
Bitfinex will no longer treat Tether as 1:1 conversion - thoughtexplorer
https://twitter.com/Bitfinexed/status/1067429276335501313
======
deweller
Tether just opened up a platform for withdrawing fiat USD directly from them:

[https://tether.to/tether-reopens-account-verification-and-
di...](https://tether.to/tether-reopens-account-verification-and-direct-
redemption-of-fiat-from-its-platform/)

> This update allows the immediate withdrawal of Tether to fiat (1:1), with
> the ability to acquire coming soon.

So Tether still backs the USDT 1:1 by fiat while Bitfinex just becomes another
trading market. Other exchanges already have USDT markets that change in
value.

This event is not the "de-tethering of Tether." It is returning the
responsibility of backing USDT to Tether.

~~~
JumpCrisscross
> _Tether still backs the USDT 1:1 by fiat while Bitfinex just becomes another
> trading market_

We don't have any evidence Tether has hard currency backing its Tether. We
_do_ know Tether and Bitfinex are under investigation in multiple
jurisdictions, and that brokerage deposits are less protected than obligations
marketed as being freely redeemable or secured (as Tether was). At the end of
the day, Bitfinex and Tether are intrinsically and ambiguously linked, a
combination that does not inspire confidence.

~~~
jpmattia
> _We don 't have any evidence Tether has hard currency backing its Tether._

We have some evidence: The CFTC subpoena was about a year ago, and it is hard
to imagine that they would not have

1\. Subpoenaed bank statements to support the backing, and

2\. Let tether continue operation if the support was lacking.

So it's possible that the CFTC was snookered somehow, but they're not known
for being patsies when it comes to obvious fraud.

The investigations for manipulation are more complicated, and it is easy to
imagine that it takes a year to iron that out, but a simple balance check?
Hard to imagine that's not already complete.

~~~
6nf
Tether is Hong Kong based and as far as I can tell they don't have any people
or infrastructure in the USA so it's going to take much longer for the CFTC to
actually do anything here.

------
patio11
A link direct to the announcement for the curious:
[https://www.bitfinex.com/posts/319](https://www.bitfinex.com/posts/319)

------
ForHackernews
It's not like Bitfinex has ever allowed anyone to cash out their USDT for USD
(despite claims to the contrary) so maybe this is just them coming clean about
that fact?

They've also removed (false) claims about being audited from their FAQs
section[0]

[0] [https://tether.to/faqs/](https://tether.to/faqs/) vs
[https://web.archive.org/web/20180628141947/https://tether.to...](https://web.archive.org/web/20180628141947/https://tether.to/faqs/)

~~~
andrewla
I haven't been able to test this directly since I'm in New York and therefore
am not allowed to have an account on Bitfinex, but nobody has reported
withdrawal difficulties in a very long time, and Bitfinex has always treated
USDT deposits as USD without any explicit or implicit conversion.

Bitfinex has had withdrawal problems and banking problems in the past, but to
my knowledge the only recent problems have been around times when USD/USDT has
disconnected, largely due to delays in Bitfinex's fiat withdrawal pipeline
that have all since been resolved.

~~~
nosuchthing
Bitfinex's entire subreddit is full of users with unprocessed withdraw issues.

[https://reddit.com/r/bitfinex/](https://reddit.com/r/bitfinex/)

~~~
andrewla
You're right -- I hadn't realized that we're currently in a regime of tether
being discounted and withdrawals being slow or not working. After the previous
discount recovered the withdrawal problems went away (obviously correlation
running in the other direction), but I hadn't been tracking that the discount
has reappeared.

Outside of periods of withdrawal difficulty, though, the reports slow to a
trickle and then dry up.

It would be interesting to pull the history of the bitfinex sub and plot the
frequency of posts mentioning "withdraw" against the kraken USDT/USD pair to
get hard data on this rather than my anecdotes, though.

------
raverbashing
Oh so all of those who had kept money as usdt will have their money devalued.
Nice

Remember, the longer you stay the more money you can lose

This will be fun to watch

~~~
andrewla
The actual announcement was linked above. Any time before the cutoff Bitfinex
will continue to support USDT:USD at parity, and all USD and EUR deposits will
be denominated in the fiat currency, not the tether equivalent.

~~~
JumpCrisscross
> _Any time before the cutoff Bitfinex will continue to support USDT:USD at
> parity_

What does "support" mean? I thought it was notoriously difficult to convert
Tether into hard currency.

> _all USD and EUR deposits will be denominated in the fiat currency_

Will previous deposits, which were held as Tether, be converted into hard
currency? (Bitfinex has recently been having issues redeeming hard currency
deposits [1].)

The cynic in me sees Bitfinex attempting to convert Tether, a secured
redeemable obligation, into brokerage deposits, unsecured obligations in most
jurisdictions.

