Topic: What'll happen when USDT collapses? (Read 2027 times)

There would be some sort of "bank run" scenario where people rush to redeem USDT.
Then there will be huge loss among crypto holders who purchased USDT.
The whole crypto market would plunge into a deep correction with many people moaning about huge loss of their money in USDT.

Also I posted this in the trading thread and i got replies where im confused about investing in altcoins.  I had thought if you invest in an altcoin that is say 1 dollar.  Well if it goes to 2 doubles, well you double your money right?  Thus say you buy lisk at 5 dollars and say you buy 1000 of it for 5000 dollars plus trading fees.  If it doubles to 2 dollars, well you have 10000 dollars worth of lisk minus trading fees.  So you made 5k less trading fee profit right?  Well when i posted this, i was told look at the btc price.  For example if btc price for lisk is 0.0007 btc... and you were to sell lisk when it hits 6 dollars but btc went up, you could be selling lisk for 0.00065 btc.  They said because of that, you lost compared to holding btc.  At first i did not understand this but then they said you would have made more money if you held that btc as oppose to selling it for lisk.  That makes sense.  But i mentioned well in the example you still make 5k profit less trading fees right?  One person did say yes but others kept telling me that you lose money here.  First off, who is correct here?  I can understand you lose here in terms of getting less btc than you invested even though lisk goes up.  But in terms of profit... $ wise... which is the most important thing here right?  Then you are up money here?


This is what i posted in the trading thread and want it posted here since this is altcoin discussion and people want to know about coins that would 3x, 5x, 10x etc.




I am planning to use bittrex to trade altcoins.  I would first get bitcoin first as i need btc to buy altcoins.

So i have a question on this and want to know if im doing it right.

Let say I have $10000 in btc. 

Btc = 7837.34 usd now

1.28 btc = 10000 usd


I send that 1.28 btc to bittrex.  Lets just make it simple and say i want to buy lisk and its worth $5.  I know its much more than that now but i like to make it simple.  Let say i want to buy 1000 lisk so $5000 plus fees.  I know bittrex fees are 0.25%.  So that means buying 1000 lisk would cost me $5000 + $12.50 = $5012.50.  This is correct right?  So basically now my bittrex btc balance is around half which is 0.64 btc?  To make it simple i ignored the sending btc fee to bittrex.


So let say my goal is to sell it once i make 20 percent profit.  Thus i want to sell it once lisk hits 6 dollars.  Say lisk hits 6 dollars.  I then sell all of it for $6000 - $15 = $5985.  So in this situation I made $5985 - $5012.50 = $972.50.  Is that correct or not? 


So once I sell the lisk on bittrex, I'm getting back btc right since lisk is paired with btc and most altcoins are not paired with usd or usdt as they put it?  So here is what confuses me.  At that moment i will get paid whatever amount btc = $5985 right?  However... isn't it a good chance that i might not get more than 0.64 btc that i originally used to buy lisk assuming btc price went up as well?  Like for example at that moment i bought lisk with my btc...  $5012.50 is about 0.64 btc at that moment.  But now... when i trade $5985 worth of lisk for btc... couldn't i get even less than 0.64 btc?  Thus even though i made a profit of $972.50 in my example buying lisk and then selling lisk... i might get back 0.60 btc only and now my btc balance is only 0.64 btc +0.60 btc = 1.24 btc?  Or is there something wrong with what im calculating here?  I do know when you are investing in altcoins, you are basically betting against bitcoin.  But here in my example, well you need btc in order to buy altcoins almost all the time since theres maybe 10 coins that are paired against usd or usdt?


And if my calculation is wrong, can someone tell me where is my calculation wrong?


Because i believe the profit i calculated is right here.  And if it is right, how do i make sure to lock in these profits?  I know you realized $972.50 in profit here.  But say you dont sell the $972.50 worth of btc now... and wait... well btc price drops... that $972.50 profit could only be $800 or less etc right?  Or is my logic wrong here?  I want to know from daytraders on this as i know daytraders mostly buy low and sell high and make lot of these transactions.  Thus if your goal for lisk is 20 percent profit of 5000 dollars invested and your goal is to make about 1000 dollars on buying lisk minus the buy/sell fees of 27.50 for a total profit of $972.50... are you suppose to immediately send that exact profit $972.50 worth of btc OR WOULD IT BE THE BTC DIFFERENCE between the 1.28 btc you started with and what you have now... and then send it immediately to gdax or gemini and sell it to them and then you lock that $972.50 in profit immediately to your bank account?


