[HN Gopher] Approx. 24 hours ago, Tether printed 1B $USDT out of...
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Approx. 24 hours ago, Tether printed 1B $USDT out of thin air
Author : hh3k0
Score : 177 points
Date : 2021-12-05 20:16 UTC (2 hours ago)
(HTM) web link (whale-alert.io)
(TXT) w3m dump (whale-alert.io)
| josefrichter wrote:
| I wonder what would happen if this proved to be scam. Would that
| kill the whole crypto market?
| kebman wrote:
| People would want to get rid of Tether and fast. One way is to
| buy real money, like Bitcoin.
| Andrew_nenakhov wrote:
| I'll probably buy a few bitcoins at $100 price point then. Just
| in case it ever grows back.
| Vadoff wrote:
| Even if it happened, I doubt it would drop lower than $10k.
| nanidin wrote:
| You and thousands of other people, thereby preventing the
| Bitcoin price from ever likely reaching $100 in the first
| place.
|
| We're living through an interesting piece of history here,
| that's for sure.
| aaronax wrote:
| Anyone holding Tether will be stuck selling it for the
| equivalent of $0.05 or whatever. This alone would have no
| effect on crypto prices.
|
| However, it will become harder to get various government-type
| currencies in to exchanges so presumably purchasing demand will
| fall, which seems like it would make crypto prices fall too.
| graeme wrote:
| 80% of crypto trades are against USDT
| sabujp wrote:
| why? a friend said it's because he doesn't have to pay tax,
| i corrected him last year. are people doing this because
| they really think they don't have to pay tax unless they
| swap to actual USDs? Or they're just hiding their USDs away
| from the IRS and other taxation entities?
| josefrichter wrote:
| That for sure. But I am more wondering about the collateral
| damage to other coins. Coz it would likely trigger sell off
| of many other coins to cover loses.
|
| On the other hand, the market cap is 75B, while ETH is 488B
| and BTC is 919B. So the impact maybe wouldn't be too drastic
| and too long lasting.
|
| I wonder if it's worth converting USDC and DAI loans to USDT,
| would be easier to repay if it did crash..
| gadnuk wrote:
| Market Cap != Liquidity
|
| 70% of the crypto volume is in USDT.
|
| From 2020 (should still hold): https://coingape.com/tether-
| dominates-exchange-trading-with-...
|
| If Tether collapses, so does USDT. If exchanges have
| majority of their volume in USDT pairs, then the market
| liquidity dries up and the whole thing collapse. Remember
| that those coins need to be cashed out for actual USD. But
| if that USD does not actually exist, what will you sell
| into?
| rglullis wrote:
| Don't forget the amount of exchanges that can not trade USD
| so they rely on USDT to deal with BTC. Tether crashing is
| going to destroy the value of BTC and it will take all of the
| alts with it. It will make Mt Gox look like a hiccup.
|
| Still, it needs to happen. Keeping Tether alive is the worst
| thing that can happen to crypto.
| rvz wrote:
| > Still, it needs to happen. Keeping Tether alive is the
| worst thing that can happen to crypto.
|
| Exactly. The next big crypto crash is waiting to happen.
| Will probably come from the debt ceiling crisis with the US
| then cracking down on Tether afterwards with the US
| government also collecting unrealised capital gains taxes;
| enough to scare the hands out of lots of investors.
|
| Tether knows they are a scam. So they are getting out while
| they can.
| Vadoff wrote:
| Kill? No. Temporarily crash? Probably.
| Oberbaumbrucke wrote:
| The price of most/all crypto would fall dramatically.
|
| Tether is a huge component of the daily traded float in BTC. If
| tether was no longer accepted at $1, there's a lot less money
| chasing BTC.
|
| These markets wil be around forever, but much less attractive
| when people start to see past the Hype.
| gadnuk wrote:
| They printed another billion just 6 hours ago:
| https://twitter.com/whale_alert/status/1467504581571751940
|
| They have become so brazen, that they will just keep printing
| billions without any audit or insight into their holdings.
|
| Their last attestation published a few days ago (by them, not by
| any independent firm) raises more questions than answers:
| https://twitter.com/dee_bosa/status/1466826912781590529
|
| They barely have any backing in actual USD and are very suspect
| in the commercial paper holdings
|
| They have a CTO who regularly engages in snarky comments when
| asked about their holdings: https://twitter.com/paoloardoino
|
| They have a CFO who has a very very checkered past:
| https://www.ft.com/content/4da3060c-8e1a-439f-a1d7-a6a4688ad...
|
| Tether has regularly been sued and settled, never won.
|
| CFTC: https://www.cftc.gov/PressRoom/PressReleases/8450-21
|
| NYAG: https://www.cnbc.com/2021/02/23/tether-bitfinex-reach-
| settle...
|
| DOJ: https://www.bloomberg.com/news/articles/2021-07-26/tether-
| ex...
|
| Moreover, they roped in a nation state (El Salvador) to issue
| bonds that fund El Salvador's Bitcoin City to be issued on
| Blockstream's Liquid Network and processed by iFinex, the
| controversial company behind Tether.
|
| https://blockworks.co/el-salvador-plans-bitcoin-city-funded-...
|
| To add to that, the SEC denied creation of VanEck's bitcoin-
| backed ETF because of risks associated with Tether
|
| https://www.ft.com/content/77bc7296-9bd4-4ea4-bab9-91cee789e...
|
| From the article: "Among the concerns the SEC raised in the
| disapproval order included possible "wash trading", when the same
| institution is on both sides of the trade, generating extra fees
| for minimal risk; potential price manipulation by whales who
| dominate bitcoin; and possible "manipulative activity involving
| the purported 'stablecoin' Tether".