[1] [https://www.coindesk.com/for-bitfinex-users-dollar-
withdrawa...](https://www.coindesk.com/for-bitfinex-users-dollar-withdrawals-
are-now-a-weeks-long-struggle)

~~~
andrewla
I don't know what you mean by this -- depositing USDT into Bitfinex has always
immediately credited your USD balance. Until this announcement, they have
always treated USDT as simply a method for depositing USD, with no explicit
conversion necessary.

What I mean by "support" is that before the cutoff (at 14:30 UTC on
2018-11-27, four and a half hours from now) any USDT deposits will be credited
to the USD account balance of the user who made the deposit, as it has in the
past.

~~~
JumpCrisscross
> _depositing USDT into Bitfinex has always immediately credited your USD
> balance_

This doesn't mean anything if that U.S. dollar balance cannot be redeemed for
actual U.S. dollars. Saying "I have 1 USDT" or "I have 1 U.S. dollar on
deposit at Bitfinex" is roughly equivalent--both depend on Bitfinex honoring
its end of the deal.

~~~
evancox100
Of course the same is true for any bank or bank-like entity, all the way up
the chain to the Federal Reserve.

I don't know a lot about Bitfinex, but it seems that the relevant questions
are:

1) If you have "X U.S. dollars on deposit at Bitfinex", how easy is it to
transfer that balance to an external account? (Maybe possible with a fee?)

2) Can you withdraw the balance in person directly for USD cash? (lol)

3) Does the federal government offer any type of legal
guarantee/protection/insurance for the balance? (Hahahahah)

If anyone knows the answers to these, I'm genuinely curious.

Edit: I somehow missed the first part of your post that established the
context as NOT being able to redeem the balance for USD. Obviously the ability
to redeem your balance on demand for cash is pretty much the defining
characteristic of a (solvent) bank, as opposed to say your friend Bob owing
you money.

~~~
Xixi
1) Until that announcement: impossible for regular people, and maybe possible
for big enough customers agreeing to go through many hoops like dealing with a
bank in Uganda (from what I've heard, not sure if even that was possible).

2) Of course not.

3) Which federal government are you thinking about? I think Bitfinex is a Hong
Kong entity, and Hong Kong is not a federation (it's a Special Administrative
Region of the People's Republic of China), so doesn't have a federal
government.

~~~
evancox100
Thanks for the answers! And sorry, I was being US-centric. Doesn't really
matter which government we're talking about, I don't think any of them would
offer any protection.

------
rememberlenny
Can someone explain why this is important?

~~~
chrisco255
Tether has been viewed as a weak-link in the crypto ecosystem and rumors of a
potential Tether "scam" have swirled around since at least last year. People
have speculated that Bitfinex (the company behind Tether) did not have the $2B
in cash on hand to back the $2B worth of Tether (symbol: USDT which is
supposed to trade at roughly 1:1 with the USD) in circulation.

They were subpoenaed, but so far no charges have been brought against them. It
also looks like they recently changed banks, with Tether now using Deltec
[1][2], a 72-year old Bahamas-based institution registered with the Financial
Crimes Enforcement Network of the US Department of the Treasury.

As far as that goes, I think it's a good thing that Tether has established a
relationship with a reputable institution. It also shows that they are
committed to anti-money laundering.

As far as fees go, it looks like unless you've got more than $1 million in
USDT, you're looking at 0.4%-1% withdrawal fees. Meh. I mean, doesn't sound
terrible...and honestly, it seems less and less likely now that USDT will
crash the market (not that it needs any help with that at the moment).

[1] [https://tether.to/tether-banking-relationship-
announced/](https://tether.to/tether-banking-relationship-announced/) [2]
[https://www.deltecbank.com/](https://www.deltecbank.com/)

~~~
nosuchthing
"a reputable institution" for off shore banking and money laundering currently
under investigation.

[https://thebitcoinnews.com/brazil-tether039s-new-banking-
par...](https://thebitcoinnews.com/brazil-tether039s-new-banking-partner-
deltec-suspected-of-accepting-laundered-funds/)

[https://www.livebitcoinnews.com/tethers-new-banker-in-the-
cr...](https://www.livebitcoinnews.com/tethers-new-banker-in-the-crosshairs-
of-the-u-s-government-for-money-laundering/)

~~~
chrisco255
[https://www.bitcoininsider.org/article/46790/deltec-bank-
tru...](https://www.bitcoininsider.org/article/46790/deltec-bank-trust-issues-
public-denial-venezuelan-money-laundering-scheme-involvement)

[https://bitcoinexchangeguide.com/deltec-bank-trust-issues-
pu...](https://bitcoinexchangeguide.com/deltec-bank-trust-issues-public-
denial-of-venezuelan-money-laundering-scheme-involvement/)

