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Comment by jkhdigital | Hacker News Reader

Honestly, this is kind of a nothingburger. The press release seems to merely reinforce what was an open secret in the cryptocurrency world, which is that Bitfinex and Tether have played fast and loose with whatever reserves they received for their Tether issuance. Which is, of course, utterly unremarkable to anyone who knows anything about how financial sausage is really made.

Bitfinex and Tether are shady. Caveat emptor, and carry on hodling.

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It’s more important than that. Cryptocurrency proponents have been trying to downplay the Tether situation for years.

One of the common dismissals was the idea that if what Tether was doing was truly fraudulent, some government institution would step in to intervene. Proponents pointed to the lack of intervention as a signal that Tether was operating above board.

This also reveals new facts and numbers about the scale of what has been going on. We still don’t know the full story, but it’s clear that reality is even worse than we thought.

I don't disagree that Tether is likely a big fraud, but my point is that even the regulated financial system is full of questionable accounting and long-running, undiscovered fraud. Remember Bernie Madoff? His fraud lasted 17 years before falling apart.

It would be nice if Tether eventually falls apart too, but the world will never run out of fraudsters and hucksters.

Bernie Madoff's fraud was big and awful, but, if the allegations about Tether are true, then (edit: for the purposes of this particular discussion) comparing the two is a category error. Madoff's fraud never raised any questions about whether the exchange rate between USD and some other currency was legitimate.

The innovation of Bitcoin is that it is a decentralized Ponzi scheme.

Bernie Madoff's scheme fell apart because it was centralized, and so, once you arrested Madoff, it was over. The end.

There's no one at the center of Bitcoin. There are big players, sure, but they are all replaceable. It's happened before and it will happen again. And each time one exchange or big player is arrested, shut down, or slinks away having stolen enough money to sate themselves, someone new can seamlessly slip in and start hyping Bitcoin and taking a percentage from the new rubes without missing a beat.

I honestly don't think it will ever go away, completely, for good, no matter how often it booms and busts. When I'm in a nursing home I'm going to be getting calls from boiler rooms trying to convince me to move my retirement savings into Bitcoin, I'm convinced.

Almost every currency is a ponzi scheme - that does not only apply to crypto.

Wombats poop cubes -- they stack them to mark their territory.

I did not see any data in that post that is new. The latest news this-year is that Tether paid-off the remaining balances of borrows/loans from other asset classes to make the USD holdings whole. The only way to tell is an independent 3rd-party audit, which would bring some finality to this discussion.

This is not "utterly unremarkable". Rational investors don't buy investments whose very basis is a lie. It's only unremarkable to cryptocurrency gamblers who've already accepted everything they're doing is a slow motion scam.

Considering the meteoric rise of BTC is tied so deeply to Tether issuances, it sounds an awful lot like you’re trying to convince us the emperor really has clothes.

Correlation is not causation. And your mental model of how the cryptocurrency markets work is likely way too simplistic--did you know that cryptocurrency perpetual swap derivatives clear over $350B in daily volume?

Pretend for a moment that Tether pulls a Nixon, and closes the "dollar window" ending redeemability. Then what would be the difference between Tether and e.g. the BitMEX XBTUSD perpetual swap contract? Just think about it for a while.

Editing my response because OP has edited theirs- putting my original comment out of context.

Go read more economics. And maybe trade some financial derivatives, lose some real money and see how that sharpens your mind.

Ending redeemability? Can you redeem a tether for a USD today?

Yes, certainly can, right here: https://www.kraken.com/prices/usdt-tether-usd-price-chart/us...

You can also short it if you are convinced Tether is going to collapse.

Sorry, trading it for a dollar isn't the same as redeeming it for a dollar.

You can easily withdraw USD/EUR you got from trading in USDT.

You're missing the point: trading means that you have to find someone willing to do the trade with you. If no one wants to buy your Tethers then you're doomed. Redeeming is completely different - the issuer of your asset has a legal obligation to buy them from you (or at least that's how it should work for assets that aren't scam).

So why not short it against USD? The choice is there on Kraken, it's arguably the easiest win possible if you are convinced USDT will eventually go to zero in the next few years? It's certainly not going to shoot above $1.

> Considering the meteoric rise of BTC is tied so deeply to Tether issuances

Got evidence for that? Because printing USDT after BTC went up is not a manipulation, but a liquidity boost.

Let's not forget that USDT isn't the only stablecoin in town, it's ratio is actually decreasing, all the way from 3k to 50k.

As a matter of fact,

https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.12903

If they are shady, then it's high time to employ and enforce regulations - if they can't regulate themselves, then someone else has to.

Arguing that this is old news, and that a small minority has been "in the know" doesn't hold much water either - the crypto scene has long since become mainstream, and as such, attracted regular masses.

In the end, it boils down to consumer protection.

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