
Tether now prints $100M daily since January 16 - ForHackernews
http://stockemperor.com/currencies/tether-now-prints-100-mln-usd-daily/
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obblekk
Contrarian opinion: I think printing Tethers out of nothing is exactly the
right policy right now.

The current price of USDT is $1.01 on coinmarketcap. In the past few days it
went as high as $1.03. This is happening because people are using USDT as a
safe haven from broadly falling crypto prices increasing demand. However, USDT
is __supposed __to be pegged at a fixed $1 per tether. So if people are
willing to sell their bitcoins to Bitfinex at >$1 then Bitfinex should take
the deal. If the demand for tether goes away and the price drops <$1/tether,
Bitfinex can use all the bitcoin they just acquired from their earlier sale of
tether to start buying back tether.

In the process of doing this, Bitfinex 1) stabilizes the price of tether at $1
and 2) makes a small arbitrage profit.

This arbitrage profit isn't without risk, of course. Ultimately this system
works as long as the downside variance on tether isn't much larger than the
upside variance. i.e., if tether goes as high as $1.03, it shouldn't go below
$0.97. However, if the market loses confidence in tether broadly then everyone
might try to dump their tethers at once and Bitfinex will run out of reserve
bitcoin/usd to buy back tether.

Side note: This is exactly what happened to the British treasury when Soros
did his famous run. Soros kept selling Pounds on the market and eventually the
British treasury ran out of USD to buy the pounds and the price plummeted. The
reason he was able to sell so many Pounds is because he was shorting them
(borrowing from others and selling back on the market). So Bitfinex is in fact
taking on some risk to run this strategy, but as long as Tethers aren't easily
shortable, and the market doesn't completely lose confidence, there shouldn't
be too big an issue.

All of this is irrelevant if Tether is committing fraud. They could easily be
selling Tethers and not holding the Bitcoin they gain in reserve, rather
spending it on yachts. If that's happening the price of Tether is bound to
fall <$1 and with no one buying them back, the whole thing will crash.

But I don't think the blog presents evidence that this is happening.

~~~
eximius
Why on earth would they ever buy back Tether when they can just print another
$100M?

~~~
obblekk
Fair point.

Long term, being seen as a reserve currency is probably worth trillions vs. a
few billions in short term fraud.

But I guess all the numbers get fuzzy at that level of wealth.

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makomk
The most interesting thing in my opinion isn't that $100M of Tether is being
printed daily, it's that it's still fairly consistently trading at above the
face value of $1. Printing funny money is easy; keeping the price of your
funny money from plummeting is much harder.

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ForHackernews
I see a moderator has deleted/marked this submission as a duplicate. Can
somebody point me at the previous submission it duplicates?

Edit: Maybe this one?
[https://news.ycombinator.com/item?id=16182423](https://news.ycombinator.com/item?id=16182423)
from 18 hours ago?

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smaili
Just trying to be open-minded: has anyone thought to have given the Tether
folks the benefit of the doubt? Isn’t it possible they _are_ well aware of the
possible risks but have the numbers to justify their printing? Again, just
trying to look at it from another perspective since we’ve already heard the
criticisms.

~~~
rapsey
100M a day open mind? That's a bit too open minded.

> Isn’t it possible they are well aware of the possible risks but have the
> numbers to justify their printing?

They could easily be transparent. They choose not to.

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jstanley
I've not read past the first paragraph, but:

> Tether is a magical internet money issued by world’s biggest cryptocurrency
> exchange Bitfinex

As I understand it, Tether is a completely separate company to Bitfinex. The
only thing they have in common is an investor.

> It was designed as a mean to launder money

It was designed as a way to transfer USD without having to wait for bank
transactions, and without having to worry about banks closing down accounts.

> I’m pretty sure this resemblance in name is deliberate to confuse owners

It's not meant to "confuse", it's meant to mean "USD Tether".

I think this post is intending to mislead far more than Tether is.

Isn't the fact that Tether explicitly state in their terms and conditions that
Tethers are non-redeemable for USD enough to know not to trust Tethers? Why do
we have to make up lies about them?

~~~
eximius
They have the same CEOs and there is credible evidence that the Bitfinex folks
'hacked' themselves. This is merely their second, larger scam.

~~~
jstanley
Care to share your "credible evidence"?

There's been an awful lot of FUD being spread about Bitfinex for the past year
or longer, so you'll excuse me for not taking these claims seriously.

~~~
eximius
If I remembered the details, yes. As it is, I probably won't spend the time
trying to find it. I have a hard time taking a conversation seriously after
'FUD' is used. It might even be justified here - I did make a bold claim with
no evidence, but everything - literally everything - I read about Bitfinex and
Tether is sketchtastic. How they handled their 'audit', how banks are
distancing themselves and explicitly denying partnership, how they attempted
to conceal their shared leadership, etc.

If I recall correctly, the details were that the account the stolen Bitfinex
funds were extracted to was then used in some way tied to some Bitfinex or
Tether action. Like I said, I don't remember the details, I just read the
article and verified the TXes on a blockchain explorer and moved on with a
more confirmed worldview.

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robk
This is going to cause epic carnage when the house of cards here collapses

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echelon
This seems worrisome. Are they (and the other exchanges) solvent?

I should start thinking about carrying a low balance on exchanges and putting
my holdings into an offline wallet.

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tlrobinson
Have any of the other exchanges (besides Bitfinex, of course) that trade
Tether (Bittrex, Poloniex, Binance, Kraken) commented on the situation?

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Kiro
Where does the printed tether go?

~~~
empath75
Margin market on bitfinex mostly.

~~~
Kiro
But who controls it? Does it go straight to Bitfinex wallet?

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blhack
How much money in deposits has coinbase taken since then?

~~~
charlesdm
Given most exchanges are adding 100k+ users per day, probably a lot more.