The thing is if everything was paired with USD, then it would be very easy to calculate/profits and losses.  I know bittrex has usdt but that is only paired with btc and not many other coins.  So the other thing is would daytraders instead of sending it to gdax or gemini... they immediately turn that btc into USDT?  That way their profits are locked since you have usdt?  I know usdt is around 1 dollar but it cannot be a little less or more.  But i read its still an altcoin.  So i want to know exactly how daytraders lock in their profit after they lock in their profit from one coin.  And most importantly, is it even possible to have a lesser btc balance after buying lisk at 5 dollars and selling it at 6 dollars depending on the btc price.  Because this is very confusing to me.

When you say park your value, do you mean like having it at a usd value so you dont have any fluctuations when you are ready to buy btc or other altcoins?


So everyone says but low and sell high.  So after all these coins including btc went down, lot of people would be buying btc and altcoins.  My question is mainly for buying altcoins.  First off, when you buy these altcoins during dips, are you buying it with another altcoin?  Such as another altcoin, sell it for btc and then buy the altcoin you want?


Or do you just buy btc and then immediately buy the altcoin?  The big issue with this is if btc goes up and that altcoin goes up, well you are getting around same amount of the altcoin assuming they both increase the same.  The same can be said if its decreasing.


Im assuming the best option would be get btc first... immediately sell it for usdt.  Then wait for prices to drop.  Once prices drop and you are ready to buy the altcoin, then you immediately buy btc with the usdt... then immediately buy the altcoin with usdt right?  I ask this because when i notice altcoins drop and i want to buy, the first thing i would do is withdraw btc from a site.  The issue with this though it would take either an hour or even a day or more depending on the site because they take a while pay you out in btc.  Then by the time i get the btc, well the altcoin might have increased too high of a price to buy already.  So is this the proper strategy to not only buy altcoin during dips but also btc?  Thus make sure you have usdt?  The other thing is if you are using coinbase or gdax, well make sure you had a usd balance on hand to get ready to buy btc, eth or litecoin during dips right?

I would find it fairly unlikely that USDT will collapse in the medium future.

The bank balance of tether's bank accounts exceeded the number of USDT issued, per the blockchain, and matched what tether was claiming to have in the bank at the time, as of September 2017. The fact that tether can simply decline to redeem specific USDT, and the fact that money sent to tether before they issue USDT is not reversible (bank wires) means there are virtually zero scenarios in which tether gets hacked, resulting in losses to USDT holders.

I'm not too concerned until the top is in. This kind of FUD doesn't usually catalyze a bear market; we still need the market to become exhausted. It's in the bear market that bad things usually start happening. For example, MT Gox shut down in February, long after the top was in.


There isn't much evidence, though. The fact is that Friedman, LLP was very careful not specify their statement as an audit nor to make any guarantees on Tether's solvency, for good reason. They have no way of confirming whether Tether has access to the funds or whether those accounts are tied to obligations other than USDT redemption.

Personally, I think they have all funds in reserve, but I think they are terrified of regulators. They have no realistic way of redeeming USDT for anyone. You can only deposit to Bitfinex or altcoin exchanges and exit via crypto.


The reason that Tether has a face value is because people believe they are redeemable, or at least that they will be someday. This is sustainable in a raging bull market because a lot more people are entering the market than exiting. When the market finally crashes and everyone wants USD -- and by that I mean real USD in their bank account -- I'm not so sure.

This actually brings up a very interesting point that makes me a little nervous about the future. It is always good to look at every angle when you are investing and this is certainly something to think about. Especially in a market that is unregulated.

I think you are mistaking anonymous bloggers and tweeters with experts. All the evidence is that USDT is backed by real reserves. The last couple of posts also miss the point about whether they are redeemable or not. It really doesn't matter whether you can redeem them for USD at Tether, what matters is that they are tradable for their face value. As long as it is possible to buy $1 of BTC with 1 USDT then they are as valuable as USD.

