
Tether has issued $450M USDT in past 4 days - ActsJuvenile
http://omniexplorer.info/lookupadd.aspx?address=3MbYQMMmSkC3AgWkj9FMo5LsPTW1zBTwXL
======
chx
[https://www.reddit.com/r/Buttcoin/comments/7rad7q/a_reminder...](https://www.reddit.com/r/Buttcoin/comments/7rad7q/a_reminder_every_time_that_tether_starts_a/dsvghqm/)

> What if the crypto community is simply too stupid to ever let the bubble
> burst?

> Like. Literally nobody has ever been able to trade their tethers back into
> dollars, and they've been around for over a year at this point. How the fuck
> do people have imaginary money and simply not want to get real money from
> it, not even once, in over a year?

> Maybe the buttcoiners were right, and we are witnessing the birth of
> something completely new here: The market that was too dumb to even realise
> that it should crash.

~~~
Maarten88
If these tethers turn out to be impossible to trade for dollars, then the best
way of getting out of them would be buying BTC, right?

Fun times...

~~~
ActsJuvenile
That would cause high prices on Bitfinex due to Bitcoin buying, while
deflating prices on Coinbase and Gemini due to cash outs.

During the last month of MtGox it was common to see $2,000 price gap between
Gox and US exchanges. I have a feeling history is going to repeat itself very
soon.

------
throwaray122
Finally people are waking up to this.

Summary of Tether for the uninformed:

1\. Their terms state that they owe you nothing in exchange for Tethers you
hold

2\. This effectively means Tether is backed by nothing. The 1:1 peg with USD
is a total farce

 _Tether must and does at all times reserve the right to refuse to issue or
redeem Tether Tokens..._

 _No Representations & Warranties by Tether: Tether makes no representations,
warranties, or guarantees to you of any kind. The Site and the Services are
offered strictly on an as-is, where-is basis and, without limiting the
generality of the foregoing, are offered without any representation as to
merchantability or fitness for any particular purpose._

What this means:

Tether can print 1 billion Tethers, buy up 1 billion Bitcoin, and then cash
out into dollars. In other words, they have engineered a way to more or less
counterfeit U.S. dollars by counterfeiting cryptocurrency.

I hope they go down hard.

~~~
catbird
Why would anyone buy a Tether? Are people getting into cryptocurrencies really
that clueless? I can see the idea behind bitcoin, that somehow it can hold
value due to its inherent scarcity and high demand. But if the Tether supply
is unlimited and controlled by a single company, how could anyone possibly
believe it would hold its value?

~~~
chx
> Are people getting into cryptocurrencies really that clueless?

I have bad news for you... YES. Check
[http://supercoolawesomemoney.com/](http://supercoolawesomemoney.com/)

~~~
catbird
Wow, is there any way to see how much SCAM they have sold so far?

~~~
chx
Looks like not a lot. 0.01088891 Ether

[https://etherscan.io/address/0xdf4B1A742D3B4F87099C835d5423B...](https://etherscan.io/address/0xdf4B1A742D3B4F87099C835d5423B54f0B5Ed4e8)

------
mancerayder
How are the big players in cryptocurrency not pushing back on this? It has
potential to take down the entire ecosystem.

~~~
enraged_camel
How would it take down the entire ecosystem? Bitcoin alone has a $194B market
cap. $450M is a drop in the bucket.

~~~
wcoenen
> How would it take down the entire ecosystem? Bitcoin alone has a $194B
> market cap. $450M is a drop in the bucket.

I'm not sure you can compare those numbers like that. If somebody used $450M
to buy bitcoin, the market cap would likely rise much much more than $450M.

For example, if I look at the GDAX order book right now, I see that the
bitcoin price could be pushed up $200 by buying less than $3M worth of
bitcoin. That corresponds to increasing the market cap by $3.2 billion.

------
barbegal
As far as I can tell it has mostly issued Tethers to itself [1](as Bitfinex).
Bitfinex/Tether are hoping that they can entice customers to use their
platforms for arbitrage with other exchanges such that they can cream off a
healthy margin without actually holding much currency themselves.

