Tether: not even a scam

[coupable]

I had some Tether on poloniex, I was using it to freeze my bitcoin's value, but when I had watched the price decreasing continousely, I sold them for bitcoin at $0.98.

Here to let everybody understand as Tether still in top 100 marketcap cryptocurrencies. As every currency price depends on regular factors (supply/bids/asks/...) how this coin can keep stability with relating to dollar price? Moreover, traders use tether to freeze their bitcoin balance when bitcoin dump (as mentioned above). Tether really made me confused compared to other coins and i didn't really expect it to be considerated as a scam. May be this post highlights the whole perspective about Tether

[European Central Bank]

Once that they reach the 900 million tether's of max supply they are not going to be able to print more of them, i mean, to create more of them because the max supply is less than one billion of tethers

says who? i can't imagine they're gonna create something with a hard coded limit like that especially when it's 1 to 1 with an infininte currency like the dollar. it doesn't make sense.

all it is is a token under their control. it ain't a real cryptocurrency.

[KingScorpio]

I have a great idea for a business. I'll invite people to send me money. For every dollar they send me, I'll send them a receipt saying "Thanks for sending me your dollar. You can have your dollar back whenever you like subject to the following condition: you don't really have any right to have it back. And I promise I'll put it in my bank account and keep it there until I decide not to anymore." And people could use my thank-you notes as money!

Would this be a scam? No it wouldn't. A scam is, by definition, a deception; a scheme based on dishonesty and fraud, and I'm being completely candid about my intentions.

From the Tether FAQ:

How do I know my Tether is secure?

Tether is built on top of the revolutionary and cryptographically secure open blockchain technology and adheres to strict security and global government laws and regulations.

All tethers are pegged at one-to-one with matching fiat currency (e.g., 1 USD₮ = 1 USD) and are backed 100% by actual assets in our reserve account. As a fully transparent company, we publish a real-time record of all value held and transferred in and out of our reserve account.

Tethers can be securely stored, sent and received across the blockchain and are redeemable for cash (the underlying asset) pursuant to Tether Limited’s terms of service.

And here are the terms of service as they relate to the redeemability of Tethers:

3. Purchase and Redemption of Tethers: The Site is an environment for the purchase and redemption of Tethers. Once you have Tethers, you can trade them, keep them, or use them to pay persons that will accept your Tethers. However, Tethers are not money and are not monetary instruments. They are also not stored value or currency.

There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers.

So Tethers are redeemable subject to the condition that they're not. No deception here. There is a fully transparent company for you.

Also from the terms of service:

Limitation of Liability & Release: Important: Except as may be provided for in these Terms of Service, we assume no liability or responsibility for and shall have no liability or responsibility for any claim, application, loss, injury, delay, accident, cost, business interruption costs, or any other expenses (including, without limitation, attorneys’ fees or the costs of any claim or suit), nor for any incidental, direct, indirect, general, special, punitive, exemplary, or consequential damages, loss of goodwill or business profits, work stoppage, data loss, computer failure or malfunction, or any and all other commercial losses (collectively, referred to herein as “Losses”) directly or indirectly arising out of or related to:
   1.   these Terms of Service;
   2.   the Site, and your use of it;
   3.   the Services, and your use of any of them;
   4.   the real or perceived value of any Tethers or of digital tokens, money, or any other property used to purchase Tethers;
   5.   any failure, delay, malfunction, interruption, or decision by us in operating the Site or providing any Service;
   6.   any stolen, lost, or unauthorized use of your account information any breach of security or data breach related to your account information; or
   7.   any offer, representation, suggestion, statement, or claim made about us, the Site, or any Service by any Associate.
You hereby agree to release the Associates from liability for any and all Losses, and you shall indemnify and save and hold the Associates harmless from and against all Losses. The foregoing limitations of liability shall apply whether the alleged liability or Losses are based on contract, negligence, tort, unjust enrichment, strict liability, or any other basis, even if the Associates have been advised of or should have known of the possibility of such losses and damages, and without regard to the success or effectiveness of any other remedies.

This is obviously very well thought out! According to #4, if you "perceive" that Tethers are worth something, and they aren't, you have no recourse.  Under #5, whatever it is that Tether does, if they suddenly stop doing it, you have no recourse. And under #7, if someone from Tether told you that Tethers are worth something, and they aren't -- no recourse. Unjust enrichment? No recourse!