According to the experts USDT is a scam it’s all a thin air printing with no real reserves of any fiat, they might have a little real US Dollars. It will surely stink if we do not feel it today we must feel it in future with the music. Even if we assume it for a while that it is not a scam and the reserves accounts they claim are real, it is even not trustworthy enough as it is vulnerable to hackers. Its easy example is the recent hack of $31million on 19 November.
It’s an alarming time for exchanges that are being backed by USDT and especially for those people who are trading or Keeping their money in USDT. It’s better to find regulated exchanges and pay some tax in order to keep your money safe.
The transaction delaying tactics has been used in past by Mt. Gox, which is now bankrupt with drowning people money of around $460million.
The USDT if proved to be a scam it will not only affect BTC but the whole market, for BTC it will be a short term price drop with creating a buying opportunity on cheap price. 

The problem is that usdt(tether) is not redeemable directly for real usd. This can be seen from the total supply of usdt. If usdt was directly redeemable for usd  there would be random decreases in usdt supply. Instead there is only an exponential increase of usdt supply.

https://coinmarketcap.com/currencies/tether/

So when someone has usdt and wants to withdraw real usd, he has to  buy first some cryptocurrencies and then he must exchange the cryptocurrencies for usd in a crypto <=> fiat exchange and afterwards to withdraw the usd to his bank account. So real usd exits the system but usdt is being kept into the cryptomarket giving it a faulty inflated total market cap. It is the same thing as hyperinflation causes the prices to skyrocket

https://bitcoinexchangeguide.com/bitfinex-tether-scam/

Here’s where things get scary for those of you with a lot of Tethers, or any funds deposited into the platform. Here’s what Tether’s terms and conditions has to say:

“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.”

In other words, Tether’s service doesn’t promise to pay you anything in exchange for your Tethers. The company suggests that it will pay you money for your Tethers – but it doesn’t promise anything.

https://tether.to/legal/

I don't really buy that explanation. Yes, multiple exchanges made similar announcements about Taiwan's banking/AML reform, including Okcoin.com and BTC-e. But Bitfinex said many months ago that they had already moved most of their money outside of Taiwanese banks, so that doesn't explain it.

I actually think the Taiwanese banking reforms provided a nice cover for the simple fact that Tether has no interest in letting anyone (customers, regulators) know where their money is.

I'm thinking more of hedge funds that would already have banks accounts in every country, no problem for them to get money in. Whales would go to the hedge funds. Another example in that last thread the other person pointed out that there was a Swiss Bank that was launching an ETF. Well, that needs to be backed by actual Bitcoins. How do they buy them? They probably have a branch in Tawain that can wire to Tethers bank and then buy them on the exchanges.

Another thing that hasn't been mentioned much if at all is that it wasn't a Bitfinex specific problem, it was a Taiwanese banking problem. Okex had the exact same problem. That being the case it's possible getting USD into Taiwan might be a pain up the arse no matter which bank you're sending to. I don't know how many Taiwanese whales there are.

As I pointed out to someone else recently in another thread, you rather conveniently forgot to quote the very next sentence in that statement from Tether.

from tether.to

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

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.

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.

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.

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.

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.

Amen to that... .

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.

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".

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.

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

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.

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".

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.....

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.

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.....

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)

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.

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.

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.

Are BTC meant to be sold?

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.

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

what do you think is possible regarding BTC price in a shallow orderbook with >100Mio tether on margin trading (fact) ?
did you ever wondered how, after a sudden 25% drop a super green candle out of the nowhere appears?
bitfinex wants BTC price to rise...its just free money for them

A potential "thethering" is greatly exaggerated in in my opinion. 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.

This is not 2013 anymore where everything was sitting on a single point of failure. It's really stupid how people compare an USDT collapse to Mt Gox 2.0. These people are deliberately FUDding in hopes of buying a good dip.

Interesting, that 's the least we can say. And it would be more interesting if some courageous journalists would dig a bit further : Bitfinex, Gox, Stamp, Ifinex, BTC-e... . Who actually are the owners of Ifinex ?

Just a few thoughts regarding the USDT:

I] - I suppose everybody read this by now: https://www.coindesk.com/tether-claims-30-million-stable-token-stolen-attacker/
II] - Tether is worth 673 M USD at the current price it's 81219 BTC - https://coinmarketcap.com/currencies/tether/
III] - Tether is "audited" by somebody reputable who actually said it was not an audit but something like "an opinion" (last time I heard this was during the defense of rating agencies after the 2008 CDO/CDS fraud).
IV] - For those who don't remember - when the fraud is big enough even auditors are happy to get their hands dirty - lookup Arthur Andersen and Enron scandal (60+ billion was lost almost overnight in a fraud in year 2000 money ~ easily 600+ billion in today's money).

