Bitfinex will no longer treat Tether as 1:1 conversion
twitter.com
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https://tether.to/tether-reopens-account-verification-and-di...
> 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.
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.
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.
These investigations take years, particularly when you have a non-bank regulator like the CFTC trying to get information from foreign banks.
Tether does not back 1:1, they charge 3% if you can even register to "redeem" so at best it's 1.00 : 0.97
Also worth noting, Tether has removed any mention of audits on their website:
Current FAQ: https://tether.to/faqs/
Is Tether transparent?
Yes. Tether’s platform is built to be fully transparent at all times.
Every tether is backed 100% by its original currency.
Yes. Tether’s platform is built to be fully transparent at all times and is regularly audited.
Every tether is backed 100% by its original currency.If Tether's withdrawing platform is for real, that should collapse to ~0%.
This prices in no margin for Bitfinex delaying or failing to redeem Tether for hard currency.
They've also removed (false) claims about being audited from their FAQs section[0]
[0] https://tether.to/faqs/ vs https://web.archive.org/web/20180628141947/https://tether.to...
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.
BTC withdraw etc. seems to be working fine but not USD.
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.
Remember, the longer you stay the more money you can lose
This will be fun to watch
Any Tether deposits initiated before 14:30:00 UTC on the 27th of November will be credited to the user's fiat wallet balances
"Cashing out" means receiving hard currency. It appears Bitfinex plans on converting Tether balances into Bitfinex brokerage balances. This still depends on Bitfinex paying out dollars for its obligations, regardless of whether they're cryptocurrency Tethers or broker balance entries in a spreadsheet.
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...
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.
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.
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.
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.
No, it isn't. For one, ATMs. For another, bank deposits are insured. The banks, themselves, are heavily audited. In fact, "no depositor has ever lost a penny of insured deposits since the FDIC was created in 1933" [1]. (Best treasury practice is to (a) open multiple accounts, to keep deposits insured or (b) hold excess cash as Treasuries.)
Not weighing in on it either way, but issues with Tether have been a sword of Damocles of the crypto market for a while. Bitfinex'd on Twitter[0] has all sorts of speculation if you want to get into it.
This promise is a lie. This announcement walks back the lie.
This is very important for the cryptocurrency ecosystem, because Bitfinex is a large exchange, liquidity provider, counterparty, and (I strongly suspect) lender. If they are factually insolvent or fail in a bank run, that is a Very Big Deal, at least insofar as anyone cares about cryptocurrency.
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/ [2] https://www.deltecbank.com/
https://thebitcoinnews.com/brazil-tether039s-new-banking-par...
https://www.livebitcoinnews.com/tethers-new-banker-in-the-cr...
https://bitcoinexchangeguide.com/deltec-bank-trust-issues-pu...
Ok, so criminal gets caught, authorities order seizure of Venezuelan's assets held in bank...bank complies with authorities. Yawn. Got any more FUD?
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://cointelegraph.com/news/bitfinex-in-poland-were-there...
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...
“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.”
https://medium.com/@bitfinexed/bitfinex-and-tether-is-unaudi...
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.
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...
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
No-liability letter showing a point-in-time portfolio cash position from a bank in The Bahamas posted to Tether's domain is a far cry from sound. It's not nothing. But it's trivial to manufacture with an overnight loan--that's why banks get audited.