Tether supports redemptions of USDT to USD: https://tether.to/es/redeem-tethers-to-your-bank-account/
Contractually, Tether doesn't allow redemptions from most people. New Yorkers are excluded thanks to the NYAG settlement. US persons are (or were when I checked) blanket excluded in their terms. Of the remainder, only their 'customers' as defined at their sole discretion are eligible for redemptions. Then, you have to meet minimum transaction size requirements ($100K I believe) and also pay their fees.
What individual would bother doing all that when they can hit 'sell' on Coinbase?
So once the retail rubes are ruled out, you've really only got gigaholders whose fate is so tied to USDT's continued existence and value that pantsing the emperor leaves them rekt.
Edit: for your later addition:
>What individual would bother doing all that when they can hit 'sell' on Coinbase?
In addition to the above, someone doing an arb play during any one of tether’s many “it’s gonna die this time for real” depeggings.
Letitia James says:
> The OAG’s investigation found that, starting no later than mid-2017, Tether had no access to banking, anywhere in the world, and so for periods of time held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations.
The CFTC says:
> As found in the order, Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period from 2016 through 2018.
I don't personally think that it's impossible to redeem, I think they're almost guaranteed not to be good for all outstanding Tethers. I think they keep some small pool of liquidity to satisfy certain key partners, and gamble with the rest of it hoping for yield they can take off the table for themselves. I strongly suspect they got ruined during the downturn. They had a ton of Celsius equity, for instance.
I think they loan tethers to institutional players in the space without collateral, too.
[edit] I'm not sure BFX actually arbs the peg, I think they stopped? I'm trying to find my source. However, I do know Alameda arbed the peg.
> Edit: for your later addition:
Sorry for the ninja add.
What's not really speculation? The new goal post you moved to, or the point I was originally contesting, before you retreated to an unrelated argument for which you could dump piles of (also unrelated) evidence?
You were claiming[1] that Tether isn't honoring redemptions, based on the fact that no one's screaming "Hey, look at me, I just got some USD back for my tethers, 1:1" -- even though people could also point to tether's failure to redeem, and even profit from advance knowledge of the imminent crypto collapse it would trigger.
Now, with no acknowledgement of what just happened, you're moving to this argument:
>>I don't personally think that it's impossible to redeem, I think they're almost guaranteed not to be good for all outstanding Tethers.
It looks like you have no aversion to making a baseless claim, and then firehosing evidence of a different one when called on it. I don't think that makes for a productive exchange of ideas.
I mean, if you really believed that Tether was honoring at least some redemptions[2], why would you casually make the argument that, gosh, we don't have reports of successful redemptions, they must not be doing any at all?
>I'm not sure BFX actually arbs the peg,
Yep, another point I never made.
[1] https://news.ycombinator.com/item?id=34635720
[2] >> I think they keep some small pool of liquidity to satisfy certain key partners,
> You were claiming[1] that Tether isn't honoring redemptions, based on the fact that no one's screaming "Hey, look at me, I just got some USD back for my tethers, 1:1" -- even though people could also point to tether's failure to redeem, and even profit from advance knowledge of the imminent crypto collapse it would trigger
I was trying to say they claim to (or have in the recent past claimed to) allow redemptions, but in reality, they don't honor all redemptions. They don't, because their terms of service say so. They don't honor redemptions to NY residents, any US persons, to anyone requesting less than $100K, etc. This is all on their tether.to/legal site. They've updated this wording many times.
I don't think in [1] I said they don't honor any redemptions.
Yes, nobody's screaming about it. I think once you exclude the above group (who sell at exchanges), then the remaining are either going to be taken care of out of a small pool of liquidity, or know not to ask for cash.
There's a ton we don't know. We don't know if Tethers are actually being issued in exchange for deposits. They could be issued to institutional players on faith, in which case a 'redemption' wouldn't be a cash withdrawal but instead they tear up the promisory note and return the USDT to the treasury. That seems within their capability.
I further maintain no big players but Trabucco and SBF have said 'they were good for our redemption requests' so I have no reason to believe they are, given their legal issues, questionable track record, and the suspicious folks in charge.
> I think they're almost guaranteed not to be good for all outstanding Tethers.
There's nothing baseless about this, they have a history as detailed by the CFTC and NYAG settlements. I have no reason to trust they're suddenly good for it. So I have no reason to believe they'd be good for all redemptions in the future.
I hope that clarifies my position.
That makes it a very unforced error. If you had come into the discussion in good faith, you wouldn't have to remember which ridiculous, over-the-top claim you made, in which subthread, and you wouldn't be addressing arguments someone never made (like about the NYAG stuff). You would have one model, one truth, and you could just argue from that.
Re-read [1] and the two levels above. Can you honestly imagine anyone going away from that believing (or believing it's your opinion) that Tether is regularly honoring withdrawals?
Even now, you don't look like you're arguing in good faith: your "proof" that Tether doesn't honor withdrawals is ... what? That their ToS has long said they don't honor certain types? Okay, but by that definition, Wal-mart isn't honoring gift cards either, simply because their ToS reserves the right not to in some cases (e.g. old card, belligerent customer). No one would seriously try to cite that has proof that no one has been buying goods with Wal-mart gift guards.
In a good discussion, the claim that Tether "isn't honoring withdrawals" would be that they aren't honoring ones that, on the face of it, meet their criteria. Using a few long-standing caveats as your "out" is dishonest.
I hope to see you do better in the future. Some people look up to you, and you're letting them down: https://news.ycombinator.com/item?id=28795594
Don't be silly, you're just being argumentative and trying to read something into my replies that isn't there. You failed to get my point. That's on both of us. Pretty much end of story.
I'm sorry but I'm not going to continue this because you are not having a conversation in good faith. Enjoy your weekend.
If you don't want people to dispute that "Tether hasn't honored withdrawals", then don't make that argument!
Good faith = honest attempt to reply to what someone actually said, not changing the topic, not talking about weekends.
Where, specifically, did you think I broke that?
I strongly encourage you to re-read what you wrote in [1] again and see if you can find any reasonable interpretation whereby someone would think you were saying Tether was regularly honoring redemption (as you now claim you meant after being called out). It just isn't there.
It doesn't matter that your general conclusions about Tether might be correct. "Good faith" means not saying things like, "They claim to [have redeemed USDT for USD] but nobody has posted proof that they got their money."
If you want to have a good-faith discussion you can't just recklessly spray negative remarks about the villain. You have to stick to things you actually believe -- or at least, recognize when you were out of line and acknowledge the moved goal posts. It's really not a big ask.
If they knew that Tether wasn't honoring redemptions, they could take out a large amount of Tether-denominated loans backed by their own collateral. Then they could go public with their information and profit.
The market can remain insane longer than you could remain solvent in that case.
In this hypothetical situation, you have information that would apparently "crash the market" if it were to become public, so what happened for the last decade isn't really relevant. Remember, this conversation started talking about Tether redemptions failing to go through and whether or not people would go public with that information. Someone said they wouldn't go public because it would crash the value of their assets, but I was pointing out that you could profit from the crash in value as well.
And this information has been public for years, including the NYAG evidence which is very damning, but no one seems to actually care - or it’s being propped up successfully regardless.
Even in this thread there are folks who refuse to believe things Tether themselves have admitted to under oath and things Tether says in their own TOS now.
At this point, even if you had authenticated video of the Tether founders admitting it was all a giant scam, would it change the market behavior? I kind of doubt it.
It’ll keep going until it doesn’t, then who knows.
Do you have a way we should be trying?