from Hacker News

Tether Is Breaking Its Peg to the Dollar

by profuse99 on 1/28/18, 6:02 PM with 81 comments

  • by Asparagirl on 1/28/18, 9:07 PM

    How did this thread get to be 46 comments long without a single mention of or link to @Bitfinexed?!

    @Bitfinexed is the anonymous Twitter account that has been publicly sounding the alarm about Tether for almost a year now. They got the receipts, they bring the fire:

    https://twitter.com/bitfinexed

    And longer articles at:

    https://medium.com/@bitfinexed/

    And as payment for his/her troubles as the Harry Markopolos of the crypto-world, he/she has been threatened with lawsuits.

    If you, like me, perversely enjoy reading about or watching true financial crime stories ("The Smartest Guys in the Room", "When Genius Failed", Casey Serin's various blog exploits, "The Wizard of Lies", etc.), then @Bitfinexed's work is incredibly satisfying to read.

    For example, in just the past few days, you can get the excitement of reading his/her public Twitter conversations with some of the big primary players in this Ponzi scheme, where those fraudsters brazenly deny any influence or financial benefits from this scheme, even in the face of immense evidence or screenshots.

    I expect to see some of those tweets included in financial crime indictments in the near future.

  • by hawktheslayer on 1/28/18, 7:19 PM

    I'm surprised they didn't go with the headline that practically wrote itself: Tether Becomes Untethered

  • by bhouston on 1/28/18, 7:18 PM

    I am reminded of this: https://en.wikipedia.org/wiki/Black_Wednesday

    George Soros broke the Bank of English's attempt to maintain a minimum exchange rate for the Pound against various other European currencies.

    It was this experience that taught me that you can not cost free fix the exchange rate between currencies unless you are using "magic". And USDT has always seemed magical to me.

    BTW: https://www.coindesk.com/tether-confirms-relationship-audito...

  • by brokensegue on 1/28/18, 7:08 PM

    I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dollar I think things are serious.

  • by empath75 on 1/28/18, 7:12 PM

    The usdt/usd pair on most markets it trades on is heavily manipulated with wash trading. It doesn’t take a big buy order for bitfinex to bounce the price back to $1.

    What you really need to watch is the widening spread in price between bitfinex and other exchanges which implies that people are buying crypto at inflated usdt prices because they don’t trust usdt any more.

    I think if either that continues or the price of tether continues trading below 1.00, it’ll trigger a panic eventually.

  • by cstrat on 1/28/18, 8:56 PM

    I never quite understood how tether is supposed to be pegged to the USD. If there is no liquidity in an exchange wouldn't the price just fluctuate with supply/demand. If people are wanting to buy them more than people trying to sell them, wouldn't the price just appreciate?

    Also - who is sitting and holding all these tethers? There are 2.2 billion of them out there...

  • by 0x0 on 1/28/18, 7:19 PM

  • by SilasX on 1/28/18, 7:37 PM

    Title is misleading; it makes it sound like Tether management is withdrawing some promise that USDTs can be redeemed at par. That would be much bigger news than the actual story, that they are trading for less than par.

    Not that I’m recommending you touch tethers with a ten foot pole!

  • by spraak on 1/28/18, 7:03 PM

    Well that didn't last long.

  • by Scoundreller on 1/28/18, 8:25 PM

    The article says that Kraken is the only exchange offering a USD/USDT trade.

    The article also shows wallets with the top USDT balances, and a Kraken wallet is 13th on the list, with about $16m of USDT, while the top 3 wallets have ~$1.1b between them on other exchanges.

    Either Kraken is a small player, or nobody on Kraken holds USDT for long because that's where people go to immediately change it for USD.

  • by aviv on 1/28/18, 8:22 PM

    It's crazy obvious that this ponzi scheme is on its way towards a massive collapse.

  • by dharma1 on 1/28/18, 7:54 PM

    did the supply of Tether also just jump $600m? https://coinmarketcap.com/currencies/tether/

  • by brndnmtthws on 1/28/18, 7:44 PM

    A good book to read for anyone interested in economics is called "The End of Alchemy: Money, Banking, and the Future of the Global Economy", by Mervyn King, who was head of the Bank of England for about 10 years and during the financial crises of 2007-8. In the book, he discusses "the alchemy of money" which he roughly defines as how money isn't necessarily backed by any tangible assets. A lot of what happens in the banking system is pure alchemy. A fascinating read IMO.