Tether now prints $100M daily since January 16 | Hacker News Reader

Tether now prints $100M daily since January 16

stockemperor.com

28 pointsForHackernews27 comments

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.

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

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.

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.

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 from 18 hours ago?

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.

They lie about where the tether is coming from. They claim they have that much USD in the bank and it is exchangable at any time 1:1 to the USD. It's not actually.

If they did, it would be in their best interests to prove it, via some statement from a reputable bank or such, that users would trust holding $500+ million.

If they were interested in clearing the air they would respond. They haven't done so, which leaves everyone to speculate on what's happening, and of all the possibilities, not many of them add up to anything good.

It is possible but it's hard to blame people for having little faith when you consider the history of cryptocurrency scams and the unwillingness of Tether people to provide any proof for dollar backing of Tether.

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.

Do you really think 300M USD have been deposited with Tether since Tuesday? I guess it's possible, but that's an awful lot of money.

They claim to have a dollar backing each Tether.

They've printed 1.6 Billion Tether.

They are completely opaque in every conceivable way that could inspire confidence in them.

Yes, we've thought of it and dismissed it repeatedly.

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?

The Panama Papers included some Tether documents, listing some of Bitfinex officers as shareholders and officers. That's more than just having an investor in common. While they may be separate legal entities, it looks like the same folks running both.

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

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.

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.

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

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.

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

Where does the printed tether go?

Margin market on bitfinex mostly.

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

"Wash trading" and "Pump and Dump" in Bitfinex.

How much money in deposits has coinbase taken since then?

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

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