> This update allows the immediate withdrawal of Tether to fiat (1:1), with the ability to acquire coming soon.
So Tether still backs the USDT 1:1 by fiat while Bitfinex just becomes another trading market. Other exchanges already have USDT markets that change in value.
This event is not the "de-tethering of Tether." It is returning the responsibility of backing USDT to Tether.
> Tether still backs the USDT 1:1 by fiat while Bitfinex just becomes another trading market
We don't have any evidence Tether has hard currency backing its Tether. We do know Tether and Bitfinex are under investigation in multiple jurisdictions, and that brokerage deposits are less protected than obligations marketed as being freely redeemable or secured (as Tether was). At the end of the day, Bitfinex and Tether are intrinsically and ambiguously linked, a combination that does not inspire confidence.
> We don't have any evidence Tether has hard currency backing its Tether.
We have some evidence: The CFTC subpoena was about a year ago, and it is hard to imagine that they would not have
1. Subpoenaed bank statements to support the backing, and
2. Let tether continue operation if the support was lacking.
So it's possible that the CFTC was snookered somehow, but they're not known for being patsies when it comes to obvious fraud.
The investigations for manipulation are more complicated, and it is easy to imagine that it takes a year to iron that out, but a simple balance check? Hard to imagine that's not already complete.
Tether is Hong Kong based and as far as I can tell they don't have any people or infrastructure in the USA so it's going to take much longer for the CFTC to actually do anything here.
Yeah, last I checked Bitfinex made it incredibly slow and difficult to convert Tether to USD. Like in theory you could do this conversion, but in practice ... not so much. Obviously there was heavy speculation that Tether was a scam. Is this still the case with Tether’s service? Or are they actually allowing easy, practical, quick conversions for whoever wants them?
It's not like Bitfinex has ever allowed anyone to cash out their USDT for USD (despite claims to the contrary) so maybe this is just them coming clean about that fact?
They've also removed (false) claims about being audited from their FAQs section[0]
I haven't been able to test this directly since I'm in New York and therefore am not allowed to have an account on Bitfinex, but nobody has reported withdrawal difficulties in a very long time, and Bitfinex has always treated USDT deposits as USD without any explicit or implicit conversion.
Bitfinex has had withdrawal problems and banking problems in the past, but to my knowledge the only recent problems have been around times when USD/USDT has disconnected, largely due to delays in Bitfinex's fiat withdrawal pipeline that have all since been resolved.
You're right -- I hadn't realized that we're currently in a regime of tether being discounted and withdrawals being slow or not working. After the previous discount recovered the withdrawal problems went away (obviously correlation running in the other direction), but I hadn't been tracking that the discount has reappeared.
Outside of periods of withdrawal difficulty, though, the reports slow to a trickle and then dry up.
It would be interesting to pull the history of the bitfinex sub and plot the frequency of posts mentioning "withdraw" against the kraken USDT/USD pair to get hard data on this rather than my anecdotes, though.
What is your source for nobody having any withdraw difficulties? I'm seeing heaps of USD withdraw problems on various twitter feeds that track this kind of thing.
BTC withdraw etc. seems to be working fine but not USD.
> they cashed out everyone's Tether balances to fiat?
"Cashing out" means receiving hard currency. It appears Bitfinex plans on converting Tether balances into Bitfinex brokerage balances. This still depends on Bitfinex paying out dollars for its obligations, regardless of whether they're cryptocurrency Tethers or broker balance entries in a spreadsheet.
The actual announcement was linked above. Any time before the cutoff Bitfinex will continue to support USDT:USD at parity, and all USD and EUR deposits will be denominated in the fiat currency, not the tether equivalent.
> Any time before the cutoff Bitfinex will continue to support USDT:USD at parity
What does "support" mean? I thought it was notoriously difficult to convert Tether into hard currency.
> all USD and EUR deposits will be denominated in the fiat currency
Will previous deposits, which were held as Tether, be converted into hard currency? (Bitfinex has recently been having issues redeeming hard currency deposits [1].)