|
| The list keeps going on and on and on...
| rsp1984 wrote:
| Can anybody with an understanding of the matter ELI5 to me how it
| can be that, given all the uncertainty, 1 Tether is still trading
| for ~1 USD on the major exchanges? That price seems to be
| determined by the open market. There are competing stablecoins.
| Is everybody just so confident that Tether is the real deal?
| zatertip wrote:
| No short of sufficient size yet
| gruez wrote:
| How would a short change things? If it did push down the
| price, all that would mean is that tether could rebuy them at
| a discount and make a profit.
| teh_infallible wrote:
| It certainly is strange that Tether hasn't been shut down for
| counterfeiting, which is essentially what they are doing.
|
| I assume people in the banking industry allow them to operate
| as a way to hold leverage over the crypto markets and absorb
| capital that would otherwise flow to altcoins.
| gruez wrote:
| > It certainly is strange that Tether hasn't been shut down
| for counterfeiting, which is essentially what they are doing.
|
| It really isn't counterfeiting. If you made fake hundred
| dollar bills and passed them off, that'll be counterfeiting.
| However, if you decided to give a bunch of people $100 IOUs
| and claim they're "totally backed by real dollars in a vault
| somewhere", but they're not, then it's just fraud. The NY AG
| and/or CFPB were able to prosecute/fine them for that, but
| they also got rid of the "totally backed by real dollars in a
| vault somewhere" claim, so whether they're currently
| committing fraud is unclear.
| leoh wrote:
| You can't pull a rug out from under your own feet
| repomies69 wrote:
| There are some other stablecoins, like USDC (about half the
| size of Tether. Why would Tether need to be closed down while
| USC not? Or do you think all of them should be shut down?
|
| Tether is just an IOU note. I don't have problems with IOU
| notes, unless someone forces me to use them. Personally I
| haven't used tether and probably never will, however I don't
| have any problem if someone else wants to use it.
| arez wrote:
| you don't understand the problem of printing IOUs and
| buying btc with it. You don't have to care, but you will if
| everything goes to zero
| Qworg wrote:
| Why do you assume the price is determined by the open market?
| Who are the large scale crypto entities that would bet against
| Tether?
|
| This happens every time the price dips, but the current best
| explanation/theory is that Tether prints more USDT with BTC
| backing from exchanges, who then use that USDT to buy BTC from
| the market. The issue is that the exchange is part of that
| loop.
| babyshake wrote:
| When it says out of thin air, it means that is some verifiable
| confirmation of no collateral? Or is the "out of thin air" part
| just means normal minting?
| wmf wrote:
| Tether is super shady but this headline is unnecessarily
| editorialized. Also, this USDT is "authorized but not yet
| issued" so technically it only needs to be backed once it's
| issued. https://tether.to/tether-issuance-primer/
| https://thecaspiancey.medium.com/understanding-tether-missio...
| diveanon wrote:
| This is the only knowledgeable answers in this thread.
|
| Minting is the first step in the process.
| JohnHaugeland wrote:
| Lol, are you demanding people prove collateral doesn't exist,
| after the other collaterals they lied about became so clear
| with time?
|
| .
|
| "Or is the "out of thin air" part just means normal minting?"
|
| There is no normal minting with a coin that claims to be
| verifiably one to one backed by hard assets.
| poetically wrote:
| No one has seen any of their collateral or knows how much of it
| they actually have. I believe the finance people call this
| being over-leveraged but I'm not an expert. Seems kinda weird
| that the SEC hasn't looked into it.
| spookthesunset wrote:
| I mean to be fair, they did have an auditor back in 2018. But
| the auditor quit before completing their investigation.
|
| Auditors quitting is never a good sign.
|
| https://www.coindesk.com/markets/2018/01/27/tether-
| confirms-...
| gadnuk wrote:
| It's even worse than that. Tether fired that auditor
| (Friedman LLC) because they were looking into it in a bit
| more detail.
|
| From the very same article: "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."
|
| Even Friedman LLP says in the internal memo "Do not rely on
| this report".
|
| It's been almost 4 years since that and no independent firm
| has ever audited Tether.
| christophilus wrote:
| I think the SEC would have to first establish it as a
| security, no? It's currently in a legs grey area.
| poetically wrote:
| I don't know. I'm not an expert but seems like there should
| be some institution that figures out whether financial
| games like stablecoins are actually economically beneficial
| and whether they should be regulated in some way or other.
| spuz wrote:
| The US treasury released a report on stablecoins last month
| warning that a run on them could disrupt the wider financial
| system:
|
| > In addition to market integrity, investor protection, and
| illicit finance concerns, the potential for the increased use
| of stablecoins as a means of payment raises a range of
| prudential concerns. If stablecoin issuers do not honor a
| request to redeem a stablecoin, or if users lose confidence
| in a stablecoin issuer's ability to honor such a request,
| runs on the arrangement could occur that may result in harm
| to users and the broader financial system. Further, to the
| extent stablecoins are widely used to facilitate payments,
| disruptions to the payment chain that allows stablecoins to
| be transferred among users could lead to a loss of payments
| efficiency and safety and undermine the functioning of the
| broader economy. The potential for stablecoin arrangements to
| scale rapidly raises additional issues related to systemic
| risk and concentration of economic power.
|
| I see this as the government equivalent of shouting from the
| rooftops. It's just a shame no one will treat it that way.
|
| https://home.treasury.gov/system/files/136/StableCoinReport_.
| ..
