Bitcoin Forum

https://cryptonomist.ch/en/2019/03/14/tether-dollar-reserve-holdings/

It's a long ongoing suspicion about USDT that they don't have 1:1 USD reserve. Especially when the books of the company was never audited. It's good that they came up with an explanation but they didn't provide any break up of the reserves yet. So it will be an ongoing dilemma until they provide a break up of their reserve.

Also I don't see any issue in using other assets as a reserve till the time they can justify the overall volume. But their books need to be audited by a reputed third party.

Yep, it is obvious that they implemented "fractional reserve"-like system because of lack transparency. I wouldn't be surprised if Tether only has $100 million from its $2 billion market capitalization.

There has been a lot discussion towards that and maybe it is needed to be discussed, surely.

This is the thread: https://bitcointalk.org/index.php?topic=2805586.0

It is maybe it’s way to correct what they have done, in the mistake that they always say that it is 1:1 which is only mean to the equivalent. So it maybe a different thing like any other valuables that is of the same value.

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This could be a helpful reference towards what happened to the investigation towards USDT

Bitfinex Investigation Outcomes: Manipulations with the Fall in the USDT, Trading Bots Involved (https://medium.com/@skeinsley/bitfinex-investigation-outcomes-manipulations-with-the-fall-in-the-usdt-trading-bots-involved-19973cb854f6)

I think that's an old issue as some says tether don't really have a 1:1 backed up and now tether had confirmed this. Anyway, this is also good that they vouch it but yet people should how much is the reserve. While this will bring uncertainty to tether as people will definitely lose trust to it.

As what they had said;

I pointed this out months ago (https://bitcointalk.org/index.php?topic=5062763.msg47634680#msg47634680). The nonsense letter that they released in November of last year stated that Tether's "portfolio cash value" was $1.8 billion. "Portfolio cash value" specifically means the final value after all assets have been converted to cash. They've not had enough USD to back up USDT in months, if ever. It seems they've finally changed their Terms and Conditions to catch up with what they've been doing for months already. It's highly likely the majority of their assets are not cash, and we have no guarantee, other than what they tell us, that these assets are worth what they say they are worth. I've said it before, and I'm sure I'll end up saying it several more times before their inevitable collapse - don't trust Tether.

They could have put all this to bed immediately at any time in the past several months by submitting to a full, independent audit of their finances. The only reason they have for refusing to do so is if they have something to hide.

They were really never audited by someone outside the company, right? That's the reason I've found this coin sketchy, you'd have to trust that they do have enough USD as reserve. Imagine if there's a cash run.

Yes, no external audit were done on Tether AFAIK so it's really hard to believe that they are true to their 1:1 conversion and that they really have USD reserves ready for every USDT available. I am inclined to believe that they didn't have the USD reserves in the first place, and only have assets that can be changed into USD in the event that they needed it, hence why they are constantly dodging audits and whatnot. Tether has never been so transparent to people, and that's where my fears and doubts are rested. All the people need to know is an external, reliable audit and that's it.

Correct. They kept deflecting and making excuses, and then finally released this letter last November, which is just a joke: https://tether.to/wp-content/uploads/2018/11/Tether-Letter.pdf

A tiny unknown bank in a tax haven country releases a letter with no names or signatories stating they hold assets (note: not cash) equal to $1.8 billion based on the "information currently in their possession" - in other words, what Tether have told this bank the assets are worth. Essentially their proof of assets is a letter from an unknown saying that the assets are worth what Tether told them they were worth. Utterly laughable.


Then Tether would crash, and many people would be left either trying to sell their USDT at far less than 1 USD each, or unable to sell at all. Their "assets" could quite easily include other cryptocurrencies. Create 1 million USDT out of thin air, sell it all for $1 million of BTC, and then they can claim that these 1 million USDT are fully backed by their assets. It's a complete scam.

