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Tether Critical Announcement

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Re: Tether Critical Announcement

#91

Post by askmike »

Jasper_ wrote: post #73
askmike wrote: post #70

Earlier quoted context omitted.

> When you go to withdraw from Tethers it basically says "if you don't have more than $50k in claims, go away" [1]. Suffice it to say that most of their customers don't have that. This is not how most people redeem tether, they go to any of a wide range of exchanges (kraken, poloniex, bittrex, etc) and trade whatever amount (from a dollar or whatever the minimum trade amount is).

How does that prove that Tethers has USD to back each USDT? If it's all exchange-based then there's no guarantee of a peg to USD.

I 100% agree with you how risky it is and how hard to prove this is for bfx. It's very dangerous and there is a lot of money on the line (not just the tethers themselves, USDT reaches for and beyond bfx).

However I don't think it's obvious that this thing will implode, based on the information we have we can only speculate. Pointing to screenshots about being unable to withtdraw tethers is a red herring and has nothing to do with whether tether will implode.

Re: Tether Critical Announcement

#92

Post by PKop »

askmike wrote: post #37
stale2002 wrote: post #33

Earlier quoted context omitted.

Well, it is "supposedly" backed up by USD. A whole bunch of people have been questioning whether they ACTUALLY have that money, very recently, and surprise surprise, there just 'happens' to be a hack that happens right now.

Not sure if "a whole bunch of people" equates more than 5 extremely vocal people on twitter and reddit. Tether published an audit a month ago.

Can you explain why that was convincing to you?

Re: Tether Critical Announcement

#93

Post by ActsJuvenile »

patio11 wrote: post #4

If you haven't been following along, here's why this matters: Tethers is a sole-source cryptocurrency, pegged to the US dollar. Bitfinex produces it, though they're cagey (some would say outright lying at times) about the level of involvement. The primary purpose of tethers is money laundering, even more so than cryptocurrency generally. Bitfinex was cut off from the US financial system, which makes it impossible for…

Tether announcement on their own website mentions their Taiwan banks have frozen all international wire transfer since April 18: https://tether.to/announcement/

Tether has printed $600 million worth of tokens since, so either: 1) Local Taiwanese have deposited $600 million to buy Bitcoins through domestic wires, OR 2) Tether is lying and printing tokens out of thin air.

Place your bets gentlemen.

Re: Tether Critical Announcement

#94

Post by askmike »

darawk wrote: post #80
patio11 wrote: post #4

If you haven't been following along, here's why this matters: Tethers is a sole-source cryptocurrency, pegged to the US dollar. Bitfinex produces it, though they're cagey (some would say outright lying at times) about the level of involvement. The primary purpose of tethers is money laundering, even more so than cryptocurrency generally. Bitfinex was cut off from the US financial system, which makes it impossible for…

...except that Tether long predates Bitfinex's wire issues. They're usable on many of the major exchanges (Bittrex, Poloniex, for example). Tether was explicitly created for the purpose of equalizing prices across exchanges. It's indeed possible that they're insolvent, but there is no real evidence of that, just lots of people speculating incessantly without much justification. Basically everything about the parent c…

Just because tether predates the big USD wire problems does not mean it's creation was unrelated. One of the biggest risk any exchange has is compliance, specifically with the US regulators (and banks).

Even if BFX did not know this before they build their exchange, this most likely became clear from day 1. Tether is a great hedge against this (politics aside).

Could you address anything that you think is "factually incorrect"?

Re: Tether Critical Announcement

#95

Post by ActsJuvenile »

askmike wrote: post #69
polyomino wrote: post #38

Earlier quoted context omitted.

This is much easier to unwind than Mt. Gox since tether is only redeemable through the tether company. Participating exchanges have to upgrade their omni/tether clients or they run the risk of accepting the unredeemable tethers for which their customers will hold them liable. Omni's design allows tether to track all the disavowed tethers so there's no risk of payout to addresses downstream of this one.

