Lampwick said:This might be a good time to get ready to cash out to fiat. As the Bitfinex BTC price rises, the rest of the market follows due to bots, at least for now. If Tether's slide continues, there may be a big pump, and most people will think it's good news at first, until reality sets in.
Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.
Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.
Jaydublin said:What do you guys think of USDC vs USDT?
Jaydublin said:^^ Thanks for the breakdown. I was talking more in terms of security but I see what you are getting at.
So what does the crash look like? A domino effect on exchanges?
Bitfinex Used Tether Reserves to Mask Missing $850 Million, Probe Finds
New York attorney general alleges cryptocurrency-exchange operator drained popular coin’s reserves to conceal missing funds
New York State Attorney General Letitia James holds a press conference in New York City March 28. Photo: timothy a. clary/Agence France-Presse/Getty Images
By Paul Vigna
Updated April 25, 2019 6:43 p.m. ET
A cryptocurrency exchange that claims real dollars back its popular digital coin Tether raided those reserves to cover up $850 million that went missing, the New York Attorney General’s office said Thursday.
State Attorney General Letitia James said Hong Kong-based iFinex Inc., which operates the Bitfinex cryptocurrency exchange and owns Tether Ltd., has been commingling client and corporate funds to cover up the missing funds, which occurred in mid-2018 and hadn’t been disclosed publicly.
The attorney general’s office said it has obtained a court order directing iFinex to stop moving money from Tether’s reserves to Bitfinex’s bank accounts, halt any dividends or other distributions to executives and turn over documents and information. The coverup drained at least $700 million from Tether’s reserves, according to the attorney general’s office.
David Miller, an attorney at New York law firm Morgan Lewis, which represents the companies, declined to comment, and representatives of Bitfinex and Tether weren’t immediately available.
The attorney general’s findings emerged from an investigation into cryptocurrency exchanges that it launched in 2018 and is continuing. A report in September warned that many exchanges lacked basic safeguards and left consumers vulnerable to exploitation by market manipulators.
A so-called stablecoin, Tether is purportedly backed one-to-one by U.S. dollars. Yet the firm has never released a public audit showing it has the reserves to back the coins in circulation, leading many to question whether the funds exist.
Tether has marketed the coin as a way to get both the safety of the dollar and the speed and anonymity of a digital currency. Its market value has risen steadily over the past two years, to $2.8 billion from about $10 million at the beginning of 2017.
It has become a major source of liquidity in the cryptocurrency market. About 80% of all bitcoin trading is done in Tether, according to data from research site CryptoCompare.
The attorney general said Bitfinex’s problems began in 2018, when it handed over $850 million to third-party payments processor Crypto Capital Corp. to handle customers-withdrawal requests. Over the months that followed, Panama-based Crypto Capital failed to process the orders, the attorney general said.
Representatives of Crypto Capital weren’t immediately available for comment.
By November of that year, according to people close to the attorney general’s investigation, Bitfinex determined that it had permanently lost access to the $850 million. To hide the missing funds, Bitfinex and Tether engaged in a series of maneuvers that drained Tether’s reserves, the people said.
A gap of that size would represent a major portion of Tether’s reserves. Tether currently claims on its website that the coins it issues are backed by reserves that include currency, cash equivalents and other assets and receivables. The language was altered in March; it previously claimed the reserves were 100% in currency.
redbeard said:There's two factors that'll determine how much the Tether situation affects crypto as a whole:
1. How f***ed Bitfinex is
This is hard to judge because we don't know what's going on behind the scenes. Although this story sounds bad, and the market adjusted accordingly, it's possible there is no funny business and everything continues as normal. "Mewn it"
However, if Tether is forced to shut down it'll be a literally bank run on the exchanges as users try to dump their worthless tokens. The exchanges will also have to rebuild using other fiatcoins (and it'll be a PR nightmare). Dump it.
2. How much users migrate to alternative fiatcoins
If traders switch to PAX, USDC, or GUSD, this USDT drama should disappear overnight. Unfortunately, it seems many of my trading friends are still using Tethers without hesitation. Sigh.
Will this be the catalyst that wisens everyone up? Hopefully, but we're yet to see how dependent the market really is on Tether.
Overall: Tether situation *could* be really bad for crypto, but you should be able to protect yourself as long as you stay away from fiatcoins, trade the chart, and prepare for downside.