I had been warned that this month would be a hard time for Tether and in fact things are likely to get worse than they already have... Now a large fine has been sent to the Tether team, effectively for fraud!
First up we have the news that the US Commodities Futures Trading Commission has issued a $41 Million fine to Tether for misrepresenting the truth about their reserves. They have always advertised that for every Tether coin in existence, they held a 'real' fiat US Dollar, meaning that the 'stablecoin' is tangibly pegged to the US dollar in as meaningful a way as is plausible with the scammy fiat US dollar. In reality, after years of exposure by activists such as @bitfinixed on Twitter, it turns out that they didn't.
Tether's own statement on the subject distances themselves from any major wrongdoing and just says they essentially chose to hold some reserves as non fiat:
Following several years of investigation and access to extensive information about the companies and their operations, the CFTC has concluded its review. The CFTC’s Order found no issues relating to Tether’s current operations. In fact, the Order related to certain disclosures about the reserves from more than two and a half years ago. As the Order recognizes, these issues were fully resolved when the terms of service were updated in February 2019.
As to the Tether reserves, there is no finding that tether tokens were not fully backed at all times—simply that the reserves were not all in cash and all in a bank account titled in Tether’s name, at all times. As Tether represented in the Order, it has always maintained adequate reserves and has never failed to satisfy a redemption request.
However, as others have pointed out, by holding reserves in crypto tokens that generate profit (and that are volatile to a point of actually risking the collapse of the entire 'stablecoin'), a feedback loop is created whereby the price of Bitcoin and other cryptos may have been artificially inflated by the process.
$1 Million Bounty For Whistleblowers
A financial research organisation has offered a sizeable reward for anyone coming forward with information on the true state of Tether's reserve holdings. They highlight that if Tether is lying then it has hugely negative implications for crypto and for specific lending institutions. I highly suggest steering clear of Tether for the forseeable future and using other stablecoins instead!
Hindenburg Research, a forensic financial research firm, today announces it is launching the Hindenburg Tether Bounty Program (the “Program”) – a reward of up to $1,000,000 for information leading to previously undisclosed details about cryptocurrency “stablecoin” Tether’s backing.
Tether is a key underpinning of the multi-trillion-dollar crypto market. Yet despite its repeated claims of transparency, its disclosures around its holdings have been opaque. The company claims to hold a significant portion of its reserves in commercial paper yet has disclosed virtually nothing about its counterparties.
Hindenburg has doubts about the legitimacy of Tether’s backing due to the company’s sparse disclosures.
Tether has been referred to as a “stablecoin” in the crypto space due to the company’s historical claims that it was equivalent to $1 USD and was backed 1-to-1 by “traditional currency” reserves.
Since those claims that garnered it “stablecoin” status were made years ago, Tether subsequently revealed that its coin was backed only by a small percentage of traditional currency, and that much of its backing consists of holdings in commercial paper issued by unnamed counterparties.
Despite multiple regulatory sanctions over its alleged lack of truthful disclosure about its reserves, and despite Tether now having a $70 billion market cap, Tether still refuses to provide transparency to the public on its holdings.
Recent reporting has indicated that Tether’s claims would make it one of the largest holders of commercial paper in the world. But major trading desks stated to the press that they had never worked with them or seen them in the market.
Hindenburg’s program enables users to submit information on Tether’s backing to Hindenburg for a chance to earn rewards in an amount up to $1,000,000, the (“Bounty”).
Hindenburg Research founder Nathan Anderson said: “We feel strongly that Tether should fully and thoroughly disclose its holdings to the public. In the absence of that disclosure, we are offering a $1,000,000 bounty to anyone who can provide us exclusive detail on Tether’s supposed reserves.”
Securities and Exchange Commission Chair Gary Gensler said in September of this year that stablecoins were acting as “poker chips” at the crypto Wild West “casino gaming tables”.
Gensler said he feared that: “[the SEC will] keep bringing these enforcement cases but there’s gonna be a problem, on lending platforms, on trading platforms, and, frankly, when that happens…a lot of people are going to get hurt.”
Hindenburg Research seeks to help advance the public’s knowledge of what it believes is a growing threat to investors by encouraging disclosure related to a crucial part of the crypto markets, which are nearing “systemic” size.
The full terms and conditions of Hindenburg’s Tether bounty program can be found here and should be read closely by anyone considering submitting information to the program.
What do you think? Is this all a hit job on Tether or is there real fraud afoot?
Wishing you well,
Ura Soul
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Tether is a scam, always has been... but 41 million is just a slap on the wrist
In the scheme of things it's a small amount, yes, but there may be other things afoot too!
Useful information. I heard they might have serious issues and I had to convert all the USDT I have into BUSD. At least, I will feel a bit safe.
Thanks for sharing this sir!
I don't know which of the other stablecoins are more 'stable', but at least there are numerous options - many people trust DAI too.
Yeah... DAI is a good alternative.
I hope this doesn't turn out to be true, or it would have a negative ripple effect on the cryptocurrency world... I for one have a lot of my funds in USDT tied up in different investments, how this would affect me, I still don't know. Hopefully this gets cleared up soon by tether.
I have been given warnings weeks ago about this getting a lot worse before it gets better - but that's as much as I can say.