I don't like baseless panic and FUD but I think there is something smelly about USDT like the OP said - I'm not sure what or how but it doesn't add up.

Is there a way to independently check how many USDT is actually out there?

Is it possible that somehow there is fake fiat aka USDT (wow double fake) buying crypto and artificially pushing the price up? My biggest concern is that there might be 10x or 100x more USDT than they actually report.

By any chance, are you experiencing any issues like these today?:

https://www.reddit.com/r/bitfinex/comments/7edo1i/23500_usdt_frozen_no_withdraw_emails_sent_this_is/
https://www.reddit.com/r/bitfinex/comments/7egwaa/is_the_support_team_of_bitfinex_on_holiday/
https://www.reddit.com/r/bitfinex/comments/7ehap7/it_has_been_over_24_hours_since_i_transferred_all/

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

Just to remind : Friedman states explicitly that the report is not an audit.

Most likely not but possible.

I saw this on r/CryptoCurrency today that Thether might be hacked by the same person who hacked Stamp in 2015.

Interesting development, awsome detective work.

https://www.reddit.com/r/CryptoCurrency/comments/7eho5y/tether_was_hacked_by_the_same_person_who_hacked/

It looks like a hilarious conspiracy because iFinex has even shares of Blockstream 
We have to therefore accept that the BTC price was artifically inflated by worthless tokens over a period of 6-8 month.
I cannot understand how USDT can trade to USD bei 1:1? There has to be some counterparty-risk involved in the price. Is everybody so dumb?
After the official meltdown my prediction was/is that at first BTC prices will further increase as long as Ponzifinex somehow manages to distribute withdrawals accordingly.
Maybe "the market" will suck it up over time or it believes in BTCs value regardless of the air - with all that greed that is likely to happen.

USDT is a scam there can be nothing else more. It is only dogging with the real dollar transaction. There is no transparent audit publication of it. Even if it has in past we have examples of audit firms involved with the clients in a high level scams.
It's impact on BTC will be not as much as on the alts if USDT collapsed but still it will be disastrous.
Let's hope all these theories turn to be false, otherwise the repercussions will be unbearable; some exchanges and people will become bankrupt.

Bingo! the only thing I wish now is for all this Tether fiasco to end ASAP, even if a small correction is needed.

People should start demanding financial audits to every single exchange they trade on, that should be the norm.

Gosh, difficult and I do not consider myself knowledgable enough. It will affect prices, of course. But I think, contrary to Gox, will be assimilated very fast. I tend to hold on to the idea that
it might be a necessary cleaning of the system.

Because tens to hundreds of thousands of people are using it on exchanges to park their value. If it disappears then so does their wealth and it could happen with nauseating speed as well. No one's going to want that shit if it is truly problematic and it's not as if there's someone else who's going to step in and magic up hundreds of millions of real dollars.

I never understood the importance of USDT for trading. I thought that BTC was the gateway drug to all the alts, so I don't get why exchanges like poloniex would suffer if USDT would disappear. Plus there is always Dash and LTC if you don''t like Bitcoin's high fees.

Do you think a Bitfinex scandal would affect prices? If so, how much?

I had read that report already. And as Friedman says it is not a valid (measured to the standards applied for financial institutions). So only smokescreen. (weel paid for).

As I have been Goxed, Cloudstripmined straight through the bottom of my pockets, I tell you : if it looks like crook business, smells like and behaves like, just run away as fr as you can.

https://ftalphaville.ft.com/2017/10/02/2194319/tethers-transparency-update-is-out/

There's a dead link here but I do recall seeing a PDF somewhere a couple of days ago. However it doesn't appear to be a full on flat out audit, more of a skim, but there's no way Friedman would put their name to some absolute dogshit.

As noted in the article - "…these consulting services do not constitute an audit or attestation engagement, which would include a significantly expanded scope of procedures and take substantially more time to complete."

I've done as much research as I can and Friedman LLP seems to be on the level. Established in 1924 with many partners who all stand to be struck off and never work again if they even had the wool pulled over their eyes let alone faked anything. It's just too implausible to happen.

I've got funds in Bitfinex and I'm watching closely if anything makes me nervous I'll get out as quick as I can, but right now it looks OK. Anything may have happened since the audit in October that hasn't been made public yet. However all the noise from a few anonymous bloggers and tweeters I'll ignore for now.


The Federal Reserve, on the other hand, I wouldn't trust an inch.


