Except of course that in the case of tether there has (AFAIK) never actually been a completed audit of their USD holdings.

the closest there has ever been is a letter from a law firm that was related to the owners and which clearly stated that it was not an audit.

I think you're right. I saw a document that I thought was the audit report but it's a simple memorandum.

https://tether.to/announcement-transparency-update/

That's exactly what Tether wanted you to think.

They also parted ways with that firm because they were unwilling to provide what the auditor requested. They've never completed an audit, despite their website claiming "subject to frequent professional audits".

> They also parted ways with that firm because they were unwilling to provide what the auditor requested.

Yeah. "Our auditor wanted to actually conduct an audit to say we had been audited."

Tether tried to give them an instantaneous bank account balance of an account with no history, and say "Yes, on day x, there's this much in the account".

Whereas, of course, there should have been nine digit deposits (sometimes multiple times a week, lol) showing on this account.

Not so much.

The real question is whether Tether can survive a substantial net outflow of funds. So far, that hasn't happened. Someday it will.

Tether was basically a workaround for the severe problems that cryptocurrency exchanges seem to have paying out real money. "Withdrawal limits", "pauses", "verification", and just not paying withdrawals are continuing problems. Kraken: [1] Coinbase: [2] (Over 1000 Better Business Bureau complaints!) But getting money out of Tether is hard, too.

[1] https://www.bbb.org/us/ca/san-francisco/profile/financial-se... [2] https://www.bbb.org/us/ca/san-francisco/profile/financial-se...

You can see why they expected this to work, there are a bunch of Eastern European banks which had audits from the Big Four brand accounting firms saying everything was A-OK right up until either the bank failed entirely or was nationalised to save it from collapse.

Not be able to secure an auditor to do this suggests somebody was too cheap. It's important to spread the loot around, for example instead of paying for an audit and expecting them to lie, try paying for the same audit AND buying ten times as much "specialist professional services" from the audit company. Don't ask exactly why these services are so expensive, and in particular don't expect to see all the people you're supposedly paying for busily working on anything. Just hand over the cash and voila, your audit is spotless. What a wonderful business.

  Stabilisation mechanism 
  unlike Maker's DAI for instance

What?

The Maker DAI relies on users trading Etherium for another token DAI.

It’s essentially a mortgage backed security derivative, except instead of houses it’s a speculative database token swap.

Certainly not safe.

> then commissions a receipt that proves their balance

Why would this report be believable?

The legal principle is that the receipts are audited and signed by a recognised/ accredited entity. If I'm not mistaken, that's how other commodities are traded in regulated markets today.

> The token itself is used to facilitate trading and many investors 'park' their gains in USDT while waiting for the market to reach a certain point or just in between trades, but that means that the token's FX value is set by the open market itself so if there are more buy orders than available USDT the price goes up and if there are more sell orders than demand the price goes down.

If the USDT to USD ratio fluctuates so much, what is the point of 'parking' your money in USDT?

It usually fluctuates by 2 or 3 cents ( ~0.98 to ~1.03).

https://coincodex.com/crypto/tether/

In theory you could just redeem your money from the Tether issuer, if it's actually backed by USD and they deign to let you redeem them.

In theory, cows are spherical. In practice, you can't actually do this.

AFAIK nobody has ever redeemed any Tether.

Do you know if any tethers have ever been destroyed? I have not seen it confirmed that this has occurred and if people were withdrawing to the dollar via USDT I would expect there to have been destructions.

No tether has ever been destroyed. While tether in its terms maintains that Tethers are redeemable "provided that you are a fully verified customer of Tether" [1], there is no known case of this ever happening, in fact it is a running joke that the tether signup page [2] is permanently suspended. Nor does anyone know who is buying them (and causing their creation). For example, when $250m of them were printed in june [3], which customer was it that deposited $250m USD? Or did they print them out of thin air? Nobody knows for sure.

But if they are in fact backed 1:1 with USDs, then it raises the question: if the tether peg is slipping below $1, why doesn't Tether or one of these alleged "verified customers" buy them up at a discount, redeem and destroy them for USD, and bank the difference?