Whatever they tether their tether to one cannot complain about it's price, it always seems to be stable. It serves it's purposes and there are others like it such as gemini USD

Except when it isn't. There was a period of 2 months at the end of last year where it fluctuated around $0.95, and it has previously dropped as low as $0.91. Not great for a "stable" coin. And you can absolutely complain when they silently change their Terms and Conditions to state that the coin they have spent so long claiming was fully backed up 1:1 with USD, is in fact backed up by anything and everything they like, including "receivables from loans". Right, because no one has ever defaulted on a loan before? We still have no idea what there reserves actually are because they still refuse to allow an audit. Tether is a complete gamble at this point.

If anybody believe that tether has 2 bln dollars reserve than that person is so naive
If Tether has that money than investigation has to be done where that money came from
It is one big surprise for me that regulators didn't start any really serious trial against Thether
Where are that money
With that kind of money there is possible to influence markets or make massive ML
As for now some exchanges owned crypto trading thanks to Tether

The problem is that only a few bats an eye regarding if they have the reserves or not. But that sure is a lot of money and of course authorities will check on it soon. Does this mean it is not safe to choose it as a stable coin then? Right?

"Safe" is a matter of perspective.  Bitcoin (and other altcoins that don't require backing) are not dependent on trust.  The vast majority of stablecoins are entirely dependent on trust.  They require you to believe that a centralised entity is holding the reserves they claim to hold.  It's a risk you have to judge for yourself.  

It's quite simple really:

1) Create 2 billion USDT out of thin air.
2) Sell these 2 billion tokens for bitcoin.
3) Sell this bitcoin for 2 billion USD.
4) Profit.

With the constant stream of news/information/updates that Tether is pretty much insolvent, coupled with the fact there are more and more stable coins out there to choose from, I continue to be amazed that people are using it. If people haven't smartened up and its market share is still as large as it is now when it collapses (and it will), we are looking at taking a big hit to all markets.

Yes, really quite muddy company. I never wanted to mess with Tether. Of course, at one time they offered a very good idea, but their activities always seemed very suspicious to me. From the very beginning of the project, there were a lot of scandals around it, and I think that these were not unfounded accusations. It seems to me that such projects as Tether should be as open as possible to the crypto-community in order to earn the trust of people and act for the long term. It is possible that in 2019 we will get many more stablecoins and they will have to be studied very carefully before investing in them.

Tether is walking along the same lines as the paper money. He began to tie it to gold and quickly printed a lot of money to end up with promises.

Extensive reliance on stable coins is more dangerous than paper money itself. I expect a major collapse of these currencies as soon as legislative laws are enacted.
Believe me, Tether will be like Tulip mania.
Also, the appearance of those company based cryptocurrencies is infused with a lot of mystery in addition to some systems such as Binance Coin.

Legislation is definitely an important point in this discussion.  Decentralised cryptocurrencies with nodes in just about every point on the Earth are difficult to legislate for.  But if you have a single entity holding fiat or other assets in reserve, that entity will likely be subject to only a small number of legal jurisdictions.  Perhaps just the ones where they base their headquarters and any where they store their backing funds/assets.  It will be comparatively easy for legislative bodies to enforce any appropriate laws.  This is why centralised systems are inherently weaker.

The new crop of stablecoins are a very different beast. I'd trust the dollars backing them are real. I would not trust the crews that issue them to guarantee me access to them.

Because the less opaque stablecoins are so desperately eager to comply most people won't ever want to use them. I've never touched USDT and never would. I'll never touch any other stablecoin because of that.  

It's depressing how things have been allowed to get like this by this stage. I really thought it could've shaken off shit like this by now.

From the point of view of any market speculator, it is alarming, since a stable currency was a guarantee to take refuge and think it was equivalent to USD, when being backed by other currencies does not fully guarantee the value that is believed to protect.

You must establish or seek an exchange that guarantees FIAT money in USD, since at the time of a fall, if it is backed by a currency, it will continue to fall, it will begin to be a non-stable currency that would be affected by high volatility. Personally I had some confidence in Tether, but now it is difficult to operate with conditions like that.

