What'll happen when USDT collapses?

[fabiorem]

Do not think so. There are only $600 m USDT. It is much smaller than the Bitcoin market cap.

That is irrational thinking. MarketCap means not much. Do you think "all" Bitcoins can be sold for 8k$? I guess not.
A better metric would be the average price paid per BTC - you can move the market alot with 20 million$, if done right.

Are BTC meant to be sold?

[1Referee]

If it really collapses, then the altcoins will suffer a lot more than BTC. USDT is a gateway way more important for altcoins than for BTC. The altcoin holders may dump for BTC in the danger for an USDT collapse.

Correct, but on the other hand, we can't discard the most of the times greatly exaggerated panic reaction of the Bitcoin market on any happening with a negative tint to it. People trading whatever crypto coin against Tether are exposing themselves to greater risks than people who are just trading without Tether. You don't only depend on the exchange to keep performing, but you also depend on Tether itself to not mess up. It's impossible to deny the advantages that Tether offers in times where exchanges have to abide by all sorts of regulations, but it should be clear that you once may end up having sold your precious Bitcoins for worthless tokens. Better safe than sorry, I always say.

[marky89]

One speculative (IMO plausible) timeline for recent events is:

1. USDT is printed out of thin air over a long period of time, and there's grumbling about it constantly, but nobody really does anything.
2. Someone looking to affect the BTC price grasps onto the above issue and spams social media about it. Eg. "Check out what this one guy says will crash Bitcoin to $0.01, you won't believe what this company did!".
3. Due to the spam, a USDT bank run starts, but USDT runs out of actual money.
4. To buy time, USDT creates the "theft transaction" as an inside job. This creates an excellent and essentially irrefutable excuse for stopping further withdrawals.

Tether appeared to be fairly legitimate as of a year ago. Lots of people used it to arbitrage the markets, they had a standard KYC process and standard bank wire service.

It wasn't until March of this year -- when both Bitfinex and Tether lost banking capabilities -- that things started to get really fishy. For one thing, did they "lose banking capabilities" or are they insolvent? We'll never know, and while Friedman LLP has apparently looked at Tether's books, their statements don't confirm that Tether has access to funds backing all USDT in circulation.

The "theft transaction" narrative seems unnecessary, since nobody can withdraw USD from Tether (or Bitfinex), and they haven't been able to for many months now. Then again, who would be dumb enough to bother hacking Tether? It's centralized; they can just freeze your funds and/or fork the network.

[gentlemand]

I would be able to reproduce that pdf with basic photoshop and document edit skills.  Worth nothing without a stamp or a signature.

One rather rapid call utilising one's telephone would clear that particular issue up with the greatest of rapidity. I really struggle to believe anyone's that stupid or crooked.

[riethos]

Tether is a scam
Bitfinex is also a scam. Do not believe anyone that says the opposite.

Bitifinex has serious problems so no fiat deposits and withdrawals are possible. That makes it a crypto to crypto exchange and any finex-usd credited in a bitifinex account is pure air not even thether (usdt). If someone sends cryptos to finex and sells for finexusd the only way to withdraw the finexusd is by buying back cryptos at higher prices probably. So finex has the potential to manipulate the price of btc and other cryptos because finex has an infinity amount of finexusd that can use to stop a dip or increase the price of any crypto that supports (manipulates in any direction in my opinion, most probable upwards).
Tether(usdt) is used for making some withdrawals out of finex possibly but is also used by other exchanges for market making in order to follow the prices that finex make for the cryptos that supports.

If usdt is not redeemable for real usd then it does not mater if there are 670M usd sitting in several accounts. THIS IS NOT BACKING USDT BY REAL USD.
Assume that someone makes an arrangement with a bank to lend him some millions of usd without even moving the funds out of the bank and this person then issues usdt and makes huge profits and pay back the bank's interests (5% at most per year, nothing compared to the potential profits) then this does not make the usdt backed by usd because if someone owns usdt can not redeem them for real usd directly but has to sell the usdt for some other cryptos and then sell the cryptos for fiat in fiat<=> crypto exchange.

In conclusion:
1)the tether/finex scam has issued 670M usdt that the majority thinks wrongly that can be redeemed for real usd
2)finex has issued finexusd in order to keep the exchange running
In my opinion these actions have the result that the total market cap of the btc+altcoins has been inflated with more than 100B $. When finex and tether stop operating firstly a very short uptrend will probably occur by people starting to sell tether for cryptos then a long term down trend will occur because there would be no finex to absorve the panic sell and to support the inflated prices. A long term correction of 60-70% is very possible.

Stay away from Bitfinex, Tether(usdt), Poloniex, Bittrex and any other exchange that uses Tether (usdt)

[squatter]

If it really collapses, then the altcoins will suffer a lot more than BTC. USDT is a gateway way more important for altcoins than for BTC. The altcoin holders may dump for BTC in the danger for an USDT collapse.

I think this is missing the bigger picture. Tether = Bitfinex: it is majority owned by Bitfinex's parent company.

So when we talk about Tether collapsing, we need to talk about how the entire circulating supply of USDT represent Bitfinex liabilities. Most of its supply was inflated after Bitfinex lost its ability to send/receive wires. That's probably margin profits exiting Bitfinex onto other platforms (like Poloniex).