| joering2 wrote:
| Half a billion $ is printed everyday by BEP. (just to compare)
| advisedwang wrote:
| Half a billion, of which 95% is replacing older money going out
| of circulation. So really the comparison is 25MM.
| sabujp wrote:
| So something like this? 0. Mint dollars backed
| by nukes and military and in anticipation of GDP growth
| 1. Create new cryptos out of thin air to suck in dollars
| 2. Mint USDT in *anticipation* of swaps from non-stable cryptos.
| No dollars have actually been deposited yet! 3. USDTs
| actually come in? maybe, maybe not, maybe fuck yourself.
| 4. Loan out USDT to hedge funds for crypto futures trading.
| 5. Give back portion of interest to people who stashed the USDT.
|
| 2-4 is where it gets sketchy.
| jagger27 wrote:
| Can someone explain why this is on the "TRON" blockchain? I
| thought Tether was on Ethereum.
| wmf wrote:
| Tether operates on a bunch of chains including Ethereum, TRON,
| and Omni.
| cliftonk wrote:
| TRON is used for tether payments in Southeast Asia, so there's
| a decent amount of volume there. These tether takes eg "printed
| out of thin air" etc are tiresome. They also do billions in
| redemptions. Even if half their commercial paper was in Chinese
| real estate developers (which I think is a dumb rumor), it's
| still likely they end up 90%+ collateralized if everything
| suddenly moved against them. Around halfway thru this podcast
| Sam bankman-fried + Matt Levine do some scenario analysis
| https://open.spotify.com/episode/2Oy0ZRklDSMMu40PTDiyOd?si=M...
|
| My take on all of it is that the tether doomers have no idea
| what they're talking about. Even the UT finance professors'
| charts can be explained by the simple idea that people that
| made a lot of money in crypto wanted to take some of it off the
| table.
| MisterBiggs wrote:
| Just about every Ethereum competitor has some equivalent to
| ERC20 tokens. I'm surprised Tether dedicated 1 Billion USDT to
| TRON but its likely because they don't think there will be any
| repercussions for creating liquidity out of thin air.
| qeternity wrote:
| A huge amount of Tether is TRC20 (if memory serves, the
| majority). Tron is very China centric, and Tether has massive
| connections to Chinese capital control evasion.
| tzone wrote:
| Nah, most of USDT is on TRC20 because gas fees are way
| cheaper there and most of the exchanges support withdrawing
| USDT using TRC20.
|
| So all arbitrageurs, market makers, etc, transfer USDT
| between different entities through TRC20 network. USDT on
| TRC20 started to increase only after Ethereum gas fees got
| ridiculously high and it became too expensive to use even
| for pretty high volume market makers.
| qeternity wrote:
| Absolutely not. Large Tron issuances started well before
| Ethereum gas fees soared. We are talking a couple of
| years ago.
|
| Also, market makers moving Tether around do not give two
| shits about $60 in gas fees or whatever. Additionally, a
| huge amount of Tether has gone into DeFi on Ethereum and
| L2s (or bridged to newer L1s, which typically don't have
| a Tron bridge).
| leishman wrote:
| Because it's faster and cheaper
| josefrichter wrote:
| In fact Tether is on pretty much all chains.
| Asparagirl wrote:
| The ice-nine of crypto.
| alpha_squared wrote:
| Every time there's a tether story here, the inevitable discussion
| of fraudulent activity comes up because Tether seems like an
| outright scam. I'm inclined to believe all that from what I've
| read and however little I can make sense of. However, I can't
| really tell how this ends. They seem confident that there will be
| no repercussions to minting money out of thin air and, so far,
| they've been right.
|
| Eventually, that's bound to catch up, but I suspect it's going to
| hurt a lot more than just those with crypto assets and hurt a lot
| of those without crypto assets, no?
| joe_the_user wrote:
| _They seem confident that there will be no repercussions to
| minting money out of thin air and, so far, they 've been
| right._
|
| Tether and bitcoin have been very robust, bitcoin has crashed
| and recovered many times now. But I have to say that every
| single bubble has involved the statement "so far, they've been
| right." as the follow-up to "this time things are different".
| bb88 wrote:
| Right now I think a good analogy is it's like musical chairs.
| The game is fine as long as the music is playing. When the
| music stops, someone's gonna lose big.
|
| The problem is when the music stops and there's a run on
| crypto. People are trying to get out of $USDT and convert it
| into cash. Exchanges have to have buyers of $USDT so they can
| exchange $USDT back into cash for anyone that wants to. But
| they can't just create dollars out of thin air. If there's no
| buyers for $USDT anymore than the "currency" flatlines, it's no
| longer tied to the dollar.
|
| If Tether were truly backed 1:1, Tether itself could just buy
| $USDT with its own cash on any exchange, and that would be
| enough to keep their currency afloat and stop the run.
| notjesse wrote:
| This makes me think; what if you shorted USDT?
|
| There seems to be almost no scenario where USDT becomes more
| valuable than the USD, and the worst case is it continues to
| be worth the same.
|
| But there is a fair probability it becomes worthless, meaning
| that you gain from it.
|
| While you need to pay premiums in the interim, for something
| with an indefinite timeframe, that risk seems fairly minor
| for the potential reward.
| wmf wrote:
| I just realized Tether is now bigger than Madoff.
| peakaboo wrote:
| This also means that nobody needs to be poor. Anyone can just
| get some money since its tied to nothing.
| rp1 wrote:
| Relative scarcity is a necessity for any currency.
| peakaboo wrote:
| Of course but you could give people some free money
| nevertheless and it would make the world a better place.
|
| What do you think would happen if you gave 1000 dollars to
| each person in America every month? I think a lot of good
| would come from that and not much bad.