The only exchange that FIAT USD guarantees is Bitfinex and has high requirements to be there for new accounts, since it must have at least $ 10k or the equivalent in cryptocurrency.

I think people generally interpret the word "guarantee" in the wrong way when it comes to stuff like this.  Even prior to this latest twist in the story, people should never have seen it as a guarantee in terms of absolute certainty, but rather as an assurance based on trust.  Insolvency has always been a possibility.  Regulatory shutdown has always been a possibility.  Saying that it's guaranteed does not negate these possibilities.  Tether are a company who have made a promise to their customers.  That's it.  Promises can be broken, as appears to be the case now that it seemingly isn't backed 1:1 by USD.

Like avikz said, scepticism about every USDT being backed up by one dollar has been around for a long time and IMO has been the main reason of not trusting it. It's interesting though that now they are saying that Tether can be backed up by other things at some point of time. The trading volume and marketcap of Tether is crazy, I am afraid when the bubble bursts it can cause serious negative impact on the world economy.
At the same time, I am not sure that Dollar is even a good guarantee, since it's fiat and USA's debt problem is very serious which could get out of control and cause hyperinflation.

And they want it to end with just a statement?

No audits? No proofs? No real facts to back it up?
I hate to say it but since day 1 Tether had been smelling with a bad odor or should I say "fishy".

To those who support this kind of currency be really careful. I am not saying it is at high risk but being careful is also not bad right?
An end could come anytime and even with other currencies. These might just go faster than them. ;D

I don't use USDT and used to be skeptical about this project for a very long time, mainly since they refused an audit and instead did an audit themselves. A self made audit is the opposite of a real audit. You do it only to decrease criticism and appease the crowd. It obviously worked for a time because there were 2 or 3 months where USDT disappeared from the media. Now it's back there again claiming they aren't backed 100%, which is a joke because they were literally claiming to be backed by USD 1:1 when they first launched.

Most people already suspect that they don't have enough USD in reserve to back up the number of tether.  We already see how much people lost confidence when USDT went under .95cents when its supposed to be pegged to the dollar.  Tether is still doing huge volume and if there comes a day when it implodes prices will crash greatly as investors lose even more confidence. 

The entire concept of stablecoins seems sucpicious.
Thy would any private investor just store in a bank billions of dollars in order just to back this stablecoin? And users don't even have to use it and may HODL this stablecoin without paying any fees or send transaction outside the issuer service so he won't get any revenue from fees. In this case it will be more reasonable for example to buy some obligations, stocks or use any other traditional and safe way of investment and get some revenue instead of just freezing your money.

If we look at how much shit Tether has gone through in the last 12 months, and the fact that it gained more market share instead of lose market share, it's safe to say that people don't seem to care.

We've gone so far that just the idea of this being worth $1 is enough for people to continue using it. It's quite similar to fiat actually--people use it without thinking about the potential negative consequences in case it implodes.

Look at the volumes Tether generates. Some times it's near $10 billion on a daily basis, while its own market cap is just $2 billion. Say about it what you want, but this is the only coin with actual use as currency.

I won't doubt anything coming from the stablecoin. It is centralized stablecoin and not very transparent.  So anything is possible with the company.

Loan to third-party sounds like fractional reserve banking on cryptocurrency world.

That's why Tether's market capitalization can never match other altcoins even though Tether has very good potential to be a valuable digital asset.

I think they might guarantee a large chuck of the dollar reserves, but not the total amount. It is a daunting idea that say $2 Billion is kept in reserves and that a centralized authority are making promises that it is 1:1 against the Tether on their books.  ::)

It was a ambitious project from the start and a supposedly safer way for people to invest in Crypto currencies with a Dollar backing. Most people seem to think that the previous ATH of Bitcoin was linked to Tether.  ::) 

No one is surprised about this anymore. The way they took almost 700-800 million USDT out of circulation in quite a short period of time was very suspicious. They probably had to take them out of circulation to have the total number of USDT be closer to what they actually hold in their reserves (whatever their reserves consisted of at that time).