I read it when it came out back in October, can't remember the link but I'm sure if you search for you'll find it.

Edit. It turns out I saved a copy https://drive.google.com/file/d/128lgqWUqvkITyPrCfupCJgI5Vz4z0-rq/view

Can you provide a link to where to find a report ?

You may be right, but we don't know if this accountancy firm is on the level.

To this day it still blows my mind that for years now, trusted people like Andreas Antonopolous makes themselves known and available to the crypto world as a trusted independent auditor (who at one point he was even offering this service for free). And yet none of these exchanges will have him come in and do one.

In my mind, that speaks volumes.

It reminds me of Janet Yellen's garbage responses:
Q. "Why won't you let the Fed be audited?"
A. "The Federal Reserve is one of the most trusted and transparent organizations.. blah blah blah...."

Then what you read was wrong. I have read the actual audit report from a well-established accountancy firm that most certainly is competent.

Bitfinexed was on LIVESTREAM last night debating the issue.

Contenders: Bitfinexed, Jimmy Song, Tone Vays (vs) Flibbr, and BTCVIX

TLDR Takeaways:

• Tether not being created out of thin air. Tether issued upon deposit of the dollar. Huge investor(s) with wiring issues make deposit arrangement to Bitfinex.  After deposits, Bitfinex creates respective tether.  Notice, the huge spike in tether happened once the bull market started picking up and hitting mainstream media.
• It would be highly unintelligent to create fraudulent tether in a fully public blockchain.  
• Friedman LLP balance sheet audit matched $400mm in bank account to 400 teather at the time. They make about $1mm in fees each day.
• Charts show no direct correlation between tether & price spikes.  
• If there is possible Fraud, the market would price in $1 USDT at less than $1 USD.
• There is no proof that Bitfinex is have withdrawal problems, no complaints anywhere.
• Tone Vays has an awesome haircut

"Bitfinexed on why Bitfinex is in trouble - Off Chain Live 2017.11.20"
https://www.youtube.com/watch?v=TerIjELO7IY

I have read that there is no official audit data provided by a competent body. And there is a very good reason for that : there are no funds. And the hacks, as well Theter as Bitfinex are false flags to cover exactly that : there are no real funds. It is only counting down now for the cover blowing off the kettle... .

I'm pretty comfortable that the funds are real and that has been proven. The hack is more of a PR and reputational problem that could cause serious issues. At the moment they are saying they can prevent the stolen funds being moved by amending the code. If that turns out to be the case they might survive this.

I very much doubt it. If it was truly audited by a reputable firm then the question as to whether or not the USDT was backed should be clear. If that's the case then I guess we could be more at ease knowing that at least part of their claims are true.

Apart from the audit from reputable New York accounting firm Friedman LLP.

https://ftalphaville.ft.com/2017/10/02/2194319/tethers-transparency-update-is-out/


That's from March the most recent audit was in October. Do you think an accountancy firm would risk its license by fabricating an audit?

They made the claim on their site and said it could be verified by looking at there audited accounts. That being said, even there accounts showed certain discrepancies (http://www.newsbtc.com/2017/03/21/tether-balance-sheet-unveils-large-discrepancy-usdt-usd-reserves/) and what's to say that the auditing wasn't fabricated either...

I cant find any info about that proof that Tether is beeing backed by real U.S $.

Tether is a straight up scam as far i can see it, things will be more clear later this week.

There's no real secret about it. Ifinex is the parent company of Bitfinex and Tether. Ownership overlaps. What extent the overlap is is another matter and they're not the most forthcoming bunch when it comes to facts.

Tether-Bitfinex = extremely fishy. They seem to have a very strange concept of audit-transparency. Some people even suspect common owners. And sooner, rather than later, both are gonna blow up.

What worries me more is indeed how deep other exhanges are "Tethered". The biggest danger resides there, not so much for BTC directly.

Something definitely seems fishy with Tether therefore with Bitfinex.
The thing is we will know for certain what's going on when it is too late if they are not coming with a full documented auditing around the corner!
Just try to avoid exchanges who deal with Tether as much as possible. Not easy as almost all altcoin exchanges deal with it.
BTC's price and the whole crypto market in general would definitely take a hit. However to guess how bad it really could get is not really possible imo. But there would be definitely blood on the streets. Lot of blood!

Lol. Yeah they'll shut it down eventually, only to replace it with their own one day.

Tether is essentially what USDFedCoin will be when it launches. Both are fractional reserve, inflatable, and backed by nothing.