The cynic in me sees Bitfinex attempting to convert Tether, a secured redeemable obligation, into brokerage deposits, unsecured obligations in most jurisdictions.
I don't know what you mean by this -- depositing USDT into Bitfinex has always immediately credited your USD balance. Until this announcement, they have always treated USDT as simply a method for depositing USD, with no explicit conversion necessary.
What I mean by "support" is that before the cutoff (at 14:30 UTC on 2018-11-27, four and a half hours from now) any USDT deposits will be credited to the USD account balance of the user who made the deposit, as it has in the past.
> depositing USDT into Bitfinex has always immediately credited your USD balance
This doesn't mean anything if that U.S. dollar balance cannot be redeemed for actual U.S. dollars. Saying "I have 1 USDT" or "I have 1 U.S. dollar on deposit at Bitfinex" is roughly equivalent--both depend on Bitfinex honoring its end of the deal.
Of course the same is true for any bank or bank-like entity, all the way up the chain to the Federal Reserve.
I don't know a lot about Bitfinex, but it seems that the relevant questions are:
1) If you have "X U.S. dollars on deposit at Bitfinex", how easy is it to transfer that balance to an external account? (Maybe possible with a fee?)
2) Can you withdraw the balance in person directly for USD cash? (lol)
3) Does the federal government offer any type of legal guarantee/protection/insurance for the balance? (Hahahahah)
If anyone knows the answers to these, I'm genuinely curious.
Edit: I somehow missed the first part of your post that established the context as NOT being able to redeem the balance for USD. Obviously the ability to redeem your balance on demand for cash is pretty much the defining characteristic of a (solvent) bank, as opposed to say your friend Bob owing you money.
1) Until that announcement: impossible for regular people, and maybe possible for big enough customers agreeing to go through many hoops like dealing with a bank in Uganda (from what I've heard, not sure if even that was possible).
2) Of course not.
3) Which federal government are you thinking about? I think Bitfinex is a Hong Kong entity, and Hong Kong is not a federation (it's a Special Administrative Region of the People's Republic of China), so doesn't have a federal government.
Thanks for the answers! And sorry, I was being US-centric. Doesn't really matter which government we're talking about, I don't think any of them would offer any protection.
> the same is true for any bank or bank-like entity, all the way up the chain to the Federal Reserve
No, it isn't. For one, ATMs. For another, bank deposits are insured. The banks, themselves, are heavily audited. In fact, "no depositor has ever lost a penny of insured deposits since the FDIC was created in 1933" [1]. (Best treasury practice is to (a) open multiple accounts, to keep deposits insured or (b) hold excess cash as Treasuries.)
Tether has been viewed as a weak-link in the crypto ecosystem and rumors of a potential Tether "scam" have swirled around since at least last year. People have speculated that Bitfinex (the company behind Tether) did not have the $2B in cash on hand to back the $2B worth of Tether (symbol: USDT which is supposed to trade at roughly 1:1 with the USD) in circulation.
They were subpoenaed, but so far no charges have been brought against them. It also looks like they recently changed banks, with Tether now using Deltec [1][2], a 72-year old Bahamas-based institution registered with the Financial Crimes Enforcement Network of the US Department of the Treasury.
As far as that goes, I think it's a good thing that Tether has established a relationship with a reputable institution. It also shows that they are committed to anti-money laundering.
As far as fees go, it looks like unless you've got more than $1 million in USDT, you're looking at 0.4%-1% withdrawal fees. Meh. I mean, doesn't sound terrible...and honestly, it seems less and less likely now that USDT will crash the market (not that it needs any help with that at the moment).
In early April, unconfirmed rumors swirled around €400
million said to have been seized by Polish authorities
that were alleged to be tied to Bitfinex. As reported on
CoinTelegraph, the funds, claimed to be held in Bank
Spoldzielczy, were said to link Bitfinex to suspicious
activities in Colombia.
Sure sounds like Bitfinex is having a reoccurring theme of having their bank accounts shut down, and then finding banks in weird locations only to get them shut down within a month or two.