| est31 wrote:
| I'm in favour of UBI, but note that it'd require
| extremely strict immigration policy as well as good
| enforcement of it, which is generally something the left
| very much dislikes.
|
| As already seen with covid aid, people wouldn't work in
| low wage jobs any more. This would lead to inflation or
| disappearance of some amenities. E.g. you might have to
| put your groceries into your bag yourself, or might have
| to pay a dollar extra for that service. This isn't
| something negative though, just a neutral change I guess.
|
| It would help a lot of poor and suffering people, but
| note that even in countries with good unemployment
| benefits, homeless people still exist.
| dragonwriter wrote:
| > I'm in favour of UBI, but note that it'd require
| extremely strict immigration policy as well as good
| enforcement of it
|
| What do you mean by "strict" and why is this inaginee5 to
| be necessary? Note that UBI is usually envisioned with a
| defined population but the absence of means or behavior
| testing within that population, either "citizens" or
| "citizens and LPRs" or "citizens and aliens with work
| authorization" or "citizens and aliens with satisfactory
| immigration status in a specific set of visa categories
| based on basis and duration" would all be valid
| populations, with wildly different impacts on the
| viability of UBI with any given immigration policy.
|
| > I'm in favour of UBI, but note that it'd require
| extremely strict immigration policy as well as good
| enforcement of it,
|
| COVID aid isn't like UBI, critically, key parts of it
| (enhanced unemployment) are conditioned on absence of
| work or reduction of it below pre-benefits levels, and
| thus forces people to choose between benefits and work.
| This is the kind of incentive with means tested benefits
| that UBI is intended to fix.
| est31 wrote:
| To your first point, regardless of which class of people
| you consider for UBI inclusion, even if you only consider
| citizens of the USA, it will have a tremendously
| attractive effect for billions of people around the
| globe. Even now quite many people want to immigrate in to
| the USA and the USA has multiple systems designed to keep
| them out, but UBI will make this _way_ worse, which is
| why I said that enforcement needs to be very strict.
|
| Plus I'd say it would be even more unfair for the
| undocumented immigrants than it is now because they would
| not get any UBI. But if you gave UBI to the undocumented,
| way more people would attempt to become undocumented
| immigrants, by overstaying their visas, etc. Which then
| probably will lead to you having to issue less short term
| visas, or actually deporting undocumented immigrants.
| elzbardico wrote:
| Where did it came from? From taxes? Then ok, it probably
| would work.
|
| Now if it came out of thin air, right from the printing
| presses, a whole lotta hurt of inflation
| opinion-is-bad wrote:
| That's not free money; it's money taken from people under
| threat of violence.
| SantalBlush wrote:
| Not agreeing with the parent comment, but I fail to see
| how printing money and distributing it involves violence.
| thaumasiotes wrote:
| The USA actually does have laws against creating anything
| that might be interpreted as competing with the official
| currency. This is the most likely avenue for violence to
| come in, as people try to resist devalued money by using
| substitutes.
| SantalBlush wrote:
| Holding crypto is legal in the US, so again, I fail to
| see how this involves violence.
| secondcoming wrote:
| A loaf of bread would cost $100
| ant6n wrote:
| True. Since once there will be a UBI, the demand of bread
| will go waaaay up. People will eat 100,000 calories a
| day.
| atdrummond wrote:
| A UBI doesn't necessarily result in inflation. The later
| is a combination of monetary policy and expectations.
| UBIs can be paid by means other than printing money.
| rzz3 wrote:
| Yes, providing money without any attached good or service
| or unit of value definitely won't cause inflation/s WHAT?
| atdrummond wrote:
| Huh? Do you think welfare transfer payments cause
| inflation?
| zhoujianfu wrote:
| The thing is, inflation caused by printing money AND
| distributing it directly and every to all people is
| fine... it's just the most efficient / progressive wealth
| tax!
|
| Even if (printing and then) giving everybody $40K/yr
| caused, say, 40% inflation, anybody making under
| $100K/year would be better off. You actually wouldn't
| need any taxes if the government just printed all money
| it needed, hopefully most of which is in the form of
| direct checks to all residents/citizens.
| gruez wrote:
| >it's just the most efficient / progressive wealth tax!
|
| no, it's not a wealth tax. it's a cash tax. if you
| printed money and caused 100% inflation, that'll just
| cause every scarce asset (eg. houses, stocks, gold) to
| double in price. Since the rich hold most of their wealth
| in assets, not cash, I doubt it will be fair or
| progressive.
| AnthonyMouse wrote:
| They're also the best (and possibly only equitable) way
| of distributing money that you're going to print anyway
| for e.g. economic stimulus.
| sombremesa wrote:
| > I think a lot of good would come from that and not much
| bad.
|
| Here something that'd happen - the homeless in
| encampments would get hoovered up by slumlords who put
| them in squalor and consume their $1k checks. Poor people
| would have more children because each child = $1k/mo,
| even if they have to wait 18 years. Abduction would be
| easy - the ransom pays itself over time. Fraud would be
| rampant. The ultra poor underclass who are undocumented
| would still get nothing, further exacerbating the divide.
| atdrummond wrote:
| Not a single legitimate theoretical or experimental
| economics research paper supports these extreme claims
| for the effect of a UBI.
| SamoyedFurFluff wrote:
| " Abduction would be easy - the ransom pays itself over
| time. Fraud would be rampant."
|
| Do we have any evidence that abduction and fraud is
| rampant in countries in Western Europe, known for the
| very generous social programs? Are they exploding with
| poor people having kids??? Is it dangerous to live in,
| idk, Sweden because someone is gonna kidnap you for your
| social bux? I'm genuinely asking because the notion of
| rampant abducting and child having hasn't happened in
| countries I know of with very generous social programs.
