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> No one has ever been scammed by Bitfinex or Ether. There is no monetary loss, ever.

Yet. Like all frauds, they succeed until they don't. People thought they made money in Enron, Madoff, etc until it unraveled and there was nothing.

> When Bitfinex got hacked a few years ago, they worked out a repayment program, and fully repaid all creditors.

Tether is so monumentally different. In fact, Bitfinex repaid creditors with tokens, the value of which are denominated in USDT and almost certainly have been inflated through Tether issuance. So basically Bitfinex repaid a hack with massive fraud.

> While Tether made misrepresentations after a banking fiasco

When your core business is trust and transparency, this isn't an "oh well" type of issue.

> The USG doesn't tend to settle unless they are satisfied.

Categorically untrue. Also, the NYAG is not the USG in the slightest. If I were Tether, I would be a lot more concerned about the SDNY USAG than I would be about the NYAG.

> When your core business is trust and transparency, this isn't an "oh well" type of issue.

As a user, the core business prop of BFX/Tether is that they keep my money, and maintain my ability to use the platform without KYC.

If I want a super-duper legit stablecoin, I'd use USDC. Tether is about bringing stability to the chaos of non-KYC, anonymously-operated exchanges, like the 100x leverage ByBit, or the various smaller no-banking, Tether-only exchanges. And they've done that.

When you place copper (Tether) next to burning trash (balances held on anonymously operated exchanges), the former looks like gold. Sure, it's not as good as actual gold, but that doesn't mean it's a scam.

Bitfinex and Tether has weathered and survived a variety of doomsday scenarios, from Crypto Capital, US seizure of bank accounts, the Bitfinex hack, and the NYAG investigation.

I think you're expecting Bitfinex or Tether to be Coinbase. They're not. If you look between the lines, and look at how Tether is used, the whole point is that you can have safe USD without any AML or KYC.

And since 2014, Bitfinex and Tether has fulfilled that promise despite so many obstacles. For someone trying to move capital out of China for example, Tether considerably is safer than Yuan in an onshore bank account. For people prosecuted by the USA, like the founder of Sci-Hub, Tether is safer than any USD bank account.

> If I want a super-duper legit stablecoin, I'd use USDC

They are morphing into Tether. Look at recent legal structure change, attestations, reserves breakdown, etc.

But your core premise (Tether as a dollar substitute for the unbankable) is predicated on there being two states of the universe (USD in risky places vs. Tether) which isn't true and ignores the key issue: all of those Tethers may not hold any value. In the real world, Tether is not the only alternative, nor is USDC. For instance, the Sci-Hub founder can hold any other major currency or frankly any non USD asset.

The crypto world constantly create false equivalencies to justify their casino. Fiat sucks long term? Yeah, by design...money velocity is a good thing, you shouldn't be holding cash, and few people do. This is why there are trillion dollar markets for other productive assets, like equities.

The Sci-Hub founder can hold any other major crypto, sure, but it's volatile. How do you propose she allow international donations? Via a SWIFT bank account? Via cash in the mail to a postal address?

The easiest and most liquid mechanism is for people like her to accept crypto donations (e.g. Bitcoin), and convert it to non-KYC stablecoins like USDT so the purchasing power is preserved.

It's not hard to explain the 60B market cap when you combine "non-KYC" and "stablecoin", and if you believe it's not backed by anything, you can open a short on USDT right now, using DeFi like Compound. Your upside is 100%, your downside is the cost of borrowing (about a few percentage a year).

The market believes $1 = 1 USDT, with a volume of $53 billion in the past 24 hours.

> The Sci-Hub founder can hold any other major crypto, sure, but it's volatile.

Why do you guys do this? It's so painful speaking with crypto die-hards. I said she could hold any other major currency, which of course implies fiat. How about EUR? How about CHF? How about GBP? I don't know enough about her but hell she could hold RUB...still less volatile than crypto.

> How do you propose she allow international donations?

That's her problem. This goes with the territory of running an illegal website, no matter how idealistic you find her cause. But basically once again, crypto's primary use-case (as you've outlined) is skirting laws. That's fine, it's a real use-case. But just quit pretending that crypto is the future of money.

> It's not hard to explain the 60B market cap when you combine "non-KYC" and "stablecoin", and if you believe it's not backed by anything, you can open a short on USDT right now, using DeFi like Compound. Your upside is 100%, your downside is the cost of borrowing (about a few percentage a year).

I agree, it's very easy to explain. That's what this video is all about. As for shorting USDT, that's about the dumbest thing you could do, and your DeFi example is absolutely naive. I want to be short USDTUSD...I can't do that in DeFi. I can be short Tether against something else whose value at the moment is determined by circulating Tethers. If you think DAI survives a Tether implosion, you're dreaming. And if it did, I still need a fiat offramp and if you think Coinbase is a good counterparty in that scenario, well then I am beginning to understand you a little bit. In my career as a hedge fund trader, I don't think I've come across a worse trade than shorting USDT.

> The market believes $1 = 1 USDT, with a volume of $53 billion in the past 24 hours.

Yes, and? If the market didn't believe this, then there wouldn't be a story here.

> Tether provides a means for people and exchanges to transfer units of accounting, pegged to the US dollar, between each other without a hard AML or KYC wall; as Tether is a crypto token.

That is probably why Tether was initially created but what Tether is now is a mechanism for insiders to cash out real money while leaving lots of "liquidity" in the market to keep the tasty scam going.

Retail investors (AKA suckers) buy coins from exchanges with real money. The exchanges have a net influx of real money because investors (AKA hodling rubes) will typically not want real money back when they are conducting trades, so the exchanges buy Tethers - I assume at a significant insider discount. Why not? Tethers are free to create, who cares?

