Apparently you have to bring a minimum of $100K of USDT to get it redeemed into real money.
I would say this is an incredibly stupid trade to try because you're relying on Tether actually paying out as promised.
I would say this is an incredibly stupid trade to try because you're relying on Tether actually paying out as promised.
The entire point of Tether is that you can absolutely trust them with $100K, $1M, $10M, or whatever. It's backed, it's robust, it's tethered, and they guarantee payout. The promise is essentially the AAA security of the crypto world, the equivalent to US Treasury bonds or whatever.
Meanwhile, the sentiment I keep hearing is yours: "You'd have to be absolutely nuts to trust these guys!"
Which is not only diametrically opposed to the picture Tether is trying to paint, but it's saying that AAA is actually a CCC− and hence that there is nothing in the crypto world that's above, oh, I dunno, B- or thereabouts.
But the entire point of Tether hinges on it being perceived as AAA.
Take for example the US dollar treasury bonds. Even countries and people opposed to the United States and everything it stands for agree that it is AAA. People that hate the US agree that the USD is a stable currency and their bonds are secure. Literal enemies, legally at war will prefer to use USD over their own currency for many transactions!
Meanwhile it's hard to find anyone that hasn't apparently drunk crypto Kool-Aid that thinks Tether is anything but a trash fire.
It's just so bizarre...
No, they don't. This is what Tether says in its ToS at https://tether.to/en/legal :
"Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves."
So, instead of redeeming your $1M in USD fiat, they can give you an equivalent amount of Dogecoin or Chinese commercial paper.
Furthermore, they say: "In order to cause Tether Tokens to be issued or redeemed directly by Tether, you must be a verified customer of Tether." You are not a "verified customer" of Tether if you exchanged USD for USDT at Coinbase or Binance.
Strongly analogous to the eurobond crisis, and the mortgage tranche issue; there was a period in 2008/9 where all sorts of things were downgraded overnight.
> Take for example the US dollar treasury bonds. Even countries and people opposed to the United States and everything it stands for agree that it is AAA. People that hate the US agree that the USD is a stable currency and their bonds are secure. Literal enemies, legally at war will prefer to use USD over their own currency for many transactions!
Yes - and this is why Americans panicking about financial mismanagement always come across as so out of touch. USD is the currency everyone else runs to for safety.
No, the entire point of Tether hinges on everyone pretending that it's AAA, and just letting the Tether money printer lift all crypto boats.
Anyone paying attention knows its a fraud, but are happy to look the other way, because it's the reason BTC is $30K, instead of $600 right now. Sure, they'll lose whatever they have invested at the moment when the house of cards collapses, but if you can't predict when the music will stop, the smart move today is to keep playing.
The smart move while the music is playing is to sell the tickets, not buy an instrument of your own.
It's like selling spades during a gold rush.
It's why bubbles grow. The optimal move for anyone but a precog is to keep playing, right up until the end.
Very few people in this case actually mint and sell tickets, most of them are hangers-on who are either hoping to dump to a bigger fool, or are also selling tickets (but are also utterly dependent on the music to keep playing.)
So what is your point actually?
"Counterparty risk"
This is what killed MtGox, their over-reliance on banks to hold the collateral needed to make them solvent. Carl Mark Force IV was a DEA agent who was basically blackmailing MagicalTux, forcing him to invest in fake crypto projects, and if he didn't play along, Karl would use his DEA powers to freeze MtGox's bank accounts. This prevented people from cashing out, which was a problem. Major exchanges learned that touching actual US dollars in bank accounts is poison, and something that major exchanges can't really do without devoting massive (crippling amounts) of resources to legal and compliance teams.
Better stablecoins exist now, from a US regulatory standpoint (USDC) and from an algorithmic pegging standpoint (DAI), but the people who run exchanges still like using Tether between themselves for historical reasons, which is fine. I will never hold Tether, and probably every person who reads this should never hold Tether, but not because it's necessarily bad, but because it's not for you. It has a very specific utility to certain crowds, and IMO that's fine.