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Comment by yusee | Hacker News Reader

Tether gets criticized for being fractional, but it's more stable than fancy collateralized derivative products. Cryptocurrency never ceases to amaze me.

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Tether gets criticized for having no released third party audits that they actually hold the hundreds of millions of dollars that is backing their token. They say they have frequent audits on their website, their transparency update that they called the Friedman audit, in the same paragraph states that it does not constitute as an audit[0].

In the same “audit”, Friedman stated they did not evaluate if tether owned those accounts, had access to the funds, if those funds represented anything else besides the backing of tether[1].

[0]https://tether.to/announcement-transparency-update/

[1]https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co...

It doesn't even matter if they don't hold the USD to back tether. They make it clear in their ToS that users cannot redeem their USDT for USD. There is no known case of anybody being able to cash out USDT directly from tether.to. It is only possible by exchanging on third party sites or with other users.

Tether is a money-printing scam by a company who had their bank account frozen, so instead of handling USD they came up with the wonderful scheme of USDT.

https://medium.com/@bitfinexed/spoiler-alert-the-institution...

would have included that, but tether changed that part of their legal section. it now includes more legalese that i'm interpreting as can redeem, but US residents cannot be customers. no idea of the implications of the latter for people trading it on exchanges.

"Absent a reasonable legal justification not to redeem Tether Tokens, and provided that you are a fully verified customer of Tether, your Tether Tokens are freely redeemable.

Persons ordinarily resident in, and nationals of, Prohibited Jurisdictions or Sanctioned Persons under Applicable Sanctions Laws; Persons and Government Officials believed or suspected to be transacting in the proceeds of corruption, bribery, or other crimes under Applicable ABAC Laws; and Persons believed or suspected to be engaged in money laundering or terrorist financing under Applicable AML/CTF Laws are not permitted to be customers of Tether; are not permitted to cause Tethers to be issued or redeemed; and, are not permitted to hold or transact in Tether Tokens.

Furthermore, residents of certain U.S. states are not permitted to be customers of Tether; are not permitted to cause Tethers to be issued or redeemed; and, are not permitted to hold Tether Tokens.

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

Decentralized trustless systems are always going to be less efficient than centralized ones.

Wait, tether is fractional now? Wasn't one of their big promises that Tether is always backed up 1:1 by the dollar?

I believe you are correct that it's not fractional, their website claims "100% Backed - Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD." [1]

The whitepaper abstract also states "issued tokens are fully backed and reserved at all times." [2]

[1] https://tether.to/

[2] https://tether.to/wp-content/uploads/2016/06/TetherWhitePape...

Tether claims to be full reserve. The contention people have is that there is little to know proof that they are _actually_ full reserve. Also, there is risk in Tether that some government will seize all of their assets (there is lots of precedence for this).

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