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Tether Is Breaking Its Peg to the Dollar

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Re: Tether Is Breaking Its Peg to the Dollar

#61

Post by encoderer »

brokensegue wrote: post #47
encoderer wrote: post #37

Earlier quoted context omitted.

My understanding is that tether exists so you can sell your alt-coin position to something resembling USD in volatility, vs selling them for btc. You can use USDT to buy ETH or BTC, and thats enables liquidity to USD fairly easily. I'm not defending Tether, I'm just pointing this out because your comment makes it sound to me like a trap that nobody has gotten any value out of.

lots of people get value out of ponzi schemes too (until they don't)

Not the point. Why not just play straight with the facts?

Nobody ever has to be able to redeem for dollars as long as exchanges keep making markets with usdt.

I have no position in tether, haven’t used it, just interested in cutting thru misinformation.

Re: Tether Is Breaking Its Peg to the Dollar

#62

Post by ceejayoz »

cstrat wrote: post #57
ceejayoz wrote: post #55

Earlier quoted context omitted.

If Tether really had $1 in the bank for every 1 USDT issued, they could set essentially infinite purchase orders at $0.99 - they'd make a penny on each purchase. They'd have a similar huge sell order at $1.01 for the same reason.

But Tether is traded on other exchanges outside of their control, this wouldn't work... plus. if they did this, then what people are suspecting is true. They just print tethers willy nilly without proper USD backing.

> if they did this, then what people are suspecting is true.

No, this is what they could do if they were legit.

Issuing and selling a new Tether when it's over $1.00 on an exchange keeps all their promises and lets them make the difference as profit. If they sell the Tether for $1.05, they put a dollar in reserves and the $0.05 is profit.

Same for buying a sub-$1.00 Tether from an exchange. They've taken a Tether out of circulation, which means they can treat the backing USD as theirs again, which means the gap between the $0.98 they paid and the $1.00 value is profit.

All of this requires them to actually have the capital to do so, though, and I'd consider the lack of Tether-issued buy/sell orders at these values to be a hint at the real scenario - they don't have the capital they claim.

Re: Tether Is Breaking Its Peg to the Dollar

#63

Post by orthecreedence »

rspeer wrote: post #52
gruez wrote: post #48

Earlier quoted context omitted.

>In fact, no one has ever redeemed a single tether and there is no process in place to actually do it. It's called withdrawing at any of the exchanges that support tether.

Can you actually "withdraw" Tether as dollars at these exchanges? Or can you just pass the buck by trading Tether for other cryptocurrencies?

You cannot withdraw Tether. You can only trade it for something else on an exchange. Tether does not actually let you convert USDT -> USD. I wonder why.

Re: Tether Is Breaking Its Peg to the Dollar

#64

Post by brokensegue »

encoderer wrote: post #61
brokensegue wrote: post #47

Earlier quoted context omitted.

lots of people get value out of ponzi schemes too (until they don't)

Not the point. Why not just play straight with the facts? Nobody ever has to be able to redeem for dollars as long as exchanges keep making markets with usdt. I have no position in tether, haven’t used it, just interested in cutting thru misinformation.

the exchanges aren't the ones tasked with defending the peg though.

Re: Tether Is Breaking Its Peg to the Dollar

#65

Post by gruez »

orthecreedence wrote: post #63
rspeer wrote: post #52

Earlier quoted context omitted.

Can you actually "withdraw" Tether as dollars at these exchanges? Or can you just pass the buck by trading Tether for other cryptocurrencies?

You cannot withdraw Tether. You can only trade it for something else on an exchange. Tether does not actually let you convert USDT -> USD. I wonder why.

Presumably you can. I personally do not have accounts at any USDT exchanges, so I can't personally verify that fact. Even if all of the USDT exchange don't accept USD withdraws (which itself is unlikely because nobody would provide sell volume to them), at the very least you can trade them for "real" USD on kraken (at a few percent discount).

Re: Tether Is Breaking Its Peg to the Dollar

#66

Post by ceejayoz »

gruez wrote: post #45
hw wrote: post #36

Earlier quoted context omitted.