If Tether management decides to close up shop tomorrow and leave with the all the money, it wouldn't violate the terms of service. It's all there in black and white - no deception there!

Could the fact that Tethers are trading somewhere close to par have anything to do with the fact that some people "perceive" (see 11.4 above) that Tethers have an intrinsic value or are redeemable? Could it have anything to do with the possibility that some people "perceive" that Tether's reserves are committed to redeeming Tethers or supporting the value of Tethers? If anyone "perceives" that, it's their own fault, not Tether's!

Here's my idea again. I'll invite people to send me money. For every dollar they send me, I'll send them a receipt saying "Thanks for sending me your dollar. You can have your dollar back whenever you like subject to the following condition: you don't really have any right to have it back. And I promise I'll put it in my bank account and keep it there until I decide not to anymore." And people could use my thank-you notes as money!

Maybe not. Nobody would do that. It would be stupid.

this is the same stuff tether, does, you can do this with all types of products even bitcoins, if you see the bitcoin futures, that are currently beeing offered,

to big problem about this crap is that the people doing that cause systematically poverty because they claim to create values out of nothing, and burden the productive economy with it, (even if it is quite productive in some reasons) this leads to unrest systematically sooner or later and for good reasons

[sinner]

is Tether audited? like, do we know for sure they have the money in the bank they're supposed to? can you receive USD for your USDT from Tether?

what is the legal risk?  is there a chance the US government shuts Tether down?

[ulhaq]

Tether is not located in the US, so is outside of US jurisdiction.

I think they need 3rd party audits, but as far as I know, they don't do it. Which is very curious why no one else replicates tether with 3rd party auditing.

Clearly more people are investing USD to tether considering the new USDT they issued, despite problems with withdrawals? Or are the withdrawal problems over?

Can anyone comment on the tether blockchain, is it centralized? How secure is it?

[sinner]

Tether is not located in the US, so is outside of US jurisdiction.

outside US, yes.  but they have USD bank accounts.. US gov can basically seize USD anywhere in the world.. i saw this happen in poker.  i see Tether as a growing risk to the crypto world.

I think they need 3rd party audits, but as far as I know, they don't do it. Which is very curious why no one else replicates tether with 3rd party auditing.

agree

Clearly more people are investing USD to tether considering the new USDT they issued, despite problems with withdrawals? Or are the withdrawal problems over?

i'm under the impression that USDT --> USD is like 7% vig. can anyone confirm?

Can anyone comment on the tether blockchain, is it centralized? How secure is it?

its built on Omni.. thats all i really know.. somehow Omni market cap is <10% of Dogecoin  

[tutkarz]

There are problems with withdrawals but does that also mean that people don't buy thether with USD? Because it also might be the reason for printing more.

[ulhaq]

outside US, yes.  but they have USD bank accounts.. US gov can basically seize USD anywhere in the world.. i saw this happen in poker.  i see Tether as a growing risk to the crypto world.

Those poker offices that were raided were all in the US, right? Despite that some of them were not US companies.

i'm under the impression that USDT --> USD is like 7% vig. can anyone confirm?

what is 7% vig?

There are problems with withdrawals but does that also mean that people don't buy thether with USD? Because it also might be the reason for printing more.

They claim to only issue USDT for each USD deposited in their bank. But once that USDT is created, it becomes freely tradable, so anyone can exchange any crypto for it, without having anything to do with USD.

[ElmetElmet]

Tether can pump to about 1.05 and it can dump as low as .90 but any more or less won't happen.

Unless something catastrophic happens to Bitfinex, like the FBI seizing their domain and bank accounts or another massive hack like last year. If that happens, the fate of Tether is tied to Bitfinex; Tether is owned by Bitfinex's parent company. If something like the aforementioned happens, the value of USDT could plummet and never recover.

This would be disastrous, too, since the circulating supply of USDT has ballooned from < $20 million USD to > $400 million USD since Bitfinex lost banking capabilities. If we are to believe that money wasn't just printed out of thin air, then that increase in supply represents USDT held on exchanges like Kraken, Poloniex and Bittrex. People holding USDT on those exchanges probably don't even realize the third party risk involved.

