Bitcoin Forum

Tether is a token used to trade cryptocurrency with. The CEO of Tether is also the CEO of BitFinex, the largest crypto exchange in the world. Tethers are supposed to be backed by USD. So, for every Tether they issue, they have a dollar in their bank account. Everytime a new bunch of Tethers is 'created', the price of Bitcoin shoots up, because they buy Bitcoin with it on Bitfinex. Because they are issuing so many Tethers (100 million in a day isn't uncommon), people are starting to doubt whether they actually have the USD to back it. Coupled with the fact that they are far from transparent, delay audits to prove they have the dollars, and they do not have the obligation to trade your Tethers back to USD, it sure looks fishy. You can imagine what will happen if it turns out the Tethers are created out of thin air to prop up the price of cryptos.

Whats your opinion on Tethers?

You just answered your own replied in there, tethers are supposed to be backed by fiat, "supposed" and it is obvious that they are not backed up with anything.

They are just increasing the supply as much as the want.

And we all knew that the max supply was just 930 million dollars, but the actual marketcap is over 980millions, and it is still increasing hour by hour.

This is very fishy

First of all what is the source that they buy bitcoin with such tether? But yes, I Never thought this way isn't it making bitcoin to a bubble itself? because bitfinex is the largest exchange we all know that and bombarding BTC price using bitfinex is quite easy. But if suddenly the tether backing conspiracy come to any conclusion bitcoin could scrap back to scratch. Is it the real people buying bitcoin or only bitfinex buying it with their tether?

Check out these two threads by Theymos (he runs the forum). There's some really good discussion on the topic. Basically Tether is supported by nothing and if there's a run on it they can't honour their agreement to peg it to USD.

https://bitcointalk.org/index.php?topic=2428027.msg24862099#msg24862099

https://bitcointalk.org/index.php?topic=2435905.msg24943714#msg24943714

Wow I am shocked a forum administrator voiced his opinion about Tether possibly being a scam.

Doesn't this threaten BTC's legitamacy quite a bit?

If tether is exposed as being fraudulent, this (to me) seems to be the #1 threat to bitcoin valuation.  Assuming there is in fact fraudulent activity, how long can this be suppressed from the public?  I suppose three scenarios:

- Has a case been opened with the local securities commission in the country where tether was created to investigate?

- If there's a run on tether, Bitfinex might have to default.

- If a competitor to tether is adopted by other exchanges, it might cause a run (and then default) on tether.

are you interested creating a new tether? this is a great business idea and the overblown current one creates the trust crisis and the demand for an alternative fiat tether

you get high returns, and the risk is practically zero

pm me

i have studied tethers businesplan intensively

regards

Thanks for the links, really useful stuff. If only more threads on this forum had such level of objective arguments and polite discussion.

IMHO Tether is highly suspicious and I wouldn't be surprised to see it collapse. Therefore, I try to minimize my Tether holdings. It will obviously have negative impact on all crypto currencies but I don't think it will seriously hinder BTC. There will be a drop in price maybe even quite big one but I am expecting BTC to start recovering quickly.

yup that's my interpretation too. Based on their statements of being backed by "assets" (not dollars, or they would say dollars).

if they buy crypto at price 10 for 10 magic tethers, their books remain neutral. but when those 10 tethers are then used to buy crypto and the price goes to 11, the crypto they are holding to back tether goes up in value to 11, giving them an extra 1 value to make up their deficit. If they do it again, the effect is compounded, bringing them closer to solvency every time.

Once they are solvent on-paper, though, they need to transfer their value to something insulated from the bubble they are creating or sustain the bubble...

That's the interesting part for me. Sure, we're all worried about the crash because that's the obvious end to this, but my suspicion is that is only plan B. My hunch is that plan A is to use their now-10x value bitcoins to quietly buy back tether until their books are in order and tether can disappear, and they won't be international finance criminals, and they will have captured a large share of bitcoin's unnatural price growth.

not to mention the fact about tethers backbone,

what will happen if the 2 banks that tether uses to hedge collapse? go bankrupt or get confiscated?

or the tether team gets bankrupt,

tether is a vast recentralisation of risk, and now its already 1 billion US-dollars high,

if you ask me the market needs an alternative.

regards

Probably it will be the main reason of 2017/2018 bitcoin/shitcoin bubble burst.

To be fair, Friedman LLP did release a statement about Tether. They verified that banks were held in Tether's name in the amounts of outstanding USDT. They couldn't technically verify Bitfinex's access to the accounts or other obligations, but I don't think we should assume insolvency. They are rightly worried about regulatory action and are in a serious pickle, but that's a different discussion.

Also, I've been watching the exchange price action closely. Coinbase/GDAX has been leading Bitfinex significantly during upward spikes, suggesting that it isn't Tether that's pumping the price. And if you look at Tether's circulating supply, it's silly to think it could singlehandedly prop up the entire market.

its very difficult to divide bitcoin if you cant sell it for tethers...

I don't really see what is silly about that, it's just "Willy MtGox" all over again. And it's even easier in this case, not only they own the Exchange (BitFinex), they also own the "Fiat" (Tether).

Whenever I see tether mentioned or talked about I immediately assume the worst.
It's a disaster in the making.