| tonguez wrote:
| Your first sentence is grammatically incorrect and
| incoherent.
|
| "Poor people would have more children because each child
| = [$$$]"
|
| A lot of poor people already do this for this exact
| reason.
|
| "The ultra poor underclass who are undocumented would
| still get nothing"
|
| Should a person be allowed to enter Japan, refuse to
| leave and then demand the Japanese people pay them $1k a
| month?
| kwertyoowiyop wrote:
| The previous commenter thought he could get away with
| omitting "/s" and has been proven wrong.
| analog31 wrote:
| The major government money systems are tied to the short term
| expected behavior of major governments.
| fennecfoxen wrote:
| "Poverty" is not about how much money you have, income or
| wealth. The only reason money matters to poverty or to human
| well-being is when that money can buy something meaningful.
| If we find we are able to forget this, it stands as a
| testament to the remarkable stability of modern fiat
| currency.
|
| Marking arbitrary large numbers in digital ledgers,
| blockchain or otherwise, does not cause prosperity. When
| everyone has infinite money, no one has any money at all,
| they just have their things.
| superjan wrote:
| Beyond the fraud allegations, the idea that an organisation can
| just print extra money as they see fit, doesn't that go against
| the principles of crypto finance? I am genuinely curious why
| people think that is a sustainable idea.
| wmf wrote:
| Tether claims that they are not printing money. Whether they
| follow their own rules is disputed, but there are rules.
| [deleted]
| Oberbaumbrucke wrote:
| Few understand this
| aaronax wrote:
| What are the principles of crypto finance?
|
| Who thinks Tether is sustainable?
|
| Tether is just someone with digital Monopoly (game) money
| basically.
| gruez wrote:
| >Beyond the fraud allegations, the idea that an organisation
| can just print extra money as they see fit, doesn't that go
| against the principles of crypto finance?
|
| or maybe the crypto community isn't a monolith, and all the
| cryptoanarchists aren't the people who hold/support tether?
| dathinab wrote:
| > principles of crypto finance
|
| There isn't really such a think.
|
| There are many crypto currencies with different goals and
| approaches to handling market dynamics. And there are some
| where doing such a think is fully against there principles
| and would brake their marked dynamics. But not necessary for
| other reasons. But this also means you need to look at the
| specific crypto system in question to decide why it might or
| might not work.
|
| I don't know much about Tether specifically, but lets say you
| have a new arbitrary crypto currency you try to make price
| stable, but like many crypto currencies it end up having
| deflationary tendencies (more demand, money getting "locked"
| in, etc.). In which case minting new coins would not only be
| sustainable but likely necessary.
| javert wrote:
| Bitcoin is principled. Crypto is not principled.
| beaconstudios wrote:
| Bitcoin is also not principled. Plenty of people are just
| speculating and trying to not be the bagholder.
| javert wrote:
| You can't keep traders from trading bitcoin. That doesn't
| mean bitcoin is unprincipled. It's in the whitepaper and
| the design of bitcoin. For example, the 21M btc supply
| limit. Bitcoin's design reflects a certain ideology about
| money.
| threepio wrote:
| Bitcoin: by limiting issuance to 21M we have made price
| manipulation of our currency impossible
|
| Tether: hold my beer
| gruez wrote:
| >Bitcoin: by limiting issuance to 21M we have made price
| manipulation of our currency impossible
|
| At what point did people claim that "price manipulation
| of [bitcoin]" was "impossible"? I think you're mistaking
| "price manipulation" with "dilution" (eg. quantitative
| easing or debasing).
| beaconstudios wrote:
| Technologies don't have principles, people who use them
| have principles; the people who buy and sell bitcoin are
| mostly the same as the other cryptocoins.
|
| Satoshi intended certain principles with the creation of
| bitcoin, but these are not the predominant driver of its
| use in actuality.
| tinco wrote:
| The principles of crypto finance? Cryptocurrencies are not
| built on principles, they are built on technologies. The only
| unifying principle across all cryptocurrencies that I've
| noticed is that you access your assets through a
| cryptographic hash. You could launch USD+SEPA+your banks
| online banking interface today and call it a cryptocurrency,
| it's as much a cryptocurrency as for example Ripple is.
|
| edit: ok the other "principle" might be that all (most?)
| cryptocurrencies are independent from government, they are
| owned and managed by individuals, companies and groups of
| people/devices (if you're lucky).
| alpaca128 wrote:
| Yes, Tether comes with a ton of suspicious circumstances and
| leadership that just nervously repeats the phrase "the money is
| there!" in interviews. A YouTube channel named Coffeezilla has
| been doing some great reporting & investigations on it (and
| many other crypto scams). It's insane what's going down on the
| crypto market, including influencers selling unmarked ads for
| currencies.
| Eji1700 wrote:
| " They seem confident that there will be no repercussions to
| minting money out of thin air and, so far, they've been right."
|
| For the most part the crypto market being unregulated means
| that there can't be any consequences, except for market
| consequences. And market consequences are vaaaaastly worse.
| It's basically like having no one make you wear a seat belt.
| Sure seems fine until you're just dead.
| lumost wrote:
| It's still a great deal for the perpetrators to only make 1MM
| in liquid capital after defrauding billions. Non-market
| consequences of theft include jail time and forefeiture of
| funds outside of an LLC.
| IronWolve wrote:
| https://protos.com/tether-papers-crypto-stablecoin-usdt-inve...