And Bitfinex is really not getting it if they don't think they have been put on notice for all their scamming. I wouldn't be surprised one day if their office gets raided and someone led out in handcuffs.

They also state that all USDT are really supported by 1:1 real USD to USDT. Which I can't believe would be possible, will this mean they have like billions of dollars already in their reserves?

Just to illustrate, bitcoin prices has risen far beyond how much deposit USDT has gotten but USDT keeps on coming. Like for example on poloniex all trades in fiat are in USDT which means when the prices of bitcoins increased USDT was always ready to match the increase. Coincidence? Probably. But I agree with thymos, I don't think this USDT is legit all the way.

Withdrawals stopped months ago. Bitfinex claim that if you have over $50,000 in USDT you can withdraw it via their special arrangements. I have never come across anyone who's stated this was possible for them.

The most likely outcome for the death of USDT is a shutdown initiated by the US. Tether only exists to bypass regulations. Soon enough they'll punish that and put the frighteners on the exchanges trading it.

Let's say the total amount and value of USDT is around $650,000,000.  With the current bitcoin prices, it is around 81,250 BTC.  The 24-h volume of BTC today is $4,493,980,000 and 549,322 BTC.

549,322 vs 81,250 BTC.

Now beside the fact this whole calculation is totally theoretical, if we say that the full amount of USDT would gone in a second, almost the 1/7 of the daily volume would gone away, which is kinda crazy.  This is the worst scenario, and we cannot count the negative impact on the investors/exchanges/etc.

USDT is alledgedly backed by real USD and can be cross checked by the reserves held in the Tether LTD bank balance that is supposedly audited on a regular basis.
Let’s say that you were right and that the coin was created with no real productive intent then I’d say the following is possible.
Simple demand/supply would result in an increase in the price of BTC if all other variables were kept at a constant. However that would be quite unrealistic. USDT holders would start dumping their ‘leeched’ BTC causing a flood of selling driving down the price of BTC which would trigger the panic selling of all the short-term holders and day traders.
As suggested, alts are more dependent on USDT than BTC is and coupled with the declining price of BTC there’d be an alt sh*tshow of a meltdown. 
Exchanges will suffer too and may not be able to deal with the financial losses.
In essence the problem is that USDT has become too big a player in some of these exchanges that makes any such scenario pretty damaging.
At the end of the day I think the loss (a $600m + wipeout will be too difficult to deal with, unlike the DAO fiasco which was just a minor slip up) and the consequences would be much greater.
I don’t know what the long term affects would be on the price of BTC #keynesianspeculation but in the short term I think things would look bleak.
Let’s just hope that we’re both wrong 

First if all I was very surprised when I saw an administrator created this thread.  I know, I should not be surprised over things things like this, but this is kinda the first time for me seeing this in a important topic like this.  Great!

On the other hand, you have concluded almost everything which is worrying me for a while.  I think the whole stuff started with hack of Bitnifex and lot of suspicious movement is made on the USDT line nowadays too.  For me, it's like pushing up the price with "printed out of thin air" USDT, while there is nothing behind it.  The whole situation is worrying.

If this turns out the market may collapse due to this, alts and btc will suffer like hell, but IMO it will be like the first collapse in 2013.  It is a very dangerous game today and I don't have a clue how much time we got until the crash.  Any opinion on this?

I've been looking into USDT a fair bit recently, and it really stinks. At this point I would be a bit surprised if it's not some kind of scam. A lot of the USDT deposits may be legit, but let's assume for a moment the worst case: USDT was created as a scam from the start, and has been slowly leeching BTC from USDT-supporting exchanges; almost none of the $600 million in USDT is from real deposits, but was printed from thin air. If we assume that hypothetical, then what would the effect on the Bitcoin price be?

I suppose that it would be a big negative force, but not as bad as some might fear. Although USDT-supporting exchanges have a lot of volume, I think that there's vastly more money on regulated exchanges like GDAX, and arbitrage between the two won't be possible if USDT is illusory. So maybe a 15-20% drop in price and recovery over several months, assuming a total instantaneous USDT collapse? Thoughts on this?

I also suppose that altcoins would be hit far harder, since they are almost exclusively traded on USDT-supporting exchanges.

I think that someone or some group has been trying to manipulate the BTC price by spamming these worries on various social media over the last couple of weeks, which has created some natural pushback against the idea. But that doesn't make the idea false. 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.