I’m new to the crypto world. I understand that Tether is supposed to be pegged to the USD dollar and that it remains similar in value to 1 USD all the time. But when I go to an exchange, the price/rate varies… is the different price the result of exchange fees only, or does Tether value regularly fluctuates, and if so what makes the price change? is that centrally determined by the company responsible for issuing Tether, or is it mostly the market?

Comments

tdscanuck t1_iyb8e7h wrote on November 30, 2022 at 2:39 AM

It's the market.

In *theory*, Tether is supposed to maintain a value of $1 USD because the issuing company (Tether Limited) says they maintain a reserve of $1 USD for every Tether.

However...Tether Limited doesn't actually do that. They're up to their eyeballs in lawsuits right now because they don't have the reserves the claim to and they won't let anyone audit them to figure out what they do have.

drafterman t1_iybapjg wrote on November 30, 2022 at 2:57 AM

Yes. You want money tied to the dollar? Keep your dollars.

Wendals87 t1_iyd1hsc wrote on November 30, 2022 at 2:29 PM

do you have any source for the lawsuits and people aren't able to redeem USDT?

Their asset backings are calculated monthly and available on their website

https://tether.to/en/transparency/#reports

I can see a lawsuit against them and a court order for them to produce a full report, but I can't see anywhere that they have failed to produce it

This year they did 16 billion dollars in redemptions without a big impact to the peg

https://www.reuters.com/technology/stablecoin-tethers-reserves-fall-by-16-billion-second-quarter-2022-08-19/

tdscanuck t1_iydi2sf wrote on November 30, 2022 at 4:24 PM

Read the report you linked to.

Among other things: -Tether promises on that page to publish reserves daily. The last accounting report is Sept 30, 2023 -That report specifically notes two ongoing lawsuits, the outcome of which is not included in the audit results (because they’re still going) -The audit report shows $56B in cash & equivalent reserves against $67B in Tether liabilities…I.e. they’re about $11B short of actually backing their token. The balance is made from bonds & precious metals (probably fine), and outstanding loans (definitely not fine…the recoverability of those loans is unknown). Most believe that those loans are actually to their parent company, which means they’re not real at all, they’re just shell game accounting. That’s what they’re trying to determine in the lawsuits and, so far, Tether has not responded to.

Short version: their own auditor’s report says they don’t have the cash they claim to and the auditors can’t tell, and Tether isn’t saying, where the balance is actually coming from. It’s definitely not cash and it may not exist. If it did, the lawsuits would be over quickly. The fact that they aren’t tells you something.

Edit: I dig into the footnotes.., it looks like they’re double counting the gold they have to back Tether Gold tokens as precious metal reserves for Tether. Which means their precious metal reserve that’s backing Tether also really isn’t…it can back Tether Gold or Tether but not both. So the gap is closer to $11B than the audit report summary makes it seem.

VeryLargeBrain t1_iybog1g wrote on November 30, 2022 at 4:55 AM

Crypto was a lie from its very first day. It's based on the principle of the Last Fool. It's a bag of dog shit being passed from person to person, and the Last Fool who can't pass it on to someone else has to eat it.

Purplekeyboard t1_iybzpsh wrote on November 30, 2022 at 6:58 AM

In the crypto world, everything is massively manipulated and people on the outside can only guess at how things really work.

Theoretically, everyone buys and sells Tethers, but they just trust Tether so much that any time the price starts to drop below $1, clever people rush in to buy it, knowing they will later be able to sell it for $1.

Actually? Tether itself is probably buying those many of those Tethers to keep them at $1, and buying large numbers of them, and if they ever stopped the price would collapse.

But it's impossible to know. The crypto world is a crooked casino, and you know everything is fixed but you're never sure exactly how. Is the blackjack dealer stacking the deck against you? Are the slot machine payoff tables completely different from what they say? Are the big winners secretly working for the casino? You never really know.