| bee_rider wrote:
| "$USDT" seems intentionally named to confuse people and imply
| that there's some relationship to, like, actual dollars. Has the
| US government ever sued somebody for trademark infringement?
| gruez wrote:
| 1. Is that actually confusing? The first time I saw "USDT" on
| an exchange, it was immediately obvious that it wasn't real US
| dollars, mainly because of the extra "T". If I logged onto my
| wells fargo account and saw that my balance was in USDW ("W"
| for wells fargo), I'd be pretty concerned as well.
|
| 2. does the federal government even hold a trademark on "USD"?
| wmf wrote:
| If they couldn't stop eurodollars back in the day maybe they
| can't stop USDT for the same reason.
| jeraldv wrote:
| There still has yet to be any verification of anything backing
| Tether. It is likely to be literally thin air.
| randyrand wrote:
| All of crypto is literally out of thin air.
|
| I feel like i'm taking crazy pills.
| Asparagirl wrote:
| At least with tulips you could plant a nice garden. And if you
| could keep the deer and voles away, they would slowly multiply
| over time, with no quantitative easing needed at all, just sun,
| rain, and good soil.
| lbotos wrote:
| Is this right:
|
| The problem with tether is a lot of crypto use it as sort of an
| "on-chain peg" and some people trade "real value crypto"
| (bitcoin) for tether. It's not a problem until the actual tether
| holders can't cash out to fiat.
|
| The secondary effect is that tether may be pumping the price of
| all crypto everywhere because it's so ubiquitous.
|
| Do I have this right? I'm mostly stuck on the "value" of tether
| beyond some sort of "accounting" or "tax avoidance" (no judgement
| here, trying to figure out why ppl would have tether's instead of
| "actual crypto".
| Osiris wrote:
| If one is using something like Uniswap to exchange crypto, you
| cannot go directly to Fiat, so people that want to sell a token
| or Ethereum will trade the asset for USDT and then later trade
| the USDT for another asset when the price has dropped.
|
| It's just a way to buy and sell crypto with an intermediate
| asset that has almost no price volatility.
| pmontra wrote:
| So what happens if the owner of that billion attempts to convert
| one thousand into USD?
| TheDudeMan wrote:
| They get one thousand USD (but I think they need to wait until
| a 3rd party wants to do the trade). That works right up until
| the inevitable collapse. Anyone who holds Tether is a fool.
| That's even dumber than buying an NFT.
| poetically wrote:
| This is the bottle imp paradox:
| https://boingboing.net/2019/02/07/the-paradox-of-the-
| bottle-.... The crash is far enough in the future that people
| don't worry about buying into USDT because they think they
| can sell it off before the inevitable crash.
| gitfan86 wrote:
| They never will. There is no liquidity. How many crypto people
| have cashed out all of their money? The scam is to build up
| this community of people who are convinced that the USD is
| going to be worthless in the future and that crypto is going to
| be only way of buying things in the future. Like Maddof there
| is no end game, just keep telling people that their gains exist
| and that they are idiots if they cash out, forever.
| [deleted]
| tzone wrote:
| People who have no idea how crypto markets work always get riled
| up by these tweets. Contrary to popular belief, there is
| generally huge demand spike for USDT when crypto market has flash
| crashes, not other way around.
|
| More USDT got issued because there was opportunity to make
| 0.1-0.2% on each new USDT since demand for it was that high (i.e.
| people were paying real USD to buy USDT at a premium, imagine
| that).
|
| USDT (and USDC) demand spikes during crypto crashes because
| people actually cash out to these instruments because they are so
| widely used and trusted by actual market players. People aren't
| cashing out of crypto ecosystem during most crashes, money
| actually stays in crypto networks.
| qeternity wrote:
| > Contrary to popular belief, there is generally huge demand
| spike for USDT when crypto market has flash crashes, not other
| way around.
|
| This is not contrary to popular belief at all. Tether almost
| always prints a few billion around large pullbacks, and the
| cynical view is that this is to stabilize markets by buying the
| dip.
|
| > More USDT got issued because there was opportunity to make
| 0.1-0.2% on each new USDT since demand for it was that high
| (i.e. people were paying real USD to buy USDT at a premium,
| imagine that).
|
| Uh yeah this is not at all how stablecoin premia get arbed. If
| you'd like a real answer, I'd be happy to explain. But I get
| the feeling that you're pretty invested in crypto and just want
| answers which align with your beliefs.
| mangoman wrote:
| Some of these transactions on whale alert are extremely
| interesting -
|
| https://whale-alert.io/transaction/bitcoin/be11f0e7c040a3f5c...
|
| https://whale-alert.io/transaction/bitcoin/28bfa6497df054f42...
|
| someone has been moving the same number of bitcoin between
| wallets like hot potato between wallets, about $730 million
| dollars. Why?
| throwaway4good wrote:
| Data on the major stable coins are available on coinmarketcap -
| click market cap, one month:
|
| https://coinmarketcap.com/currencies/usd-coin/
|
| https://coinmarketcap.com/currencies/tether/
|
| Tether's market cap - or dollar supply goes from 72 to 75B - up
| 3B USD.
|
| USD Coin (related to Circle and Coinbase) goes from 34B to 41B -
| up 6B USD.
| seaourfreed wrote:
| We are closer to them collapsing
| cmckn wrote:
| I understand why stablecoins exist, but doesn't an operation like
| Tether go against the decentralization goal of "crypto"? The fact
| that the ecosystem has become dependent on these types of players
| is interesting to me. Why hasn't the community demanded even
| basic transparency about their operations? It seems to be totally
| exempt from the pious expectations of other crypto projects.