[1] [https://medium.com/@bitfinexed/spoiler-alert-the-
institution...](https://medium.com/@bitfinexed/spoiler-alert-the-institution-
buying-tethers-is-bitfinex-themselves-f56af29ce60c)

------
modeless
Disclaimer: I think Tether is shady, likely illegal, and would never use it
myself. However, I think there is a perfectly reasonable explanation for where
this Tether is coming from and why no existing Tether has ever been redeemed
for USD.

First, understand that Tether and Bitfinex are the same people. Bitfinex has
hundreds of millions of dollars in their accounts. It is likely that most or
all of the Tether is bought directly by Bitfinex in order to satisfy Tether
withdrawal requests. The money comes from USD deposits to Bitfinex.

When people want to convert Tether to USD, rather than redeeming from
Tether.to directly, they send Tether back to Bitfinex, which credits it to
their USD balance at a 1:1 rate. The USD can then be withdrawn as a wire
transfer. Crucially, this process does not require that Tether be redeemed,
because Bitfinex maintains a large balance of both USD and Tether. As long as
Tether demand keeps increasing, Bitfinex can simply sit on the Tether they
receive until it's time to hand it out to someone else doing a Tether
withdrawal.

The only situation in which Tether would ever be redeemed is if there was a
bank run on Bitfinex. As Bitfinex's USD reserves fell they would need to
redeem the Tether that they hold for USD. So far, Bitfinex has not faced this
situation and so no Tether has ever been redeemed.

So, I've described a way in which Tether could be relatively legitimate. Is
that actually what's going on? Nobody knows except the management of Bitfinex.
Personally, I don't trust them. The incentives for fraud are astronomical, and
even if it's been entirely legit up to this point it's unlikely to remain so
forever.

~~~
hendzen
If that was true, why would Bitfinex not agree to an audit to prove the funds
were held?

And do you really believe 450m was transferred to Bitfinex in the last 3-4
days?

~~~
dhoulb
Only scenario I can think of for those kinds of numbers is a big bank or hedge
fund buying in.

~~~
dhoulb
(Obviously unlikely given the offshore-ness of ot all.)

------
blhack
Can somebody explain, in detail, the conspiracy theory here? Preferably in a
way that doesn't emotionally _assume_ some nefarious action?

$450M is a lot of money. Why do you assume that tether is lying about this?

If tether aren't actually backed by anything, isn't that just about the worst
ponzi scheme imaginable? Like some sort of reverse ponzi scheme, actually?
They give you "fake" tethers, and you get to buy "real" bitcoins with them.

~~~
Shank
> Can somebody explain, in detail, the conspiracy theory here?

For tether to maintain a 1:1 ratio of 1 USDT to 1 USD, they have to have a
backing of $450M from some company or bank that has USD to give them. As of
now, they have no US based banks even doing transfers with them, let alone
working with them on being solvent.

Tether promised to be open to auditing, and none of the latest issuings have
been audited as having actual backing currency.

~~~
StavrosK
I'm far from knowledgeable on this, but, as I understand it, for tether to
maintain that ratio, the issuer of tether must both be willing to buy and sell
one tether for one dollar, to and from anyone, at any time. The moment that
stops, you're operating on faith, and you're no longer pegged to anything.

~~~
FireBeyond
Well, it's a good thing they don't have anything like this in their Terms:

> "There is no contractual right or other right or legal claim against us to
> redeem or exchange your Tethers for money. We do not guarantee any right of
> redemption or exchange of Tethers by us for money. There is no guarantee
> against losses when you buy, trade, sell, or redeem Tethers."

Oh, wait, that's exactly what is in their Terms...

------
brianpgordon
And I'm sure every single one is backed by legitimate USD deposits...

~~~
6nf
So supposedly someone somewhere has, what, 2-3 Billion USD in a bank account?

~~~
FireBeyond
Yeah. But not Wells Fargo. And they won't tell you unless you sign an NDA.

Meanwhile this bank is supposedly receiving upwards of $100MM/day in deposits
for this account and blissfully unaware...

One born every minute.