It doesn't help that Tether requested an audit but ended up severing ties with that audit firm [0]. It's likely Tether wanted a quick audit but the audit firm didn't want to sign their name to it so quickly without doing a deeper dive into the accounts. They've also just printed $600m in tether a few hours ago. Hopefully that's backed by actual $600m in new customer deposits. Edit: Market cap of Tether jumped $600m i…

>They've also just printed $600m in tether a few hours ago. when? https://omniexplorer.info/default.aspx?filter=grant

I've seen this claim floating around a lot.

Seems to be just https://coinmarketcap.com/currencies/tether/ getting delayed data - it jumps from $1.6B to $2.2B at 01:14 UTC on Jan 28, but Tether was printing $100M chunks during the period it shows as flat.

Re: Tether Is Breaking Its Peg to the Dollar

#67

Post by ceejayoz »

gruez wrote: post #65
orthecreedence wrote: post #63

Earlier quoted context omitted.

You cannot withdraw Tether. You can only trade it for something else on an exchange. Tether does not actually let you convert USDT -> USD. I wonder why.

Presumably you can. I personally do not have accounts at any USDT exchanges, so I can't personally verify that fact. Even if all of the USDT exchange don't accept USD withdraws (which itself is unlikely because nobody would provide sell volume to them), at the very least you can trade them for "real" USD on kraken (at a few percent discount).

> at the very least you can trade them for "real" USD on kraken (at a few percent discount)

For now. If faith in Tether collapses, no one will trade USD for that "few percent" discount anymore.

Re: Tether Is Breaking Its Peg to the Dollar

#68

Post by QML »

bhouston wrote: post #7

I am reminded of this: https://en.wikipedia.org/wiki/Black_Wednesday George Soros broke the Bank of English's attempt to maintain a minimum exchange rate for the Pound against various other European currencies. It was this experience that taught me that you can not cost free fix the exchange rate between currencies unless you are using "magic". And USDT has always seemed magical to me. BTW: https://www.coindesk.com/t…

How many pounds did Soros accumulate and later sell off to be able to break the Bank of England?

Re: Tether Is Breaking Its Peg to the Dollar

#69

Post by panarky »

bhouston wrote: post #30
petertodd wrote: post #18

Earlier quoted context omitted.

No, it's very easy to fix the exchange rate between currencies: make them actually be the same currency. Tether is supposed to be be 100% backed by USD on a 1:1 basis. If that's true, while it may temporarily go higher and lower, and should always return to normal as actual USD moves in and out of the system. The controversy about Tether is very simple: they haven't taken any steps to convince people that's actually…

Nouriel Roubini: "Like any not credible fixed exchange rate regime that is not backed by enough reserves, Tether/USDT collapses when they run out of true dollar reserves. And since Tether/USDT 1:1 peg to the US$ is the mother of all scams it will soon collapse taking Bitcoin down with it." https://twitter.com/Nouriel/status/957623357708668928

If traders lose confidence in Tether, won't they sell Tether to buy other cryptocurrencies, thereby driving the price of Tether down and the price of other cryptocurrencies up?

Re: Tether Is Breaking Its Peg to the Dollar

#70

Post by rspeer »

gruez wrote: post #65
orthecreedence wrote: post #63

Earlier quoted context omitted.

You cannot withdraw Tether. You can only trade it for something else on an exchange. Tether does not actually let you convert USDT -> USD. I wonder why.

Presumably you can. I personally do not have accounts at any USDT exchanges, so I can't personally verify that fact. Even if all of the USDT exchange don't accept USD withdraws (which itself is unlikely because nobody would provide sell volume to them), at the very least you can trade them for "real" USD on kraken (at a few percent discount).

You say "presumably you can", but according to David Gerard, there is no evidence that anyone has redeemed Tether. Only people presuming that they could if they wanted to, or people who heard of someone who heard of someone who did it.

The surprising fact is that people do buy and sell on exchanges that have no access to real money.

Trading Tether for USD on Kraken is different, and is the topic of this thread. Given that Tether cannot be redeemed, its price is free to fall as soon as traders on Kraken lose faith -- which, given that Tether has essentially failed an audit, may be happening.

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