What's up with the tether scam?

[AdolfinWolf]

I see alot of people talking about if $Tether raises ( in increased market cap for example ), bitcoin will raise/go down aswell.

I'm wondering what all the controversy is about and i'm a bit out of the loop.

Is this pure FUD, -> https://medium.com/@bitfinexed/the-mystery-of-the-bitfinex-tether-bank-and-why-this-is-suspicious-a8a6407a1241

[1714112704]

1714112704

[HeRetiK]

USDT is definitely a tragedy waiting to happen and I would absolutely stay away from it. Nonetheless I think that when USDT goes belly up -- when, not if -- its effect on Bitcoin will be short- to mid-term at worst. We might see a hefty correction, but I'm fairly positive that BTC will be able to recover rather sooner than later. There are indeed quite some parallels to MtGox back in the day, but Bitfinex is luckily nowhere near as dominant as MtGox used to be.

In conclusion I would take most of the article with a grain of salt, but it doesn't hurt to stay away from Bitfinex and USDT just in case. There's enough alternatives. Long term I wouldn't worry about Bitcoin though.

It might be also worth reading Theymos' take on that matter:
https://bitcointalk.org/index.php?topic=2435905.0

[illyiller]

I see alot of people talking about if $Tether raises ( in increased market cap for example ), bitcoin will raise/go down aswell.

I'm wondering what all the controversy is about and i'm a bit out of the loop.

Is this pure FUD, -> https://medium.com/@bitfinexed/the-mystery-of-the-bitfinex-tether-bank-and-why-this-is-suspicious-a8a6407a1241

It's not pure FUD but the author you linked to (Bitfinexed) is sort of a wingnut that is taking conspiracy theories too far without evidence. Yes, the supply is inflating during a period where there is no inflow of USD deposits. That could be explained by a) large inflow of USD deposits to Bitfinex from corporate entities as they claim and/or b) outflow of USD from Bitfinex in the form of Tether.

The trouble is that we can't verify anything one way or the other. It's very possible that Tether is 100% solvent and has just been used to spread Bitfinex liabilities to other exchanges like Poloniex and Bittrex.

There are some risks inherent, though. If some law enforcement agencies and regulators don't like what Tether is doing, they could possibly freeze Tether's assets, rendering them immediately insolvent. It's a centralized system dealing in a USD derivative. I prefer cryptocurrency myself!

[gentlemand]

If some law enforcement agencies and regulators don't like what Tether is doing, they could possibly freeze Tether's assets, rendering them immediately insolvent. It's a centralized system dealing in a USD derivative. I prefer cryptocurrency myself!

I'm going to guess that Tether is backed 1-1 by real dollars, but those dollars will be far, far offshore and borderline impossible to track down. I'll also guess that the bank holding them has no idea they're being used to back USDT. That's how Bitfinex rolls.

[JaredStein]

I see alot of people talking about if $Tether raises ( in increased market cap for example ), bitcoin will raise/go down aswell.

I'm wondering what all the controversy is about and i'm a bit out of the loop.

Is this pure FUD, -> https://medium.com/@bitfinexed/the-mystery-of-the-bitfinex-tether-bank-and-why-this-is-suspicious-a8a6407a1241

It's not pure FUD but the author you linked to (Bitfinexed) is sort of a wingnut that is taking conspiracy theories too far without evidence. Yes, the supply is inflating during a period where there is no inflow of USD deposits. That could be explained by a) large inflow of USD deposits to Bitfinex from corporate entities as they claim and/or b) outflow of USD from Bitfinex in the form of Tether.

The trouble is that we can't verify anything one way or the other. It's very possible that Tether is 100% solvent and has just been used to spread Bitfinex liabilities to other exchanges like Poloniex and Bittrex.

There are some risks inherent, though. If some law enforcement agencies and regulators don't like what Tether is doing, they could possibly freeze Tether's assets, rendering them immediately insolvent. It's a centralized system dealing in a USD derivative. I prefer cryptocurrency myself!

I heard it was the same person who hacked the ETH DAO. Whatever the case is I hope it was a different hacker that way we have these hackers attacking the biggest scams and exposing them. This way more and more people will eventually get back into BTC. A lot of people are going to feel like idiots for selling their BTC or trading it for other cryptos.

[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 some law enforcement agencies and regulators don't like what Tether is doing, they could possibly freeze Tether's assets, rendering them immediately insolvent. It's a centralized system dealing in a USD derivative. I prefer cryptocurrency myself!

I'm going to guess that Tether is backed 1-1 by real dollars, but those dollars will be far, far offshore and borderline impossible to track down. I'll also guess that the bank holding them has no idea they're being used to back USDT. That's how Bitfinex rolls.

That's just the problem. I recall hearing on a Telegram chat from Giancarlo Devasini that Bitfinex aren't criminals -- they just do their banking like criminals. That sounds fair enough to some of us anti-government nuts, but it doesn't exactly make me feel warm and fuzzy inside when holding USDT.

That's been my feeling all along. Tether has the funds fully backed, but they can't risk moving them or informing the bank of the true nature of custody. It seems like a precarious situation. How is anyone ever going to get their money out?

[timikulit]

Now we realized that USDT is not backed by the US government and we dont know if the amount of USDT is actually stored in the BANK or NOT.

The US will seize them someday and if that happens the price of USDT will hardly fall.