So, the only way to create Tethers is to deposit real dollars to Bitfinex. But, there is 20x more Tethers since the very last bank (Fargo Wells) stopped serving them. For me, the real value of Tether has dropped 20x. But I may be wrong, as I am not an economist. Anyways, have never owned a fraction of USDT for a fraction of second. Will never touch it. The bad thing is, when shit hits the fan, there will be no safe haven. Tethers, BTC, alts, everything will go down like hell and there will not be enough time to convert the crypto assets into real fiat. Or will it?

[ulhaq]

Really good thread that illustrates many of the issues discussed here:
https://www.reddit.com/r/Bitcoin/comments/7dkwm8/btc_bounty_to_whoever_uncovers_tether_banks/
Could be a huge crash in the crypto market if the speculation that USDT are being created out of thin air to pump up the price of BTC is true.

If it is not true, the crux of the matter is likely that no banks want to accept USD knowing what tether is, for fear of application of not yet invented US regulations (and what happened with wells fargo and the taiwanese banks). Therefore tether cannot publicly have an audit done or reveal where their banks are located if they do have new banking partners. This is also why there are no competitors to tether in the USD space.

BUT, it raises the question, why can't a 1:1 peg be done with other fiat currencies? Is it is being done? Because then all one has to do is exchange USD for other fiat and exchange that for digital tokens, and banks may be okay with the deposits?

I will also stay away from tether for now.

According to this post:
https://cointelegraph.com/explained/tether-case-explained
Bitfinex has fixed the price of USDT to USD at 1:1. Fixing prices is a big no-no in my mind.

[torrantz]

Really good thread that illustrates many of the issues discussed here:

https://www.reddit.com/r/Bitcoin/comments/7dkwm8/btc_bounty_to_whoever_uncovers_tether_banks/

Could be a huge crash in the crypto market if the speculation that USDT are being created out of thin air to pump up the price of BTC is true.

If it is not true, the crux of the matter is likely that no banks want to accept USD knowing what tether is, for fear of application of not yet invented US regulations (and what happened with wells fargo and the taiwanese banks). Therefore tether cannot publicly have an audit done or reveal where their banks are located if they do have new banking partners. This is also why there are no competitors to tether in the USD space.

BUT, it raises the question, why can't a 1:1 peg be done with other fiat currencies? Is it is being done? Because then all one has to do is exchange USD for other fiat and exchange that for digital tokens, and banks may be okay with the deposits?

I will also stay away from tether for now.

According to this post:
https://cointelegraph.com/explained/tether-case-explained

Bitfinex has fixed the price of USDT to USD at 1:1. Fixing prices is a big no-no in my mind.

It looks the tether supply gets manipulation by the developers and it seems to give fixed rate for each tether seems just like a scammy way. I will never try to buy this scam manipulation token. USDT sucks.

[BureauChef]

I read most of the posts under the thread. I started to worry about my trading activity because I use USDT coin very frequently after I need some rest by selling my bitcoin and ethers. Then it's gonna be so complicated if tether causes a chaos on Exchange platforms.

[tutkarz]

If people will lose trust for USDT for some reason, then the price of BTC will skyrocket. Everyone will start to exchange USDT for BTC and it in turn will drive real price up. (people will pay more and more USDT per BTC just to get rid of it)

Meantime one can try and use bitUSD (only on bitshares platform for now) or SBD (this one is not bad but the problem is it is listed on exchange as SBD-BTC so you can't see USD value without calculating first)
I am mentioning them because there is real need for people to have some kind of USD pegged crypto, so it can be transferred fast between exchanges and maybe can point this out to some exchanges, so they will allow necessary changes.

[ElmetElmet]

If people will lose trust for USDT for some reason, then the price of BTC will skyrocket. Everyone will start to exchange USDT for BTC and it in turn will drive real price up. (people will pay more and more USDT per BTC just to get rid of it)

Meantime one can try and use bitUSD (only on bitshares platform for now) or SBD (this one is not bad but the problem is it is listed on exchange as SBD-BTC so you can't see USD value without calculating first)
I am mentioning them because there is real need for people to have some kind of USD pegged crypto, so it can be transferred fast between exchanges and maybe can point this out to some exchanges, so they will allow necessary changes.

