It's Time for Tether Immunization

jetglobal (28)in #tether • 7 years ago (edited)

Only a very small part of Dollar - Bitcoin Trading is actually done in US $ Yellen style.
All bigger banks shy away from exchanging Fiat to Bitcoins. Only very few exchanges
let you do this. 2 of the best established crypto exchanges which allow it use small banks.
Bitstamp.net lets you transfer Euros to its Fidor Bank Account in Germany.
Kraken.com uses a bank in Slovenia for fiat transfers. As far as I know that is the only exchange which allows
Tether - USD transactions for retail customers. At times of extraordinary high trading volumes you will most likely not even be able to reach the Kraken website.
For some months, a person under the name “Bitfinex’ed” has put warnings on Twitter and Medium claiming that a
fraud is going on at Bitfinex, the biggest exchange using Tether. He thinks that Tether tokens are created like Yellen Dollars out of thin air for a group of traders to manipulate the price of bitcoin by placing fake orders, a technique known as"spoofing" which suggests an unrealistic high demand. He goes as far as claiming that Bitfinex may be involved in it.
On top of that the company behind Tether Dollars revealed that it suffered a cyber attack in which a hacker stole more than $30 million worth of Tether Dollars. Additionally they announced steps to rectify the hack, including one that led exchanges to suspend USDT to other crypto currency transactions.
The the Tether team explained that: “Yesterday, we discovered that funds were improperly removed from the Tether treasury wallet through malicious action by an external attacker. $30,950,010 USDT was removed from the Tether Treasury wallet on November 19, 2017 and sent to an unauthorized bitcoin address.” and “We will not redeem any of the stolen tokens."

There is a real danger that Tether will be taken down by the US government. Every time somebody tried to clone the Dollar (remember Liberty Reserve) the founder ended in jail.

Bitfinex managed to do business with another bank now: .Bank Polskiej Spółdzielczości – also most likely used by CEX.io Its director, Molina Lee Ivan Manuel is also the director of many Offshore companies registered in Panama. Tether itself is registered in the British Virgin Islands. For details see https://thebitcoinnews.com/questions-mount-as-bitfinex-stay-silent-in-the-wake-of-the-tether-hack/

With so many red flags on the way you should immunize your hodlings against Tether. That is easier said than done however.
You cannot sell your USDT back to Tether, they make that clear on their website
https://tether.to/legal/ :

"Purchase and Redemption of Tethers: The Site is an environment for the purchase and redemption of Tethers. Once you have Tethers, you can trade them, keep them, or use them to pay persons that will accept your Tethers. However, Tethers are not money and are not monetary instruments. They are also not stored value or currency. There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers."
When people stop wanting to own USDT, the true value will go down rapidly. Under such circumstances xchanges can not keep the bid/ask at 1 US $. (Many people are still not aware that they exchange crypto to Tether Dollars and not US government $.)

As long as most crypto currencies are just traded and NOT USED for buying real products / services it is a dangerous situation for them too if USDT fails.
With all major cryptos near all time highs it may be a good idea to keep at least half of the money off the table and transfer it to your bank account first and then buy physical gold for it.