| BrissyCoder wrote:
| Most of the crypto heads on Twitter actually seem to believe
| that it is properly backed. But you know, you're judging the
| opinion of people who invest in cartoon apes.
| qeternity wrote:
| > Most of the crypto heads on Twitter actually seem to
| believe that it is properly backed.
|
| I don't think anyone genuinely believes this. But as long as
| everyone knows the game, but the peg holds and their bags are
| pumped, then nobody cares.
| BrissyCoder wrote:
| Nah. It's backed by cash and cash equivalents mate.
| natch wrote:
| So in other words, long term, it's backed by toilet paper.
| BrissyCoder wrote:
| I think that kind of paper wouldn't make for a very
| comfortable ass wiping so no - lacking the utility of TP.
| pezzana wrote:
| And? So what?
|
| If that quantity of Tether (1/75 of the float) were dumped into
| the open market for USD, you'd expect to see the USD change rate
| fall. That clearly hasn't happened. The rate has been very close
| to 1:1 forever.
|
| There's this unsubstantiated conspiracy theory that as I gather
| goes like this: Tether prints tokens, uses them to buy bitcoin
| when the USDBTC exchange rate falls. These Tether issuance spikes
| always happen after BTC corrections, and this is taken as
| evidence of pumping USDBTC.
|
| The problem is that if there were legitimate buying of BTC with
| Tether, which is plausible after the ass-whooping USDBTC has
| taken recently, new Tether would need to be issued to keep the
| 1:1 peg.
|
| Sources critical of Tether IMO don't provide the evidence needed
| to distinguish the two scenarios.
| qeternity wrote:
| > The problem is that if there were legitimate buying of BTC
| with Tether, which is plausible after the ass-whooping USDBTC
| has taken recently, new Tether would need to be issued to keep
| the 1:1 peg.
|
| Um, no. Not sure how you think markets work, but this isn't
| right. Suggest you ask yourself if you really understand this
| topic, or if you own some crypto and thus have an incentive to
| believe you understand it so that you can dismiss it and enjoy
| the sweet crypto gainz.
| chpatrick wrote:
| > If that quantity of Tether (1/75 of the float) were dumped
| into the open market for USD, you'd expect to see the USD
| change rate fall.
|
| Not if the small amount of people who want to redeem their
| Tethers for USD or vice versa are able to. Everyone else will
| happily trade at that rate as long as they feel confident what
| they own is equivalent to a dollar. The problem is if everyone
| suddenly wants their money back and it turns out it doesn't
| exist.
| throwvirtever wrote:
| > [I]f there were legitimate buying of BTC with Tether, which
| is plausible after the ass-whooping USDBTC has taken recently,
| new Tether would need to be issued to keep the 1:1 peg.
|
| Can you explain in detail why new Tether would need to be
| issued?
| qeternity wrote:
| It wouldn't. OP doesn't understand.
| fredgrott wrote:
| I have some very exclusive Dutch Tulips to sell you for small
| amount, they will go up
|
| (side-ways glance) how do we short this?
| bob332 wrote:
| Who cares. Let the fools waste their money
| mrtweetyhack wrote:
| So now they need to pay taxes on that
| [deleted]
| wc- wrote:
| Regarding this "print":
| https://twitter.com/paoloardoino/status/1467504705857335302?...
|
| "PSA: 1B USDt inventory replenish on Tron Network. Note this is a
| authorized but not issued transaction, meaning that this amount
| will be used as inventory for next period issuance requests and
| chain swaps."
|
| The tether CTO routinely comments on these seemingly large moves
| because people get very worked up about them.
|
| Why does tether seem to bring out the tinfoil theories from
| people that have absolutely 0 background in finance or crypto
| market structure or econ in general.
| wmf wrote:
| Tether could allay these concerns by getting audited and
| cleaning up all the investigations against them.
| FDSGSG wrote:
| > cleaning up all the investigations against them
|
| This makes it pretty obvious that you're not arguing in good
| faith. I guess you would have given Steven Hatfill or Wen Ho
| Lee the same advice?
| qeternity wrote:
| Lol Tether's own attestations make mention of the numerous
| open investigations.
|
| There's no good faith argument to be had. It's just a
| matter of fact.
| FDSGSG wrote:
| The idea that one could just "clean up" government
| investigations is downright ridiculous. That's not how it
| works, no matter how innocent you may be.
| qeternity wrote:
| > Why does tether seem to bring out the tinfoil theories from
| people that have absolutely 0 background in finance or crypto
| market structure or econ in general.
|
| Hilarious. People with backgrounds in finance are for the most
| part the group of people that have made an issue about this,
| myself included.
|
| But more curiously, I'm not even sure what you're attempting to
| to convey with this comment? Do you think that a background in
| finance, or econ, is necessary to understand the incredibly
| simple business that Tether operates, and the even simpler
| reasons of why it is likely problematic (if not an outright
| fraud)?
| edoceo wrote:
| Is this the Billion that was invested into the Trump social?
| csomar wrote:
| To put this into perspective
|
| 1. 1 billion is just 1.33% of the total USD Tether has issued.
|
| 2. USDC also issued 1bn in the last 24 hours.
| santhoshnarayan wrote:
| source re usdc?
| gadnuk wrote:
| Actually $1.9 billion USDC was printed since the dip.
|
| And $2 billion USDT
|
| Source: https://twitter.com/LucaLand97/status/146759165687049
| 4210?s=...
|
| Source for USDC prints: https://twitter.com/usdcoinprinter
| rglullis wrote:
| Circle has passed multiple audits. Coinbase is a company that
| managed to at least convince the SEC they are doing things
| correctly. Also important, no one from Circle/Coinbase
| leadership is missing, incommunicado or in hiding.
