course. A depositor might walk in and ask to withdraw more money than the bank has cash on hand. The seven days gives the bank time to get the requisite notes (or call the appropriate law enforcement agency).

> A depositor might walk in and ask to withdraw more money than the bank has cash on hand. I'm sure you didn't mean it that way, but that sounds rather like an excuse for a bank to hold on to someone's money. Withdrawals don't have to be in cash, banks can issue cheques or money orders (always assuming they still exist in your jurisdiction!) If not the bank can simply pay out your balance by electronic transfer to an…

I was referring specifically to those rare cases where someone exercises their right to withdraw coins and Federal Reserve notes despite it being virtually always imprudent. For example here[1] is a story about a man who asked for $600,000 in cash. The bank didn't have that many coins and bills on hand and actually took considerably longer than seven days to acquire it.

[1] https://www.investopedia.com/terms/n/notice-of-withdrawal.as...

Re: Tether Withdrawals Top $10B

#460

Post by newbie13 »

rglullis wrote: post #121
askmike wrote: post #92

Earlier quoted context omitted.

USDT is the fuel that powers a lot the crypto ecosystem. Good luck trying to move USD around between different places in the crypto ecosystem (especially outside office hours). While possible it's complicated, slow and has terrible uptime. The biggest crypto markets in the world are quoted in tether.

Fiat-backed, collaterized stable coins that are better than USDT - USDC (Circle USD) - GUSD (Gemini USD) - BUSD (Binance USD) - EURS (Stasis EUR) Crypto backed (overcollaterized) stable coins that are soft-pegged and better than USDT - DAI (MakerDAO) - sUSD (Synthetix USD) - sEUR (Synthetix EUR) No one needs USDT anymore. The fact that even Binance gets more credibility than Tether should tell you how scammy the peop…

Agreed :) EURS is a great stablecoin for people counting their wealth in Euros :)
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