You might associate these "toxic assets" with altcoin exchanges, but they are Bitfinex's liabilities. It's funny because Bitfinex can't even wire people USD, but they are the highest volume BTCUSD exchange. Go figure. Anyway, I don't see how we can deny the effect on BTC there.....

[timikulit]

Thank you for this info.

I am always converting coins into USDT when waiting for another trade. I think the OP is right, The USDT is created from nowhere and become the basis of BTC - USD exchange rate under their control. Tether (USDT) is not the real dollar because it is not backed by the US government. the US government might sue them later on.

[figmentofmyass]

Thank you for this info.

I am always converting coins into USDT when waiting for another trade. I think the OP is right, The USDT is created from nowhere and become the basis of BTC - USD exchange rate under their control. Tether (USDT) is not the real dollar because it is not backed by the US government. the US government might sue them later on.

USDT does appear to be a derivative with USD as the underlying. i believe such instruments require formal registration with the CFTC. and they've been serving US customers for years, so that'll probably amount to a stiff civil penalty when all of this finally explodes.

the way i see it, the tether debacle is only one of multiple big problems that bitfinex has:

1) no banking
2) BFX tokens = unregistered securities issued to/traded by US customers
3) USDT = unregistered derivatives issued to/traded by US customers
4) bitfinex operated as an unlicensed money transmitter in the US since 2013

i see very bad things coming for bitfinex. three letter agencies will be involved IMO. i really don't think btc-e was the last unlicensed exchange that will be brought down.

and why not? they can hand the exchange/broker industry to big wall street players and auction off the seized BTC to rich banksters. everything happens for a reason.....

[BillyBobZorton]

If it really collapses, then the altcoins will suffer a lot more than BTC. USDT is a gateway way more important for altcoins than for BTC. The altcoin holders may dump for BTC in the danger for an USDT collapse.

I think this is missing the bigger picture. Tether = Bitfinex: it is majority owned by Bitfinex's parent company.

So when we talk about Tether collapsing, we need to talk about how the entire circulating supply of USDT represent Bitfinex liabilities. Most of its supply was inflated after Bitfinex lost its ability to send/receive wires. That's probably margin profits exiting Bitfinex onto other platforms (like Poloniex).

You might associate these "toxic assets" with altcoin exchanges, but they are Bitfinex's liabilities. It's funny because Bitfinex can't even wire people USD, but they are the highest volume BTCUSD exchange. Go figure. Anyway, I don't see how we can deny the effect on BTC there.....

It is in any case overrated. Bitfinex can go down as a whole, so what? we have plenty of exchanges out there nowadays. If it crashes, it will be a very fast dip that will get bought by people that aren't complete idiots and understand it's irrelevant.

Somebody has found new information on this btw, seems to be linked to some Polish bank; Google "CRYPTO SP. Z O.O." and "Molina Lee Ivan Manuel".

[adaseb]

Basically all of this is based on conjecture.

What is conjecture?

-an opinion or conclusion formed on the basis of incomplete information.


Like Bitfinex mentioned in their tweet, all of this panic to start a sell-off of BTC and apparently its working causing nothing but panic and fear.


Keep in mind Bitfinex make like $2 million A DAY in trading fees alone. They got huge traders. These traders obviously are still trading on their platform daily and aren't worried.  If they were scared, their volumes would drop and they would move to other exchanges.

[LeGaulois]

What do you think about this comment on Reddit? While saying "to bring down the entire market" may be a bit exaggerating, there are accurate facts still. Bitfinex is a so suspicious platform since their hack long back and I won't be much surprised if it's turn out to be true.

This potential fraud is related to Bitfinex and their USDT token (USD - Tether). Currently Bitfinex is the second largest exchange by volume (trading $800m daily at the time of writing).
The people behind Bitfinex are “printing” endless amount of these dollar tokens (currently $370m+) which are supposed to be backed up by real dollars. They refuse to be audited and prove whether these dollars exist. Information regarding the people behind Bitfinex/Tether is slowly disappearing from their website: https://tether.to/
It is possible that Bitfinex are circulating their own token through their exchange to manipulate the order book and the price of Bitcoin. Just last year they were “hacked” to the tune of $60m in Bitcoin (which can be sold for real dollars).
Recently Bitfinex announced their withdrawal from the US market due to license difficulties, which is strange because smaller less-profitable exchanges have been able to get licenses. Surely the second biggest exchange by volume would want to be in the USA?
The average user perceives USDT to be the same as USD, which it is not. Bitfinex’s website is misleading as it lists their trading pairs in USD (when in fact you cannot actually deposit dollars). Bitcoin enthusiasts stand to lose of all their money in a Bernie Madoff style scam, if their funds are stored in USDT and/or on Bitfinex’s exchange. The collapse of the second largest exchange would likely crash the price of Bitcoin.
See:
https://hackernoon.com/the-curious-tale-of-tethers-6b0031eead87
https://youtu.be/Ud4V__nADA0?t=1m36s
https://m.youtube.com/watch?v=0E35oMQcCLU
https://www.reddit.com/r/CryptoCurrency/comments/6xodch/can_we_talk_about_usd_tether/
http://money.cnn.com/2016/08/03/technology/bitcoin-exchange-bitfinex-hacked/index.html

https://www.reddit.com/r/Tether/comments/6yammo/tether_has_the_potential_to_bring_down_the_entire/

[Ludwig Von]

Basically all of this is based on conjecture.

