What are the likely implications if Bitfinex/Tether goes down?

[LarryHolmes]

So I was reading about some possible scenarios if Bitfinex/Tether goes down.

What are the chances of tether losing its value? I think if it's proven that a number have been printed that are not backed by a real dollar, that means they did perhaps have a role BTC's ultra moon last winter.

Lets say it happens, and this people lose faith in tether tokens and they become worth less than 1USD, what does that mean, a large number (of the imflated tokens which were not matched with real USD) need to be taken out of circulation, to stablise it?

So obviously worst case scenario, if an investigation finds that x number of coins are not backed by real USD this could trigger a panic style bank run, and move btc closer towards what the "Uninflated price" (not influenced by non backed tether printing) of btc could be?

A Wall Street trader (source: Wired) also said interestngly enough:

"Tether still trades close to $1. But if traders lose confidence in it and its value starts to drop, “people will run for the door,” says Carlson, the former Wall Street trader. If Tether can’t meet all its customers’ demand for dollars (and its Terms of Service suggest that in many cases it won’t even try), tether holders will try to snap up other cryptocurrencies instead, temporarily causing prices for those currencies to soar"

Interestingly it also looks like Tether quickly, and mysteriously burned about 30 million tokens the other day, possibly with this in mind in an attempt to stabalise supply?

http://omnichest.info/lookupadd.aspx?address=3MbYQMMmSkC3AgWkj9FMo5LsPTW1zBTwXL

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[davis196]

I don`t think that there is such a big relation between btc and tether.If tether goes down,the btc price will decrease for a while,but i don`t think that it will be a big price crash.Obviously all the people ,who use tether do this at their own risk.I don`t trust tether,despite all the promises that it is backed by a USD reserve.
Tether is a Bitfinex tool.Bitfinex is big enough to support the USDT value,but i don`t trust them.

[LarryHolmes]

Likewise I couldn't trust Bitfinex as far as I could throw them.

I do think tether does offer some level of safety/stability in so far as it's obviously easier to move around that real USD in real exchanges- and it is a quick substitute for shorting crypto when needed. That is of course only if it is actually legit, and I have my concerns Bitfinex have cooked the books and thus helped manipulate the price of BTC by printing lots of non backed tokens.

I don`t think that there is such a big relation between btc and tether.If tether goes down,the btc price will decrease for a while,but i don`t think that it will be a big price crash.Obviously all the people ,who use tether do this at their own risk.I don`t trust tether,despite all the promises that it is backed by a USD reserve.
Tether is a Bitfinex tool.Bitfinex is big enough to support the USDT value,but i don`t trust them.

[hase0278]

I don`t think that there is such a big relation between btc and tether.If tether goes down,the btc price will decrease for a while,but i don`t think that it will be a big price crash.Obviously all the people ,who use tether do this at their own risk.I don`t trust tether,despite all the promises that it is backed by a USD reserve.
Tether is a Bitfinex tool.Bitfinex is big enough to support the USDT value,but i don`t trust them.

You are right that btc and tether are not related with each other but Bitfinex is since it is one of the major exchanges we now currently have. I am sure that if both goes down, then we will see some bearish trend for a while but it will not be that big of a crash like you said but it ain't that small either. FUDs are also there to contribute to the dump whenever Bitfinex and tether goes down.

[Longfellow27]

Surely this will destabilize the tokens, if this is not backed up by real dollar then the case could be create a panic as such that people will no longer trust digital coins anymore. People will fear if what they have, being digital in nature, is truly a coin with value and which would then create a panic selling of all related coins. I have read an article that China had called a ban on bitcoin exchange due to 90 percent fraudulent transactions and later bitcoin was then seen affected in market trades. If this is true then maybe this is the kind of the scenario it will create.

[DexterLox]

The most likely thing is that it generates losses for those who work directly with that platform (Bitfinex and tether), I do not know if this could affect the value of bitcoin as such ... But without doubt it will generate a destabilization within the total economy of cryptocurrencies. So far, what is the news that has been said?

[Murloc]

So obviously worst case scenario, if an investigation finds that x number of coins are not backed by real USD this could trigger a panic style bank run, and move btc closer towards what the "Uninflated price" (not influenced by non backed tether printing) of btc could be?

The worst case scenario is if the government will shut down Tether Limited and all of the coins won't be available for exchange into fiat. At this moment coinmarketcap shows total 2 217 140 814 USDT in the market and I bet that all of those coins won't be backed. The worst case scenario is that people will loose this amount of money and we will get a huge market crash.

[Hydrogen]

If I remember right, the media claims tether printed $80 billion dollars out of "thin air" which they utilized to buy bitcoin to keep the price from falling. If you look at the market cap of tether for the quantity of coins they have in circulation, their market cap is only $2.2 billion.

I think most people don't believe the media's claims. Its a myth fabricated to fool those who are new or less knowledgeable about crypto currencies. Perhaps to fool people into selling their bitcoin so that financial firms and banks can purchase them at a discounted price. Its difficult to guess what the motivation or intent behind it is, although there would appear to be some campaign behind it.

The key thing will be whether any real or substantial evidence regarding tether is released. Yes, they are shady. But are they capable of printing $80 billion dollars without anyone noticing? That could be too farfetched to be accurate.

[aeternus]

The biggest risk for Tether is that Bitfinex is closed down by the US authorities under the grounds they are facilitating money laundering, after all USDT is supposed to be the equivalent to one dollar and if you are using dollars then you fall under the regulation of US authorities, Bitfinex tried to avoid this by creating Tether on the first place but I do not think it is going to be enough to protect them from what it is coming and when we take into account it is unlikely every Tether is backed by a dollar then things are not looking good.

[BarbusseH]

Peter Sin, co-founder of the Singapore bitcoin club, says that if the authorities find out that Tether has a violation, the company's tokens may quickly fall in price. Time will tell who was right, but some observers welcomed the CFTC's decision to go deeper into this business. Ursula McCormack, Hong Kong partner of the law firm King & Wood Mallesons, advising on ICO issues and block projects, believes that "the formal request of the regulator is useful, because it will be followed by this or that certainty."

The fall of bitcoins has already worked this news. If the regulators find that everything is good or minor comments, then the price will return to its highs.

[LarryHolmes]

Interesting points!

Agree that the sooner this is cleared up the better. However from looking at the CTFC archive most of their investigations take years, so I'm not going to stop trading crypto because it looms over, but I've just got contingency plans to mass panic sell then move btc to GDAX and sell for fiat quickly if I see indication it is definatately in the wrong once they conclude.

Peter Sin, co-founder of the Singapore bitcoin club, says that if the authorities find out that Tether has a violation, the company's tokens may quickly fall in price. Time will tell who was right, but some observers welcomed the CFTC's decision to go deeper into this business. Ursula McCormack, Hong Kong partner of the law firm King & Wood Mallesons, advising on ICO issues and block projects, believes that "the formal request of the regulator is useful, because it will be followed by this or that certainty."

The fall of bitcoins has already worked this news. If the regulators find that everything is good or minor comments, then the price will return to its highs.