Now the exchanges have some of the investors' (AKA marks) money, Tether has some money, the miners (who are actually doing real work) get some money for the relatively rare blockchain transactions. Everyone wins. All the exchanges have to do is carry enough cash so that the relatively rare customer requests for real money can be satisfied. As a quick trip to reddit will confirm, they can't even manage to do that reliably. Luckily for them nobody seems to care so long as the price remains high, which it will because the trades are mostly conducted with very cheap Tethers.

But the end result is that Bitcoin, etc are ultimately priced in Tethers - as I write, Bitcoin is currently priced at 37145 Tethers not $37145. To put it another way, the market is so distorted that bitcoin has become just a complex way for people to turn USD into Tethers. They may hodl the bitcoin for a while but that is the end result.

The situation is more complex than what I describe because there are multiple stable coins and multiple parties involved, but the end result is that real money flows from retail (AKA fools with more money than sense) to a relatively small number of groups while worthless Tethers flow the other way. And nobody seems to mind as long a numbers go up.

The next economic downturn will wipe out the whole exercise.

OK, so if you're saying that the entire crypto world is operating on a giant fake dollar Ponzi scheme, then how can a US-regulated exchange like Coinbase (who operates another stablecoin, USDC) be listed on the NASDAQ?

You'd think no one in the entire US government apparatus would let the SEC know?

> The next economic downturn will wipe out the whole exercise.

People have been calling the demise of bitcoin since 2008.

Don't get me started on things like the Coinbase IPO and Greyscale. These are just other ways for insiders to cash out of crypto without actually removing liquidity from the very thin markets, by effectively selling shares in a pile of crypto without selling the crypto itself.

Both Coinbase and Greyscale are trading at a significant discount at the moment but that doesn't really matter for the insiders. If they cash out 80 cents of real money to 1 dollar of crypto then they are still doing well.

> Tether provides a means for people and exchanges to transfer units of accounting, pegged to the US dollar, between each other without a hard AML or KYC wall; as Tether is a crypto token.

Pegged by fiat, not by algorithm. Surely the future for such an oracle is an algorithmic peg, as several honest projects continue to forge.

> A token that derives its utility from being shady (an unregulated way to move US dollar without KYC or AML) will obviously have shady elements to it.

I don't think this is sound logic. It's perfectly plausible for a token to be shady in the sense of opacity before inspection and yet be transparent in the sense of its logic and operations. Monero is an example of such a project.

> However, I (and the broader crypto market, going off tbe market ccapitalisation, anple liquidity, and the $1=$1USDT peg maintaining) trust Tether because of their actions and history of preserving the peg, and protecting all deposits.

You may speak for your trust endorsement, but I think you go too far by translating price and liquidity into community trust. It's a calculation based on the small number of plausible available options.

If you tell a starving person that you'll feed her for life if she performs a tapdancing number on an abandoned minefield, she may conclude that the risk is worth it for her. It doesn't mean that she trusts landmines.

> While Tether made misrepresentations after a banking fiasco, they have fully settled their case with NYAG. The USG doesn't tend to settle unless they are satisfied.

A settlement from the office of the NY Attorney General - which it itself not exactly a paragon of truth or justice in the first place - is not an endorsement from the NY or US governments as you seem to imply.

And if it were, this is hardly the authority to which you'd want appeal to if indeed blockchain tech is to be as transformative to society in the long-term as its enthusiasts (yours truly included) hope.

> You may speak for your trust endorsement, but I think you go too far by translating price and liquidity into community trust. It's a calculation based on the small number of plausible available options.

You are very welcome to place a short on the USDT if you believe that view. The only cost of doing so is the interest, which is a few percentage a year. Your reward is 100% if you are right.

The market doesn't believe Tether is a fraud. The volume of Tether was $53 billion in the past 24 hours.

Where can you short Tether anyway? Kraken?

Ponzi schemes always seem great until the final collapse.

Do you really think the New York Attorney General would have settled with a "ponzi scheme" with a $62 billion market cap?

The USA isn't shy about pursuing crypto operators.

It's also hard to call a 0% interest, zero return token, a ponzi scheme.

The NYAG isn’t the only US law enforcement agency and the NYAG investigation only covered through 2019 when ISDT was much smaller.

> It's also hard to call a 0% interest, zero return token, a ponzi scheme.

Much easier if we mention that only 3-4% of the entire Tether supply is backed by actual dollars.

The same way your bank account is <3-4% backed by dollars, and the rest in the form of Treasury notes, bonds, credit, and loans. Just like Tether.

Welcome to fractional reserve banking. It's been this way, with every single account, for decades now.

No, it's not the same at all. Tether is not a bank. Banks are audited and bank deposits are insured. Banks can't print money unilaterally. Tether doesn't have the same regulations apply to it.

i wouldnt trust a benevolent (offshore) dictator with my money but if it suits your needs, go ahead

It's all about your risk profile. For someone looking to move capital out of China, Tether is safer than the Chinese Yuan in a bank account.

For people dealing with all the anonymously operated, no-KYC exchanges, Tether in your address is far safer than whatever balances you have on those exchanges.

The 'dark' economy is huge, and a lot of capital live in fear of seizure. It shouldn't be a surprise how big Tether's market cap is.

It's basically "USD-ramp-as-a-service", with the only fee being Tether doesn't pay interest, so obviously the operators get whatever interest there is on the float. And this service is VERY valuable, whether you are launching an exchange in a jurisdiction that prevents exchanges (e.g. China), or want to bring about traditionally regulated financial instruments (e.g. derivative swaps) into a relatively unregulated field.

Is tether even a true blockchain or is it just 'INSERT INTO ledger' with extra steps?

AFAIK they're tokens on the omni (bitcoin) or ethereum network. So yes, it's on a "true" blockchain.