It still surprises me that we haven't seen regulators actively try to raid the crap out of TetherTO. They're either patiently waiting for their moment to strike, or it's not of much importance to them. ::)

Suspicion such as these is the reason for most of the skepticism around stable currencies. They are backed by actual currencies or assets, this defeats part of the purpose for digital assets, which is decentralization, as the developers try to achieve stability in an otherwise volatile field. But with back or transparency, comes huge risks.

Tether is partnering with Tron, so more obvious ToS changes were made in terms of it. And like usdt is not interested in quitting that collaboration. ToS is fine, people not trading tether just being too dramatic and spread fud with NO proofs

Tether is essentially a bank that runs on a blockchain, without a storefront.

I've warned people about this all the way along. Stablecoins, no matter how trustworthy they may seem, eventually are not trustless the way bitcoin and other decentralised cryptos are. You are relying on the legitimacy of their audits, their reports, and their full reserve promises at the end of the day.

And what they are doing right now with shifting the goalpost on their full reserve target imo is just confirming that. They want to make profit, and they know that they can't do this through operating at full reserve, which is why they very subtly changed to basically a fractional reserve system. Using them makes no sense at this point to me.

Market works like that sometimes they took coins out of  circulation sometimes bring them back. It should be clear for the person who familiar with economy.
Actually I was patiently looking for that information about tether in different sources and have not found any proofs. Better learn something than stay gossip gather

I haven't touched tether once while being in the crypto market.  I do not trust it and I don't want to get unlucky and be caught holding it while the whole thing gets exposed.  This just may be all fud and they may really have enough USD to back up their usdt but I'm not willing to take the risk.

I had to look that up cause I thought you were joking. Wow. Just wow. Tron's whitepaper is plagiarized and their code is plagiarized. It has a long history of scamming, running fake competitions and announcing fake partnerships just to pump the price. Justin Sun is great at marketing to gullible people, but totally useless at developing a cryptocurrency. If there was one coin they could have paired with to make themselves look even more untrustworthy, it was TRON.

Actually, now that I typed that out, it makes perfect sense. A scam cryptocurrency pairs up with a scam stable coin. They are perfect for each other.

It is still a marvel how they managed to market themselves as the stablecoin of dollar fiat currency in many places.
Look at the exchanges, many of them still use it to this day, after all that has been said and done about it, they are still used everywhere.
I mean I don't even know how we could get it back you know? Like I understand it was distributed to the public at one point and purchased a bunch of coins with it thanks to their "trust me I have it backed in real currency" but who really believed them ?

Like they gave away their fake currency to people and bought bunch of stuff and people were like "alright if you say it is 1to1 then I will accept this" and they moved on with their way. That is crazy to think about, how do you really trust a person that say "yeah I have the money, I just don't want to give you the money but I will give you a paper that says I have money", that logic is incomprehensive at best. Hopefully, we will one day see them collapse but I doubt it will be anytime soon.

What project/whitepaper did tron copied from? Need to know this so that I can keep tabs on the information and other tron related stuff.

The blockchain already sounds compromised with the CEO tag on an open and decentralized blockchain.

https://zycrypto.com/tron-whitepaper-plagiarised-ipfs-filecoin/

https://coincentral.com/community-accuses-tron-plagiarizing-whitepaper/

https://www.reddit.com/r/CryptoCurrency/comments/7q7alk/summarizing_the_recent_tron_mess/

https://www.reddit.com/r/CryptoCurrency/comments/7qfjef/tron_gets_caught_again_plagiarised_white_paper/

https://medium.com/digitalassetresearch/trx-we-found-new-instances-of-code-copy-without-attribution-but-these-pale-in-comparison-to-the-305aff860f8b

Bonus twitter hilarity: https://www.reddit.com/r/CryptoCurrency/comments/8a8kav/vitalik_buterin_just_burned_justin_sun_on_twitter/

I heard this news and it seems to me that this is one of the reasons why they have not yet been officially audited. They just did not have that amount of dollars. And now they say that they simply do not have to have so much money. Funny yes?