| qeternity wrote:
| > Circle has passed multiple audits.
|
| Circle has absolutely never been audited. Circle, like
| Tether, has published attestations, which do not remotely
| approach the thoroughness of an audit.
| seibelj wrote:
| I worked at Circle. If you think that Jeremy Allaire is
| going to go to federal prison, you are out of your mind.
| Their combined in-house plus external legal teams are
| larger than 95% of the YC startup headcounts. The US
| government has been all over them for years.
| qeternity wrote:
| > I worked at Circle. If you think that Jeremy Allaire is
| going to go to federal prison, you are out of your mind.
|
| You're making massive leap in logic. I completely agree
| with you. Regulators have been absurdly slow to react,
| and I think that both Circle and Tether will probably end
| up just fine, at least legally. There may be a
| cataclysmic breaking of the peg but ultimately it will be
| retail that gets slaughtered. Tether's own terms from day
| 1 have basically told you that all you're getting from
| them is something that hopefully someone else will value
| for close to $1.
|
| I think these guys are pretty iron clad. Doesn't change
| the fact that Tether has almost certainly played a key
| role in manipulating crypto higher, on the mild end by
| providing leverage through crypto collateralized loans,
| and at the serious end by outright fraudulently printing
| Tether.
| rglullis wrote:
| Ok. I stand corrected. Call them attestations.
|
| Nonetheless, they have been done by independent third-
| parties who are a lot more reputed than whatever has
| actually managed to look into Tether's data. Even if you
| take the "attestation" done by Tether at face value, it
| showed a mix of assets that is absolutely unhealthy.
| qeternity wrote:
| Cool. So you clearly have no idea what an attestation is,
| or why the fact that it's not an audit is so important.
|
| > Nonetheless, they have been done by independent third-
| parties who are a lot more reputed than whatever has
| actually managed to look into Tether's data.
|
| Like the New York Attorney General? Go read the NYAG
| settlement. Tether got an attestation by wiring in $850m
| of Bitfinex's cash to their account the morning before an
| attestation, and then wiring it back to Bitfinex
| immediately after. The attestations merely state certain
| very shallow facts like "at this point in time, there
| were $X assets in an account". They do not audit the
| source and ultimate ownership of those things.
|
| Look man, I get that you want someone to pump your bags.
| But sometimes it's best to just bite your tongue. Tether
| doesn't have any defense. They may be totally legit, and
| if they are, it's totally indefensible to act this way.
| And if they're not legit, well...
| rglullis wrote:
| > Tether doesn't have any defense
|
| I am not defending Tether, quite the opposite. My only
| argument is in favor of Circle, and even then admittedly
| in terms of "Circle at least provides a better _sense_ of
| legitimacy ".
|
| > I get that you want someone to pump your bags.
|
| Sure, I will make a fortune by shilling USDC. /s
|
| Anyway, you are right. I was under the impression that
| Circle was doing proper audits, and if that is not true,
| we need more people and exchanges pressuring them to do
| or to stop using it.
| vesinisa wrote:
| Wrong, USDC has never been auditted. They do publish a
| monthly "attestation" by an independent accountant that seems
| to amount to tautologically saying that they are satisfied
| that Circle is not engaged in fraud IF the account balances
| provided by Circle are truthful: https://www.centre.io/usdc-
| transparency
| skookum wrote:
| More perspective:
|
| - A year ago 1B USDT would have been more than 5% of it's
| market cap.
|
| - A year ago 1B USDC would have been 33% of it's market cap,
| today it is 2.5%.
|
| A lot of stablecoin mintage has occurred over the past year.
| unixhero wrote:
| Are tethers on Tron now??
| quangv wrote:
| I kinda of think this is causing the current housing prices
| bubble.
| newsbinator wrote:
| Please elaborate
| [deleted]
| lilSebastian wrote:
| Care to explain?
| jeraldv wrote:
| More generally, this concept of creating money out of thin air,
| yes.
| intuitionist wrote:
| Tether's total (on-chain) liabilities sum to a bit less than
| two months' worth of Federal Reserve purchases of agency
| mortgage-backed securities. They're huge, if they're a fraud
| they're probably the biggest ever, but in macro terms they're
| small fry.
| tehlike wrote:
| inflating crypto prices, people end up diversifying into real
| estate.
| zhoujianfu wrote:
| I'm not saying tether is fully backed (I think it's been admitted
| they're not), but do people not understand how it even ostensibly
| works?
|
| When people sell other crypto for tether/USDC, they are
| essentially "buying" tether/USDC. Which tether and circle "print"
| out of thin air... but ostensibly back by selling the other
| crypto they just received for real dollars.
|
| With the huge crash, a lot of people were selling their crypto.
| gruez wrote:
| >When people sell other crypto for tether/USDC, they are
| essentially "buying" tether/USDC. Which tether and circle
| "print" out of thin air... but ostensibly back by selling the
| other crypto they just received for real dollars.
|
| You're missing the previous links in the chain. When you sell
| your crypto at an exchange, your counterparty isn't the
| exchange, it's another person who wants to buy crypto.
| Therefore you making the trade doesn't cause new USDT to be
| printed. That happens before the trade, when your counterparty
| made the deposit.
|
| Money flowing into the cryptocurrency ecosystem causes tethers
| to be printed; money flowing out causes it to be destroyed. If
| people were all simultaneously cashing out (on net), it would
| stand to reason that tethers be destroyed, not issued.
| qeternity wrote:
| Precisely. So many Tether defenders simply have no idea how
| exchanges or markets work for that matter.
|
| It's truly scary how much confidence people have in topics
| they do not understand.
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