Comment by craigc | Hacker News Reader

Comment by craigc | Hacker News Reader

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I hope you do realize that the idea that the two large numbers were randomly chosen to represent funds in a bank account that doesn’t exist, and a law firm founded by three formal federal judges (one who was a former FBI director) reported and lied about it to mislead the public, is many many times more improbable than the idea that the Tether actually holds this amount of US dollars.

That is one thing I find so crazy about the entire thing — the fact that they are backed 1:1 is the simplest possible explanation and yet the conspiracy that they were created out of thin air to artificially prop up the price of bitcoin is more believable to many/most people here.

Just so you know money is created out of thin air by the federal reserve every day and much of it is used to prop up the stock market. I’m not saying that to defend it or imply it is happening here. I just think it’s ironic cause no one is claiming that the stock market is overly inflated or that the federal reserve should go to prison even though there is proof there that it happens.

FWIW the stock market has a market cap around $30 trillion. Bitcoin alone is around $115 billion. Big price fluctuations are much more likely with a small supply and small market cap.

> That is one thing I find so crazy about the entire thing — the fact that they are backed 1:1 is the simplest possible explanation and yet the conspiracy that they were created out of thin air to artificially prop up the price of bitcoin is more believable to many/most people here.

Tether concealed its relationship to Bitfinex, which is generally not a good sign. Their auditor also released a statement which, I am told, is auditor-speak for "they failed the audit."

If they are backed 1:1, it requires them to have received large dollops of USD at a time when many financial institutions were wary of giving cash to cryptocurrencies. Without more details on how that USD came about, there is reason to be skeptical of that claim.

Thank you for not ripping my head off. I too am skeptical. I just think the other way is also not super likely.

On Bitfinex tethers are not used for actually purchasing bitcoins. US dollars are. Tethers are only issued when you want to withdraw funds from the exchange to, for example, take advantage of arbitrage opportunities with other exchanges that offer Tether trading pairs.

Why is that idea so unlikely? Crypto was in a bull market last year and lots of people were trying to buy. If I saw the price was cheaper on an exchange that offered Tether pairs but not USD pairs I would probably convert some USD to Tether to buy there as well.

In a previous thread (https://news.ycombinator.com/item?id=17304571) it became apparent you've fallen for Tether's misinformation to the point where you believed they'd passed an audit. Again, they have completed zero of the "frequent" audits they claim on their website.

Is it possible you see objections to Tether as "so crazy" because of this sort of fraud on Tether's part?

Just because I was wrong about that one thing doesn’t make what I just said any less true. You have yet to provide any evidence that they are not backed by USD. Just because they haven’t had an audit doesn’t prove any of your allegations.

Why do you have it in for Tether so much in the first place?

> Just because I was wrong about that one thing doesn’t make what I just said any less true.

It's evidence of credulity where Tether is concerned.

> You have yet to provide any evidence that they are not backed by USD.

The onus is on Tether.

"We have taken in two billion dollars, but can't find an auditor to say so, so here's a non-audit while we keep the 'frequent professional audits' statement up on our site" is outright fraud.

Your threshold for claims made by proven fraudsters is remarkably low.

> Why do you have it in for Tether so much in the first place?

I don't like being lied to, especially when billions of dollars are at stake.

> I don't like being lied to, especially when billions of dollars are at stake.

That’s totally understandable and fair. I also agree it is partially on them to prove that they can be trusted and I think this report today is a step in the right direction.

That said, there is still no hard proof that they have been lying and I like to believe they are innocent until proven guilty.

Also Tether can’t fully explain the run up in prices last year since Tether only accounts for some of the crypto trading volume, and many people still paid USD to buy Bitcoin and other cryptos last year.

> That said, there is still no hard proof that they have been lying and I like to believe they are innocent until proven guilty.

There is. Their website claims "frequent professional audits". Zero audits since the founding of Tether Holdings Limited in 2014 is neither frequent, professional, nor an audit.

I should have clarified. I meant no proof that they have been lying about the 1:1 dollar backing.

I agree with you the fact that they claim they are audited and never are is a sleazy business tactic.

Proof they're lying about audits should be strong evidence the 1:1 dollar backing is an unreliable claim at best.

Unreliable claims to $2B in assets should be treated as extremely suspect until a reputable audit is provided. "I've got a Canadian girlfriend you've never met" doesn't fly in middle school; it shouldn't fly in a financial system.

Tether's claim now is more like: "There was a girl in my apartment on June 1st. Our lawyers are pretty sure of that, but not sure enough to claim anything else."

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