What is conjecture?

-an opinion or conclusion formed on the basis of incomplete information.


Like Bitfinex mentioned in their tweet, all of this panic to start a sell-off of BTC and apparently its working causing nothing but panic and fear.


Keep in mind Bitfinex make like $2 million A DAY in trading fees alone. They got huge traders. These traders obviously are still trading on their platform daily and aren't worried.  If they were scared, their volumes would drop and they would move to other exchanges.

The source of incomplete information is themselves. The "Huge" traders are also themselves. And if you don 't believe their current story, they will soon have to invent another one... . And they are not fearing a sell-off, but rather a "Move out".

[gentlemand]

There are two outcomes pretty much. Tether turns out to be absolutely and provably fine and is mysteriously allowed to carry on existing, or it turns out to be what many suspect it to be and implodes or is shut down by The Man.

Both outcomes are fine with me. I'd prefer an orderly and non harmful version of the latter myself. Bitfinex is pretty much the final significant holdout of bitcoin's wild west phase and it's safe to say that despite it getting us to where we are today it's not good enough any more.

I'm rather gobsmacked that bitfinex managed to stay right up there despite everything they've inflicted on everyone.

[Ludwig Von]

There are two outcomes pretty much. Tether turns out to be absolutely and provably fine and is mysteriously allowed to carry on existing, or it turns out to be what many suspect it to be and implodes or is shut down by The Man.

Both outcomes are fine with me. I'd prefer an orderly and non harmful version of the latter myself. Bitfinex is pretty much the final significant holdout of bitcoin's wild west phase and it's safe to say that despite it getting us to where we are today it's not good enough any more.

I'm rather gobsmacked that bitfinex managed to stay right up there despite everything they've inflicted on everyone.

Amen to that... .

[rifiuti]

Bitfinexed guy has been yelling about this for a year or two, nobody gave a small fck about it.

Now the BTC price goes up, suddenly Tether is hacked, press pays more attention, people start questioning the legitness of Tether.

Seems like FUD campaign working very well.

[gentlemand]

Bitfinexed guy has been yelling about this for a year or two, nobody gave a small fck about it.

Now the BTC price goes up, suddenly Tether is hacked, press pays more attention, people start questioning the legitness of Tether.

Seems like FUD campaign working very well.

Judging by the recent gloating in the requisite places it appears to have been seized on by BCH shills as a way of undermining Bitcoin's legitimacy in the last few days.

However if they're not bright enough to figure out it's going to affect them as well then I pity the fools.

It's been discussed relentlessly on r/bitcoinmarkets forever. I don't get why it's news now.

[BillyBobZorton]

Bitfinexed guy has been yelling about this for a year or two, nobody gave a small fck about it.

Now the BTC price goes up, suddenly Tether is hacked, press pays more attention, people start questioning the legitness of Tether.

Seems like FUD campaign working very well.

Bitfinexed guy, even if he might be into something with all of this Tether thing, sure sounds like someone bitter that wants to buy back because he sold his bitcoin a long time  ago and now regrets it, so he is trying to hard to exaggerate the impact of a Bitfinex Gox-like scenario to create another 2013 style crash and be able to get back in the game at a discount.

Not going to happen. I couldn't care less if Bitfinex goes down, only a complete retard things this is comparable to 2013's Goxing.

[gentlemand]

Bitfinexed guy, even if he might be into something with all of this Tether thing, sure sounds like someone bitter that wants to buy back because he sold his bitcoin a long time  ago and now regrets it, so he is trying to hard to exaggerate the impact of a Bitfinex Gox-like scenario to create another 2013 style crash and be able to get back in the game at a discount.

Not going to happen. I couldn't care less if Bitfinex goes down, only a complete retard things this is comparable to 2013's Goxing.

The theory about him is that he sold his Bitfinex haircut debt token things for a piddling amount only to watch them rise from the ashes, hence the rabid bitterness.

[ASHLIUSZ]

Bitfinexed guy has been yelling about this for a year or two, nobody gave a small fck about it.

Now the BTC price goes up, suddenly Tether is hacked, press pays more attention, people start questioning the legitness of Tether.

Seems like FUD campaign working very well.

FUD will be getting circulated all around. Now with this issue tether could gave experienced a major downfall but this time it has declined to a very small extent. This confirms that FUD has gone effectless, as people have the understanding the issues that arise with the security system.

[Lopumbo]

from tether.to

Since April 18, 2017, all incoming international wires to Tether have been blocked and refused by our Taiwanese banks.  As such, we do not expect the supply of tethers to increase substantially until these constraints have been lifted.

well where are these 600Mio comming from? 

Many people are moving their funds from bitfinex, lets wait and see

https://bitinfocharts.com/bitcoin/address/3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r