You can't control the secondary market. I can sell my Tethers for whatever value I want. If I think that, for some reason, their value is zero, I can try to sell at a discount before others realize this.

The point is that tether is wlsupposed to be willing to buy back tethers at $1 each so that if the price drops below $1 they buy all the sub $1 tether until the price returns to $1.

You can sell it at a discount but why if you can get $1 for it. That makes no sense.

For tether to depeg something else must be going on

It can temporarily depeg if there are more people selling than there are people who are able to redeem who are incentivised to defend the peg

On Bitfinex the peg has held strong because Bitfinex have a close relationship with Tether and enabled customers to convert USD/USDt freely (for now)

Other exchanges are experiencing either a temporarily blip (will eventually get arbitraged away) or it's the beginning of Tether being insolvent. Time will tell

>people who are able to redeem who are incentivised to defend the peg

This doesn't make any sense. Either you can sell it for $1 or you can't. If you can then it's free money to buy tether from people selling below $1 and selling it back to tether for $1.

I would describe the relationship between tether and bf as more than "close" they have the same owner.

They are, they just aren't buying them back on coinbase. Tether don't manage the secondary market (cexes and dexes)

Though the minimum redeemable amount is $100k https://tether.to/en/fees

Why they are depegging is people are selling for under a dollar on coinbase (perhaps in panic); and Alameda Research (re: FTX exchange) who normally makes a ton of money doing the arbitrage between dollars and tether is having liquidity problems, so not doing it currrently.

so thinking about this.

assumption: bitfinex has "dollars" to backup every USDT.

If bitfinex will buy a USDT for a $1 if it drops below $1 to maintain the peg, they can do this because they have "dollars" backing each share.

however, they would also have to destroy that USDT on purchase (as they just spend the $1 backing it). They could print more USDT (/ sell that back) for $1 and they would be whole again, but if there is downwards pressure on USDT, one should expect to see the market cap for tether to drop while bitfinex is buying/destroying currently existing USDT.

If one doesn't see this drop, wouldn't that be indicative of a problem?

Does destroying currency (reducing the amount in circulation) put downward pressure on it? Not in my experience.

I (believe) what I said if there's downward pressure on the currency, therefore to maintain the peg they have to buy it (and in a sense destroy it). not that destroying it leads to downward pressure, but that we should see a reduction in market cap. I'm wondering if we can see this fluctuation in market cap.

Wonder if its a friction thing. Do you have to setup a special account to redeem on the primary channel?

The "official" channel has a MOQ of $100,000: https://tether.to/en/fees/

There is a huge amount of friction. It's not clear whether they run market-maker operations to pick up the spread between Tether and $1. As always, the question is what actual assets Tether has to meet its claims.

Alameda Research (re: FTX exchange) normally makes a ton of money doing the arbitrage between dollars and tether but its having liquidity problems, so not doing it currently.

> It's not clear whether they run market-maker operations to pick up the spread between Tether and $1.

Of course they do.

Yes, it is, which in practical terms means that the company behind Tether should own real-world assets that cover all the outstanding USDT.

The fact that people are willing to trade their USDT coins for less than 1 USD means that they do not believe those "real-world assets" exist in sufficient quantity. In other words, they are afraid that Bitfinex (USDT issuer) is scamming them and prefer to convert to American dollar, even at slight loss.

> Yes, it is, which in practical terms means that the company behind Tether should own real-world assets that cover all the outstanding USDT.

Asset. Not assets.

There is only one asset that an operation so big and trusted by so many should hold and that is U.S. Treasuries.

If you feel frisky you could do G-8 govt. bonds but that's about it really. And you are taking a chance on the forex exchange.

FTX just imploded because they didn't realize this simple fact. If you are a custodian and you are not advertising yourself as an active asset manager you should stick to US Treasuries and even that could be considered a breach because you should keep USD in a bank.

Keep USD in a bank and you have nothing to fear.

You can't really keep $69,613,437,845.79 (at time of writing) in a bank. At that point, you are the bank. In the case of Tether, Deltec in the Bahamas. https://www.deltecbank.com/about-us/?locale=en

Tether themselves seem to be based in Taiwan: https://assets.ctfassets.net/vyse88cgwfbl/RPHIloRD3eE4J5QYNR...

Taiwan's extradition situation is .. informal. Because Taiwan does not officially exist. But there have been extraditions from Taiwan to the US.

> FTX just imploded because they didn't realize this simple fact.

They fully knew this. There is no business in keeping USD in USD (or US bonds for that matter.)

Trading fees when your volume is billions? Nothing? Also what about IPO so that you can exit and enjoy 500M-1B of real net worth?

1 real billion > 20 make believe

People are selling on exchanges, so the price goes down. That's unrelated to what it's backed by.