------
js2
Their terms of service currently has this clause:

 _Beginning on January 1, 2018, Tether Tokens will no longer be issued to U.S.
Persons._

[https://tether.to/legal/](https://tether.to/legal/)

So these USDT are being issued to non-U.S. Persons. How does that work? A
non-U.S. Person wires funds in their local currency to tether who applies the
current exchange rate for that currency to USD then issues an equivalent
number of USDT? Why would anyone do that instead of just purchasing the tether
for their own currency?

~~~
Mandatum
It's so they're not caught out by laws pertaining to "USD-backed securities"
enforced by the nice people at the SEC.

This doesn't excuse them from previous transactions they've already made..
Which means likely they didn't start printing Tether until after 1st of Jan.
It's likely they have loans out for the amount stuck in escrow since Taiwan
froze their wire's in April.

This is the heist of the century. They're 5% of the way to ENRON level
shenanigans.

------
StavrosK
Doesn't "issued" mean sold? Didn't they get $450M in dollars for them? Or did
they just give the USDT to themselves or something?

~~~
ufo
The most likely explanation is that no one is purchasing those Tethers and
that they have been printed out of thin air.

* Tether purchases are "temporarily disabled" for regular customers. [https://wallet.tether.to/app/#!/signup](https://wallet.tether.to/app/#!/signup)

* Tether claims that these large purchases are being made by nameless "institutional investors" but didn't name who those investors would be.

* Why would large institutional investors be stupid enough to purchase billions of dollars of useless cryptotokens from a shady company anyway?

~~~
StavrosK
Oh man... That means the tether isn't even pegged any more! If I can't buy
them from the issuer for one dollar each and I really need a billion of them
for some reason, then they're worth more, no? Conversely, if I can't sell
them, they're worthless.

~~~
ufo
It gets better! From their terms of service:

"There is no contractual right or other right or legal claim against us to
redeem or exchange your Tethers for money. We do not guarantee any right of
redemption or exchange of Tethers by us for money. There is no guarantee
against losses when you buy, trade, sell, or redeem Tethers."

Apparently they changed this text earlier this month to make it sound less
like a total scam but the original text is still available on archive.org:

[https://web.archive.org/web/20171224172135/https://tether.to...](https://web.archive.org/web/20171224172135/https://tether.to/legal/)

------
lvturner
Shameless plug, I wrote a little telegram bot to send an alert whenever new
Tether are created:
[http://t.me/TetherAlerterBot](http://t.me/TetherAlerterBot)

------
aviv
Tether will end up being the pretext US authorities use to raid various
exchangers. It's coming folks. Do not leave your coins at an exchange wallet,
ever.

~~~
ActsJuvenile
Tether is a foreign company, so the raid has to be from international
authorities... but boy that raid story will rival Silk Road or Megaupload
stories.

~~~
aviv
This is not going to matter one single bit. US authorities will claim they
have evidence or reasonable suspicion that Tether funds were converted to
coins that were later sent to addresses believed to be under the control of
US-based exchangers. Money laundering raids 101.

------
6d6b73
Sometimes I wish I could forget all about integrity and honesty and just use
my knowledge to make a quick buck by scamming people like all these
cryptoscammers do..

~~~
tluyben2
Or do not do that but use your tech knowledge to make money from the market in
a non scammy way. Past 1.5 month including the 'crash' of the past days were a
party without scamming people. That is a quick buck.

------
KasianFranks
A US public company can do the same thing in terms of their authorized stock
vs their shares outstanding. You can print money without it being backed. This
means increasing your 'authorized' as you see fit. Just get approval from the
SEC/Finra and your buddies and you're good to go. Now lets talk about other
organizations printing money that's not backed by anything e.g. the Fed, QE
1-4, countries with inflationary problems. Cryptocurrency offers far more
transparency (as we can see here) and has true global reach. This FUD needs to
stop and more effort needs to put into understanding financial engineering and
it's importance and relation to software engineering.

~~~
jhwang5
I think you should look up how stock dilution works, how that typically
destroys share prices, etc. I would like to suggest learning how finance
works, starting from Investopedia /s

~~~
davidbanham
It would destroy the issuing company in a similar way that Tether refusing to
pay out would destroy them. The analogy holds.

~~~
jhwang5
Yeah - I agree it's a ticking bomb - hasn't exploded yet, though.