“This banking information is commercially sensitive and
confidential. You should be very careful with this
information. You are asked to keep this information to
yourself and to not share it except with your financial
institution. Divulging this information could damage not
just yourself and Bitfinex, but the entire digital token
ecosystem. Accordingly, you are cautioned that there may
be serious negative effects associated with this
information becoming public.”
Tether auditor distances itself after publishing "not an audit" and then "Friedman Quietly Removes Bitfinex Mentions"
A brief announcement posted on Friedman’s own site, dated
May 8th 2017 and titled “Friedman Selected as Crypto-Savvy
Auditor by Bitfinex” now links to a 404 page. For the
record, here’s an archived version.
There's a narrative that Bitfinex/Tether drove up the price of crypto fraudulently, and that USDT is not 1:1 backed by fiat.
Not weighing in on it either way, but issues with Tether have been a sword of Damocles of the crypto market for a while. Bitfinex'd on Twitter[0] has all sorts of speculation if you want to get into it.
Bitfinex is the same operation as Tether (commingled ownership and common control). Tether’s product is the eponymous “stablecoin” which promises that each USDT is backed by $1 USD sitting in a bank account and available for withdraw on demand.
This promise is a lie. This announcement walks back the lie.
This is very important for the cryptocurrency ecosystem, because Bitfinex is a large exchange, liquidity provider, counterparty, and (I strongly suspect) lender. If they are factually insolvent or fail in a bank run, that is a Very Big Deal, at least insofar as anyone cares about cryptocurrency.
This is a well known Twitter account with no other purpose that tweeting 3times per dat for 2 years stuff about Tether which proved reserves last week again. I would be cautious about alterior motives. Those accusing or manipulation can be the manipulators in disguise.
So, is the Bitfinex BTC/USD market now a USD or USDT market? The price premium compared to other exchanges indicates it's a BTC/USDT market yet it's called BTC/USD. Has anyone sold BTC on bitfinex? Do you get USDT or USD?
Honest question... did tether ever allow people to create accounts? As far as I can tell he only way to buy tether has been via exchanges... even at this time last year their "create a new account" form was disabled.
I find it curious that there isn't any analysis suspecting the BTC crash to the breaking of the USDT peg. It started a couple weeks ago and now USDT is routinely trading at a discount relative to $1.
There were a ton of articles in 2017 speculating that the bubble was being directly inflated by USDT printing and when the peg broke BTC would crash[0]. Now that those things have happened - silence.
Silence? No analysis? Prices on every crypto are down massively. This news is hours fresh. What are you talking about? What are your expectations here? Was this not a crash?
No- the market will buy and sell Tether at the market-discovered price- which means it's no longer centrally "pegged" by Bitfinex.
This could be because they want to better take advantage of the difference in price themselves, knowing that their books are good and that the token is backed- or, following the narrative, it's because the token isn't 1:1 backed. Either way, this further erodes trust in Tether
> All indications are that they do in fact have $2B in cash on hand
No-liability letter showing a point-in-time portfolio cash position from a bank in The Bahamas posted to Tether's domain is a far cry from sound. It's not nothing. But it's trivial to manufacture with an overnight loan--that's why banks get audited.
Yes, BTC and other crypto are down 80-90% in a matter of weeks, but this is Bitfinex making it "easier" to withdraw your money. Are you gullible or trying to deceive others to save yourself?
They're not down 80%-90% within weeks. BTC has been on a year long decline from it's $19K peak this time last year. I'm not gullible, people are withdrawing USD using USDT. Thats a stable coin acting as advertised. I've never owned any Tether. But I've never seen so much FUD. Personally, I'm going to be getting some DAI as a stable coin as I like and trust it's decentralized system much better.
https://tether.to/tether-reopens-account-verification-and-di...
> This update allows the immediate withdrawal of Tether to fiat (1:1), with the ability to acquire coming soon.
So Tether still backs the USDT 1:1 by fiat while Bitfinex just becomes another trading market. Other exchanges already have USDT markets that change in value.
This event is not the "de-tethering of Tether." It is returning the responsibility of backing USDT to Tether.