Ok, so criminal gets caught, authorities order seizure of Venezuelan's assets
held in bank...bank complies with authorities. Yawn. Got any more FUD?

~~~
nosuchthing
Sure

    
    
      In early April, unconfirmed rumors swirled around €400   
      million said to have been seized by Polish authorities 
      that were alleged to be tied to Bitfinex. As reported on 
      CoinTelegraph, the funds, claimed to be held in Bank 
      Spoldzielczy, were said to link Bitfinex to suspicious 
      activities in Colombia.
    

[https://modernconsensus.com/cryptocurrencies/bitcoin/bitfine...](https://modernconsensus.com/cryptocurrencies/bitcoin/bitfinex-
tether-investigation/)

[https://cointelegraph.com/news/bitfinex-in-poland-were-
there...](https://cointelegraph.com/news/bitfinex-in-poland-were-there-money-
laundering-links)

Sure sounds like Bitfinex is having a reoccurring theme of having their bank
accounts shut down, and then finding banks in weird locations only to get them
shut down within a month or two.

[https://finance.yahoo.com/news/tether-found-bank-might-
baham...](https://finance.yahoo.com/news/tether-found-bank-might-
bahamas-181859081.html)

    
    
      “This banking information is commercially sensitive and 
      confidential. You should be very careful with this 
      information. You are asked to keep this information to 
      yourself and to not share it except with your financial 
      institution. Divulging this information could damage not   
      just yourself and Bitfinex, but the entire digital token 
      ecosystem. Accordingly, you are cautioned that there may 
      be serious negative effects associated with this 
      information becoming public.”
    

Seems legit

[https://medium.com/@bitfinexed/bitfinex-and-tether-is-
unaudi...](https://medium.com/@bitfinexed/bitfinex-and-tether-is-unauditable-
why-they-will-never-do-a-real-audit-3324e002b185)

Tether auditor distances itself after publishing "not an audit" and then
"Friedman Quietly Removes Bitfinex Mentions"

    
    
      A brief announcement posted on Friedman’s own site, dated 
      May 8th 2017 and titled “Friedman Selected as Crypto-Savvy 
      Auditor by Bitfinex” now links to a 404 page. For the 
      record, here’s an archived version.
    

[https://web.archive.org/web/20171129082053/http://www.friedm...](https://web.archive.org/web/20171129082053/http://www.friedmanllp.com:80/insights/auditor-
engagement)

------
arisAlexis
This is a well known Twitter account with no other purpose that tweeting
3times per dat for 2 years stuff about Tether which proved reserves last week
again. I would be cautious about alterior motives. Those accusing or
manipulation can be the manipulators in disguise.

------
jcfrei
So, is the Bitfinex BTC/USD market now a USD or USDT market? The price premium
compared to other exchanges indicates it's a BTC/USDT market yet it's called
BTC/USD. Has anyone sold BTC on bitfinex? Do you get USDT or USD?

------
carrja99
Honest question... did tether ever allow people to create accounts? As far as
I can tell he only way to buy tether has been via exchanges... even at this
time last year their "create a new account" form was disabled.

~~~
wmf
Just updated: [https://tether.to/tether-reopens-account-verification-and-
di...](https://tether.to/tether-reopens-account-verification-and-direct-
redemption-of-fiat-from-its-platform/)

------
alistproducer2
I find it curious that there isn't any analysis suspecting the BTC crash to
the breaking of the USDT peg. It started a couple weeks ago and now USDT is
routinely trading at a discount relative to $1.

There were a ton of articles in 2017 speculating that the bubble was being
directly inflated by USDT printing and when the peg broke BTC would crash[0].
Now that those things have happened - silence.

[0]: [http://fortune.com/2017/12/05/bitcoin-btc-price-usd-
tether-l...](http://fortune.com/2017/12/05/bitcoin-btc-price-usd-tether-
limited-bitfinex/)

~~~
User9991
Silence? No analysis? Prices on every crypto are down massively. This news is
hours fresh. What are you talking about? What are your expectations here? Was
this not a crash?

------
gwbas1c
So basically, any slight deviation from 1:1 is similar to a transaction fee?

~~~
mhluongo
No- the market will buy and sell Tether at the market-discovered price- which
means it's no longer centrally "pegged" by Bitfinex.

This could be because they want to better take advantage of the difference in
price themselves, knowing that their books are good and that the token is
backed- or, following the narrative, it's because the token isn't 1:1 backed.
Either way, this further erodes trust in Tether

~~~
chrisco255
No they're making easier to withdraw USDT to fiat, minus a 0.4%-1% fee. All
indications are that they do in fact have $2B in cash on hand to back the USDT
in circulation: [https://tether.to/wp-content/uploads/2018/11/Tether-
Letter.p...](https://tether.to/wp-content/uploads/2018/11/Tether-Letter.pdf)

~~~
User9991
Yes, BTC and other crypto are down 80-90% in a matter of weeks, but this is
Bitfinex making it "easier" to withdraw your money. Are you gullible or trying
to deceive others to save yourself?

~~~
chrisco255
They're not down 80%-90% within weeks. BTC has been on a year long decline
from it's $19K peak this time last year. I'm not gullible, people are
withdrawing USD using USDT. Thats a stable coin acting as advertised. I've
never owned any Tether. But I've never seen so much FUD. Personally, I'm going
to be getting some DAI as a stable coin as I like and trust it's decentralized
system much better.

