Am I correct that it’s not necessarily $10B in withdrawals, as it is that the total market cap (valuation * total coins) dropped by $10B?
Seems like an important distinction?
Seems like an important distinction?
That is before they printed tokens without backing, used them to prop up market prices. And now they are pulling those out after likely making some gains when prices were high.
So if the price is still $1 but the circulation has gone down by 10 billion, that means $10B worth of it has been cached out
Tether being caught lying is practically perennial. Unless we have records showing someone receiving $10bn from Tether, it's safe to be sceptical of the claim.
Instead of $10B of tether being converted to USD and taken out of the crypto ecosystem, what I suspect has happened is that $10B of loans have been paid back in tether and the collateral has lost value so the borrower cannot re-borrow the tether. Bitfinex doesn't ever redeem tether for USD and that isn't how tether is burned.
This means that it is predominantly crypto backed, which will at some point collapse if crypto collapses, but it is much more intrinsically stable than Terra/Luna up until crypto fails.
Maybe I'm wrong and we're about to see Tether bolt for the exits and crash and take out all of crypto with it. But crypto has been through a worse crypto bear market before, and Tether has been burned before without a systemic panic.
Poster below says Tether can create and destroy coins at will. They can certainly create them, not sure they can destroy them if in others wallets (and doing so would be a huge adverse news event). If they have destroyed coins can only be their own (in their own wallets) but I suspect that would also be transparent. My feeling is that yes there have been $10bn of redemptions.
I.e. either the number of total coins in circulation has dropped (unsure how that is different than withdrawing) or its valuation has dropped (i.e. it lost its peg).
If they are just destroying coins, then they weren't 1:1 (possibly more than 1:1 before, but also possibly less).
People then get all hand wavy and point at the fact banks have fractional reserves too.
A more accurate description would be „withdrawals minus deposits”, but it’s quite obvious that this is what is meant.
The point parent is making, AFAIK, is that without actual audits (that they have promised for years were only months away) we have no idea if they actually processed $10B of withdrawals. Or whether they simply nuked $10B of unbacked Tethers from orbit. Maybe they printed $10B, used it to buy Bitcoin, then sold the Bitcoin back for USDT and nuked the USDT? We have no way to know without a formal audit.
An exchange could borrow the USDT, and when returned, they could be burned - with no dollars changing hands.
Therefore it's the number of total coins which is falling.
So if 84 billion coins are there in circulation . 84 billion of dollars had been exchanged for coins . If the coins reduces to 73 billion then 11 billion coins have been redeemed back to dollars