It is much better to store/switch your crypto in BTC when waiting for a new trade

[Makrochain]

I see alot of people talking about if $Tether raises ( in increased market cap for example ), bitcoin will raise/go down aswell.

I'm wondering what all the controversy is about and i'm a bit out of the loop.

Is this pure FUD, -> https[Suspicious link removed]d/the-mystery-of-the-bitfinex-tether-bank-and-why-this-is-suspicious-a8a6407a1241

I know that Tether is experiencing extremely bad problems from the United States. Money of the coin has become a popular alternative to the dollars on cryptocurrency transactions around the world, with about $ 2.3 billion except on Tuesday. When Tether says all of it has been back in US dollars to hold reserves, the company has yet to provide conclusive evidence of its holdings to the public or its account auditors. Skeptics have questioned whether money is really there.
I am really worried because I am currently keeping a lot of Tether.

[alyssa85]

I see alot of people talking about if $Tether raises ( in increased market cap for example ), bitcoin will raise/go down aswell.

I'm wondering what all the controversy is about and i'm a bit out of the loop.

Is this pure FUD, -> https[Suspicious link removed]d/the-mystery-of-the-bitfinex-tether-bank-and-why-this-is-suspicious-a8a6407a1241

I know that Tether is experiencing extremely bad problems from the United States. Money of the coin has become a popular alternative to the dollars on cryptocurrency transactions around the world, with about $ 2.3 billion except on Tuesday. When Tether says all of it has been back in US dollars to hold reserves, the company has yet to provide conclusive evidence of its holdings to the public or its account auditors. Skeptics have questioned whether money is really there.
I am really worried because I am currently keeping a lot of Tether.

If you are worried, then sell your tether for either other cryptos/bitcoin or send to Kraken and sell for real USD. I think it's clear at present that tether is just another alt at this point.

[pooya87]

Tether has always been shit and everyone who has ever bothered to look into what it is knows that already. when the company does not even guarantee exchange of it with real dollar, and when they don't even guarantee the price of it to be always $1 you should know what you are dealing with. and that is not new.

the drama about it is that they are saying Bitfinex is printing USDT out of thin air and then buys bitcoin with it, pushing the price up. they even go as far as saying that all the current rise is because of it and ignore the fact that bitfinex has less than 6-7% volume among all the other exchanges.

p.s. the author of that article on medium is nuts

[gentlemand]

https://blog.bitmex.com/tether/

An interesting analysis here that goes into details that many other theorists haven't. Bitmex always comes up with thought provoking stuff. It's along the same lines as I'm imagining. The money is there but regulators is what'll kill Tether.

The comparison to e-gold and Liberty Reserve is a valid one. Neither had happy endings.

[OriginTrain]

https://blog.bitmex.com/tether/

An interesting analysis here that goes into details that many other theorists haven't. Bitmex always comes up with thought provoking stuff. It's along the same lines as I'm imagining. The money is there but regulators is what'll kill Tether.

The comparison to e-gold and Liberty Reserve is a valid one. Neither had happy endings.

Stuck between a rock and a hard place aren't we? On the one hand we have shady independent offshore organizations such as Tether which could easily do us over and run off with all the money, has happened innumerable times in history. On the other hand we have corrupt legislators spending our money to fund private military organizations and dilute our savings for their own personal gain that will supposedly regulate all this to prevent the aforementioned from happening.

It would be fantastic if we could somehow have a decentralized hedge coin in crypto that is not connected to any central party. Fiat or gold won't do since these must be centralized somewhere, and a coin not backed by anything won't do either since if the crypto market crashes, that coin could too. What is the solution I wonder?

[JLCoin]

As I understand it, Tether was meant to be supported at a rate of $1 per Tether, with the dollars stored in Tethers vaults. Tether was meant to have regular audits to provide transparency and verification to its users. However, the last major audit was fraught with problems and the auditing firm quit without publishing any reasons as to why. Then, both Tether and its major exchange, Bitfinex were subpoenaed for suspicious activity. This made everyone nervous, as much of the crazy activity that happened over December was due to people making purchases with Tether, and if that Tether is worth nothing, then that means that the currencies are also worth nothing. However, it has been over a month and there have been no new developments, so no-one is really sure what is going on there. 

[scam confirmed]

I (loosely) know a couple people involved in the operation over there, and without over-reiterating what's already been said, I confirmed with them that the 1:1 [deposit:tether creation] ratio has been abused.. basically the same issue with the FED, except when the FED does it, it's legal

[squatter]

As I understand it, Tether was meant to be supported at a rate of $1 per Tether, with the dollars stored in Tethers vaults. Tether was meant to have regular audits to provide transparency and verification to its users. However, the last major audit was fraught with problems and the auditing firm quit without publishing any reasons as to why.

All we can do is speculate, but my thinking is that Friedman dissolved the relationship for the same reason that Tether can't move money. It's probably not that they're insolvent. Tether's banks probably don't even know what the money is for, and resuming withdrawals en masse probably means getting accounts seized by regulators -- like the CFTC, who sent subpoenas to Tether 2 months ago. If so, Friedman had no way to verify Tether's obligations and ability to repay outstanding USDT.

However, it has been over a month and there have been no new developments, so no-one is really sure what is going on there. 

The feds take years to build cases sometimes. Consider BTC-e. They unsealed the indictment in July 2017, but filed it 6 months earlier. They were probably investigating for years before that.