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Comment by csomar | Hacker News Reader

I think the news was out for some time and only now the rumor started to confirm.

Tether is trading at exactly $1/$1 on Kraken. It had touched $0.85/$1 on October 2018 though. It was discounted for the last quarter of the last year. The discount lasted for several months suggesting lack of liquidity and possibly lack of funds.

The Tether discount suddenly disappeared. And suddenly a discount/premium appeared on Bitfinex. However, that discount was getting smaller everyday and almost disappeared (until a bit earlier but still negligible in the volatile crypto market).

I personally hold a significant amount of USDT/Finex Dollars and not worried. I think the price is more relevant than the news. The probabilities or lack of funds will be builtin in the price. And the current price suggests that iFinex has got its shit together.

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It will hold it's peg until it doesn't, and when it doesn't you will take a 50-70% haircut. Just watch.

Tether’s worthless if it’s not worth a dollar. You’ll either get 100% or 0%.

It's worth the market's perception of what the holders will get after a prolonged bankruptcy process.

The lawyers and accountants get paid out of the leftover assets.

If there's practically zero assets left, the process won't even start.

You may remember the implosion of mtgox, and people buying mtgox ‘dollars’ at a discount. There’s always a greater fool, apparently.

Wait, what's so foolish about buying debts for a discount? There's an entire industry (collections) devoted to that. Sure, that time they lost, but hindsight is 20/20.

Mt. Gox bankruptcy claims proceedings are marching along slowly, so I wouldn't say that they've lost just yet.

That is right, it is an industry. It has established risk models. It has norms and remedies. Most importantly, it has the triumvirate of debt worthiness (aka credit bureaus) at it's beck and call.

It had to start somewhere didn't it?

If you bought btc at a discount at mtgox you are mega rich now.

If and only if you got your btc out of mtgox.

MtGox paying out with the remaining funds.

> And the current price suggests that iFinex has got its shit together.

Or, it could mean that they keep buying up coins on the market at face value to keep prices stable to avoid a run on the bank (which they can only do as long as their reserves remain).

You are holding counterfeit money and hoping you can offload it before the shit hits the fan. When everyone starts running for the exit, you may not be in the front of the pack.

You can use it as a medium of exchange, temporarily, never expose yourself to a large extent.

>I think the price is more relevant than the news.

Only true if the price is pure market driven, not manipulated by a powerful player. Like say...idk Bitfinex.

>I personally hold a significant amount of USDT/Finex Dollars and not worried.

I'd be panicking, but to each their own

I imagine that bitfinex/tether is liquidating reserves to hold the peg. They can keep it pegged until they run out of money and then not only is tether worthless but so are all your coins on their exchange (and probably most other exchanges that use tether). That’s how bank runs work.

Lessons learned from sovereign debt crises: don't defend the peg. Let it float now, it will hurt more if you defend it all the way to insolvency. Devaluation is better than forced debt restructuring or full bankruptcy.

Oh well, we'll see it all again.

That reasoning doesn't matter for Bitfinex because when the money runs out they can just exit scam.

Maybe they already have. 850m is missing right?

Why would you hold significant amounts of Tether? There's no upside and all of the downside.

Why do you do it?

It's used for margin trading at exchanges that do not accept fiat

I suppose leveraged betting is done best when backed by worthless collateral.

exactly and that means that regular long-term investors should not be worried at all about this.

Best liquidity, most pairs, and can be bought at a discount.

If the discount was because they lost funds, that was insider trading. That was not public information. And of the bad kind.

Why hold USDT? Why not hold other coins with proven reserves, or DAI?

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