Yeah, the price will skyrocket... against USDT. In terms of real money, it will drop massively. Remember what happened with MtGox? Same is happening with Bitfinex today, and Bitfinex practically owns Tether. I was thinking about using Nubits on Bittrex (price is more or less pegged to $) or NZDT on Cryptopia, but neither seems to be a safe and secure way of protecting one's assets when the whole market crashes. Bitshares platform has extremely thin orderbooks (at the moment). Anybody has other ideas?

[ElmetElmet]

BUT, it raises the question, why can't a 1:1 peg be done with other fiat currencies? Is it is being done? Because then all one has to do is exchange USD for other fiat and exchange that for digital tokens, and banks may be okay with the deposits?

Yes, for example Cryptopia has done a peg 1:1 against New Zealand Dollar, but we don't know if it isn't similar story to Bitfinex (small exchange, easy to keep a secret). There are exchanges all over the world, some of them let you exchange to real money, but it usually will be a local currency and you probably would need an account in local bank to withdraw the money. It may be a solution to protect your wealth (for a short term at least), but there is a problem with liquidity. If you would have wanted to exchange, say, 100 BTC into a local currency, you would end up buying it very expensive, then in order to exchange it back to BTC, you would be selling it very cheap.

[Kriptex]

BUT, it raises the question, why can't a 1:1 peg be done with other fiat currencies? Is it is being done? Because then all one has to do is exchange USD for other fiat and exchange that for digital tokens, and banks may be okay with the deposits?

Yes, for example Cryptopia has done a peg 1:1 against New Zealand Dollar, but we don't know if it isn't similar story to Bitfinex (small exchange, easy to keep a secret). There are exchanges all over the world, some of them let you exchange to real money, but it usually will be a local currency and you probably would need an account in local bank to withdraw the money. But it may be a solution to protect your wealth (for a short term at least). But there is problem with liquidity. If you would have wanted to exchange, say, 100 BTC into a local currency, you would end up buying it very expensive, then in order to exchange it back to BTC, you would be selling it very cheap.

As long as they do this withour problems, it's not our business to criticize their way of issuing those USDT thing.

They can manage it because they have real reserve money in their pocket, I mean the big exchanges like Bitfinex.

[ulhaq]

BUT, it raises the question, why can't a 1:1 peg be done with other fiat currencies? Is it is being done? Because then all one has to do is exchange USD for other fiat and exchange that for digital tokens, and banks may be okay with the deposits?

Yes, for example Cryptopia has done a peg 1:1 against New Zealand Dollar, but we don't know if it isn't similar story to Bitfinex (small exchange, easy to keep a secret). There are exchanges all over the world, some of them let you exchange to real money, but it usually will be a local currency and you probably would need an account in local bank to withdraw the money. It may be a solution to protect your wealth (for a short term at least), but there is a problem with liquidity. If you would have wanted to exchange, say, 100 BTC into a local currency, you would end up buying it very expensive, then in order to exchange it back to BTC, you would be selling it very cheap.

NZDT is not listed on coinmarketcap, presumbly it is not freely tradable?

[jubalix]

pegging something to something that is worthless or inherently beyond your control, USD FIAT, is doomed to fail.

I can see why they are doing it to work around legacy banking....but to many variables....many of which are internal, like the urge to FRB..T!

(fractional reserve bank Tether).

If FRB T is no going on then .... ok lets face it ... it is.

[Turkiwi]

There were news today about Tether and their role in losing about 30 million USTD. It's quite a big amount and they definitely have to explain what happened there. The Omni network is simply not secure enough, or Tether itself has messed thigs up. To be honest they might as well have gambled that 30 million and just try to back it up and cover their losses by saying they got hacked. It's really dodgy and the market needs more participants and other alternatives in order to not relly on only one provider. Tether has seen a lot of controversy and there is always something to say against the company, the fact that there are no alternatives out there is ridiculous, there is a huge market cap to fill that sector. More projects should get involved.

[eddie13]

Very interesting thread but I'm surprised that their are not more threads about the current hack..

I came to bitcointalk today to get the news from the community about the USDT hack and their seem to be little to nothing, except the usual sig spam threads..

Their is this thread https://bitcointalk.org/index.php?topic=2436765.0;topicseen
But with a pathetic 10 total posts and no valuable information on the subject..

Where are the goods?