Let me be hopeful for the best.
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This post is mostly just quoted text.
This was posted as a notification to Leo Finance users for people who may need to sell tether coins quickly in order to avoid problems. Evidence was posted to substantiate the notification.
Then decline rewards.
My attitude towards my posts and rewards is that I have spent years cultivating a subscriber base as a result of posting strictly along a certain theme which is to provide services to people that improve their lives. Sometimes that takes the form of pointing things out in politics/society, sometimes it might be healing information and sometimes it might be economic etc.
As far as I am aware, people choose to upvote me - whether manually or automatically, because they appreciate my overall aims and the content I create. If I post material that isn't valuable or that doesn't improve lives in some way, then I will lose votes (including autovotes). Therefore, I always aim to post content that people will truly value for one reason or another. The tether post could potentially result in people minimising substantial financial losses, should the fate of Tether continue in the direction it is going. So there is a lot of potential value there for some people.
The subjective valuation of hive posts goes in both directions - isn't that the exact mantra of the downvoting curators? If that is true, then it also applies to upvotes. If someone wants to continue to upvote me of their own free will, using their own stake - then that is their right and entirely in line with the intended design of the Hive blockchain since the outset. That is literally all that is happening here.
I don't really see why some people here feel it is their position to go around telling other people how to behave when clearly hundreds of other people have no problem with my posting and are even willing to direct their own stake towards helping me do more.
I'd honestly really love to know why you think your logic trumps hundreds of others users. Maybe I am missing something important. Mostly, I just get told to do as I am told without any real explanation other than what seems like undercurrent attempts at intimidation. There is no need for that whatsoever, yet here we are.
I am happy to be left to my own devices and to associate with stake holders who do the same.
Autovotes have close to 0 care and it's obvious how little people check up on them and go afk. I'd love to hear your thoughts on autodownvotes though.
I personally use autovoting because I don't have enough time to manually curate, create good content and also do all the other things I have to do in the day. I still try to stay on top of the content that I am voting on though and I use the Discord tracker to view all the upvotes from my account to do that.
There may be people who auto upvote who never use Hive at all, I wouldn't know really.. But I do know that around half of the bigger upvoters who seem to auto upvote me only started quite recently and have been quite prolific posters at one time or another. In my own mind I imagine them reading posts and checking up enough that they aren't at least wasting their votes or upvoting people they disagree with. Ultimately, neither of us has any way of really knowing how engaged these people are, but they have chosen to use their stake in the way they saw fit for their own reasons. Such free and voluntary association is part of the whole point of decentralised anarcho type technology.
Previously, the biggest problem on Hive was bidbots and the free downvotes were (to me) largely brought in to counter them. This seemed to work. Now, it seems that the biggest problem you are personally having with the content/voting is autovoting and I presume that's because you think people are doing it to get curation rewards rather than because the content is engaging or valuable. As a content creator, other than refusing all rewards in protest at the design of the hive algorithm, there really isn't much I can do about the situation. Should I be penalised because I am getting too much support? It seems a strange attitude to me - especially when a couple of votes from just one or two large accounts (who I don't get votes from) can dwarf the payouts I get - and regularly does. Should the posts these accounts vote on get downvoted too because the payouts are too high? How does a presumed manual upvote from a large stakeholder serve Hive better than a collection of auto votes from smaller holders?
I think that there are a lot of assumptions and biases involved in most conversations around these subjects, but they are important conversations to have. No matter what any particular person thinks, all hive holders will do best if Hive as a whole thrives and grows. So we all have a part to play in creating harmony and making good business decisions.
I think that if there is a perceived problem with auto upvoting then curators need to be more rewarded for manual curation somehow. The problem I see is that doing that would be a pretty tough challenge technically and might require some kind of robot check to make sure every vote is done by a human. That, in turn, means that everyone has to be chained to hive in order to make sure their investment doesn't constantly lose value because of the inflation the system is based on..
Essentially, the inflationary system here means people are heavily motivated to vote at least 10 full votes every 24 hours or they may lose money. I don't think it's right to view people who get auto upvoted as being trouble makers or wrong in some way, especially when they mostly can't do much about it and when the upvoters are so heavily pressured by the design of the system to continue auto upvoting if they don't have the time in their lives to manually curate.
Auto upvoting can motivate people to engage on the network and put more time into posting. Auto downvoting will obviously do the opposite for many people. I think that auto downvoting suggests a specific dislike for a person or their content. If people want to autodownvote to try to stop auto upvoting then they should probably speak to the people running the auto upvoting bots and all of the curation guilds that do vote following to get them to stop, rather than give the impression to most of the network that they are tyrannical.
Ultimately, the nature of the reward pool in Hive is a combination of individual free will and collective action.. Yet we don't have a consensus on the collective action and there are many people who think differently to each other. Inevitably this results in political/ideological voting and ego driven activity, rather than true proof of brain.
Unless the algorithms are changed to a genius new form of curation/voting, I think that the best the community can do is learn to be communicative, social and friendly in order to create a harmony that everyone be proud of, feel good about and that is inviting to new users.
I don't think the quantity of my own work that goes into a post has any baring on whether it gets Zeroed on Hive. My post about censorship had many thousands of hand written words and many reblogs/comments - it was still zeroed.