The answer to this question is left as an exercise for the reader.

[1] https://tether.to/legal/

[2] https://wallet.tether.to/app/#!/signup

[3] https://omniexplorer.info/tx/bd9520b9aea701e9606ad8a8f4d6852...

> No tether has ever been destroyed.

Here's 30 million being destroyed earlier this year:

https://omniexplorer.info/tx/24db40680654b8b505fda3e96be722c...

Yeah, and if I remember correctly a bunch more were returned to the issuer account, presumably in preparation for being destroyed, but ended up being reissued instead.

Oh yes, to actually sign up with Tether, you had to be not affiliated with the US in any way, have a minimum of $10,000/$30,000 to give them, and wait for 90 days or more.

The moon also had to be in full eclipse while in Mercury retrograde.

To the best of my knowledge, exchanges do not allow redeeming USDT for USD.

Kraken allows selling USDT for USD. The current price is $0.94 USD.[1]

[1] https://cryptocoincharts.info/pair/usdt/usd/kraken/today

Redemption != Sell

Redemption implies a non-market transaction to turn in an asset for a guaranteed face value. For example, you redeem bonds (and bond coupons) for the face amount with the original issuer, once the bond or coupon has matured

Thanks for mentioning DAI.

I mentioned DAI today in comment and essentially got banned for doing it.

In comment I provided link to interview with Olaf on blog.ycombinator.com where MakerDAO was mentioned.

So I got banned as spammer in HN for providing link to blog on YC.

It tells a lot about the level of average HN reader.

You got flagged, not banned. But if you keep rambling about readers' intelligence, it might yet happen.

You need to take a step back and breathe.

"Marked you as a spammer" and "promote fraud" is your interpretation, and I believe it's wrong. A single person called your comment "link spam", that's it. And nobody even mentioned fraud.

You seem to think fraud could be the only reason for a flagged-off comment. It's the rarest reason. I cannot remember a single clearly fraudulous comment here.

And I'm sure the people who flagged my submissions and comments from time to time didn't think they were fraudulous, either. They thought they were obnoxious. Or combative. Or mean-spirited. Lots of reasons why someone might flag something.

For what it's worth, I don't think you're trying to defraud anyone. Still, I believe that this cryptocurrency you mentioned is probably fraudulous, as are all of them. :-)

Yes, you linked to ycombinator. Among other links. Nobody ever said anything about that particular link. Again, it's your imagination.

Thanks for full-quoting your comment, but that wouldn't have been necessary. I have already read it. Before flagging it.

I don't care much about you taking your words back, and your pathetic attempt at blackmail doesn't change that.

Finally, yes, HN has changed a lot. In my opinion for the better, but you're in good company, many readers lament that change. Personally I don't particularly respect (or disrespect) Paul Graham, and I'm glad this isn't a Paul Graham fan site.

Maybe it really isn't for you. Do you really want to put more energy in this fight?

You can read why I strongly believe in cryptocurrencies based on my life experience (which has nothing do to with crypto):

https://news.ycombinator.com/item?id=16197475

I think HN went pretty much to the left, if not far-left. HN readers are pretty much on the side of Paul Krugman, Thomas Piketty's world view.

I'm on the side Milton Friedman, Paul Graham's world view.

The left consider what I believe as total shit and at the same time call me intolerant. And this irritates me a lot. There is no way of being in peace with left without being submissive or self-censoring. And I don't want to be either.

> I believe that this cryptocurrency you mentioned is probably fraudulous

So do you believe YCombinator promotes fraud? Because cryptocurrency I mentioned was on blog.ycombinator.com.

I don't think https://news.ycombinator.com/item?id=18218901 deserved to be flagged, and I turned the flags off on it.

Your other comments on this topic, though, have been off-topic and tedious. Please just don't post like that, no matter how frustrated you are. If you think a post is being treated unfairly, you can email us at [email protected].

(On another note, I'd be careful about assuming that pg's worldview is the same as Milton Friedman's. That doesn't sound right to me.)

There you go again.