You can officially redeem USDT 1:1 for USD. If you believe that it's fully backed and that the company honors all redemptions, you would buy a lot of USDT below $1 now, redeem it, and make a good profit via arbitrage. These buys will drive the price up again so that it goes back to $1.

Thus, the price reflects the trust in USDT backing.

Can you give an example Tether actually doing redemptions? Never really happened, as far as I am aware.

This most definitely happened (also for private people).

Can you provide a cite/link for a private individual being able to redeem tether? I’ve never seen a confirmed case.

Just a lot of misdirection, bs, and confirmed cases of people not being able to actually do it despite promises.

Sure,

> “I’ve been minting/redeeming USDT on an institutional scale for over 3 years with multiple desks!” – said Ryan Salame, Head of OTC at Alameda Research, before adding

https://www.trustnodes.com/2021/01/05/alameda-research-revea...

So not a private individual, and also someone at the center of the major crypto collapse right now who is literally imploding?

Got it.

Do you have any others?

Here's another individual speaking on behalf of a corporation and at the very center of the FTX collapse

> It's sort of funny hearing people claim that you can't create/redeem USDT for $.

> Like, I don't know what to tell you, you can, and we do.

https://twitter.com/sbf_ftx/status/1349096853346816001

I can’t tell if you’re being sarcastic or not.

That is the same entity controlled by the same dude above. The one that is imploding due to a liquidity crisis. FTX.

Which is at least partially imploding due to…. Not being able to get customer funds out in the form of cash?

So again, do you have an example of an actual individual able to get actual cash out?

Preferably also not someone neck deep in the Tether mess, with huge incentives to make stuff up, and not actively in the middle of going bankrupt?

Would you believe Binance if they came out and said that the Tether redemption process works as stated?

From the trustnodes article, there's a link to: https://etherscan.io/address/0x1E65141A6ea081F382B737141137f...

There, we see the Alameda and FTX transactions, which we know the Alameda transactions are for redemption and we know FTX (via Sam Bankman-Fried) says redemptions work. We also see that Binance has sent the same sort of transaction (e.g. From Binance 4 to Bitfinex 3).

You started with: "Can you give an example Tether actually doing redemptions?"

I sent the trustnodes article.

You then criticized it based on the ongoing Alameda/FTX fiasco. Sure, that's all a mess and any statements like "FTX is fine" were nonsense and there's zero reason to trust them with your money. But, does that mean that they lied about their experience redeeming Tethers?

It seems that for some folks the only way they'll ever believe things like, "Tether does redeem for USD" is by actually going through the process. For Tether, that's a process requiring $100,000 to figure out. And if it works, why would you bother posting about it on the internet when Tether itself continually reminds people that redemptions are being processed?

Considering that binance is not a regulated entity (and in fact is banned in a growing list of countries due to alleged criminal activity [https://en.m.wikipedia.org/wiki/Binance]), and relies on Tether having the appearance of redemptions to exist, as that is their primary method of getting money in and out of their exchange, and other exchanges like Bitfinex had principles directly involved in setting up and running Tether, despite historic statements that they were independent entities.

They have the exact same issue.

Binance is literally completely untrustworthy here.

Literally the only people who say they can do anything regarding redemptions with Tether appear to be insiders with a vested interest (in the billions to tens of billions of dollars) in it looking like you can do Tether redemptions.

Which is my whole point. And you keep reinforcing it while not realizing you’re doing so.

Tether got prosecuted by the US Treasury department because of flat out lies about currency and assets backing it. Have you read the indictment? It’s pretty damning, and has a lot of concrete information in it regarding what little actual banking infrastructure they had, which was essentially none (or at least little to no LEGAl infra).

Tether has a long history of flat out lying on exactly this topic.

My exact point is, there is zero evidence from anyone who isn’t deeply in bed with Tether.

The way it's meant to work is tether acts as a market maker, always willing to buy and sell tokens at parity. Nobody would buy below that if they know tether is around. Tether, having issued the coins, should have sufficient capital to play that role. But if they spend too much of their capital, they lose the ability to fulfill their role.

Could a drop in the value of USDT represent a rush to get back into Bitcoin, Ethereum, etc after the recent fall rather than people attempting to convert USDT to dollars?

It's fear. When everyone is making money, confidence is high in crypto institutions and pegs are strong. But when a major crypto institution like FTX (that was supposed to be as legit as the come) becomes insolvent after apparently squandering the deposited funds of users which weren't supposed to be invested in the first place, people start to think that maybe the party is over, and that maybe, just maybe, Tether doesn't have the funds to back up the USDT peg.

You technically can trade your USDT for 1 dollar to the issuer (I don't know how, but it is probably harder than just going to market and selling)

But this is people buying and selling their USDT, in a market, they can try to sell for a any price and if there is a lot of people trying to sell and not so much trying to buy, it naturally goes down in price

This variation though, while large, isn't that uncommon AFAIK