You mean until the hacker starts sending some money to known exchange addresses and tether cold storage addresses, infecting everything? EDIT: it appears I was wrong!

Tether patch invalidates the root transaction, so child transactions don't matter. Check it out on Github.

Re: Tether Critical Announcement

#96

Post by jerkstate »

panarky wrote: post #65
cperciva wrote: post #29

Earlier quoted context omitted.

Post-script: Is this good news for Bitcoin? Oh this is great news for Bitcoin. If you don't believe Bitfinex's $600 million in liabilities are worth a copper shilling, the only option for getting your value out of Bitfinex is to swap your liability for Bitcoin, which drives up the price of Bitcoin at the margin. Correct me if I'm wrong here, but this seems to be an argument for BTC/USD going up on Bitfinex -- but not…

Oh this is great news for Bitcoin If the price of Bitcoin has been inflated by 600 million USD that doesn't really exist, then when this unwinds it will be bad news for Bitcoin.

that's about 0.6% of the market cap of bitcoin

Re: Tether Critical Announcement

#97

Post by ActsJuvenile »

sanxiyn wrote: post #58
rtpg wrote: post #40

Earlier quoted context omitted.

has anyone checked to see if this money has already spread to downstream addresses? It's possible the damage is already done and exchanges have accepted money from the poisoned address.

Check yourself. It has not moved yet: http://omniexplorer.info/lookupadd.aspx?address=16tg2RJuEPtZ...

Unless the address in question was an Exchange deposit address. In that case hacker has purchased $30mm worth of Bitcoins in a matter of hours and moved them out immediately without needing to move Tether anywhere.

Re: Tether Critical Announcement

#98

Post by iamthirsty »

darawk wrote: post #80
patio11 wrote: post #4

If you haven't been following along, here's why this matters: Tethers is a sole-source cryptocurrency, pegged to the US dollar. Bitfinex produces it, though they're cagey (some would say outright lying at times) about the level of involvement. The primary purpose of tethers is money laundering, even more so than cryptocurrency generally. Bitfinex was cut off from the US financial system, which makes it impossible for…

...except that Tether long predates Bitfinex's wire issues. They're usable on many of the major exchanges (Bittrex, Poloniex, for example). Tether was explicitly created for the purpose of equalizing prices across exchanges. It's indeed possible that they're insolvent, but there is no real evidence of that, just lots of people speculating incessantly without much justification. Basically everything about the parent c…

> without much justification.

Well, they've never proved it. Just a literal: "Hey, we promise we have the money."

So, can't really say; it's basically a Schrödinger's cat to everyone on the outside. We will only know when it booms — or busts.

Re: Tether Critical Announcement

#99

Post by iamthirsty »

ActsJuvenile wrote: post #93
patio11 wrote: post #4

If you haven't been following along, here's why this matters: Tethers is a sole-source cryptocurrency, pegged to the US dollar. Bitfinex produces it, though they're cagey (some would say outright lying at times) about the level of involvement. The primary purpose of tethers is money laundering, even more so than cryptocurrency generally. Bitfinex was cut off from the US financial system, which makes it impossible for…

Tether announcement on their own website mentions their Taiwan banks have frozen all international wire transfer since April 18: https://tether.to/announcement/ Tether has printed $600 million worth of tokens since, so either: 1) Local Taiwanese have deposited $600 million to buy Bitcoins through domestic wires, OR 2) Tether is lying and printing tokens out of thin air. Place your bets gentlemen.

> Tether is lying and printing tokens out of thin air.

$600 million bet — literally.

Re: Tether Critical Announcement

#100

Post by iamthirsty »

ActsJuvenile wrote: post #95
askmike wrote: post #69

Earlier quoted context omitted.

You mean until the hacker starts sending some money to known exchange addresses and tether cold storage addresses, infecting everything? EDIT: it appears I was wrong!

Tether patch invalidates the root transaction, so child transactions don't matter. Check it out on Github.

Not everyone has to/will update their clients, though.
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