From Coindesk
Often, when a cryptocurrency tanks, holders of a rival coin will tease them with "SFYL" - sorry for your loss.Read more: https://www.coindesk.com/big-fail-tether-might-still-cryptos-ticking-time-bomb/But the entire industry needs to keep an eye on Tether's USDT token, because if something were to happen to it, the result could be everyone's loss.
That's because the coin, also known as tether, has become a pivotal source of liquidity for the crypto markets. Without wanting to further spread fear, uncertainty and doubt (FUD) in a community that's had more than its share, a collapse of tether would be extremely bad for these markets, causing a ripple effect and, in the worst case, conceivably toppling exchanges.
To be sure, so far, tether has lived up to its description as a so-called stablecoin, whose value is pegged to the U.S. dollar. Trading data shows tether has generally hovered around $1, occasionally dipping as low as $0.80 or jumping as high as $1.10.
But the company's online critics have long alleged that Tether, which has close ties to the crypto exchange Bitfinex, has been issuing more USDT than it has dollars in the bank, in order to drive up the price of bitcoin.
That's a problem for investors because tether is rare among cryptocurrencies in that it carries counterparty risk - in other words, the possibility one party to a contract may not fulfill its end of the bargain. In Tether's case, the "obligation" is redeeming USDT tokens for dollars.
An audit by the firm Friedman LLP was supposed to prove that USDT was fully backed. But recently Tether abruptly announced that its its relationship with Friedman had ended. It remains unclear who dumped whom and why.
Now, with no audit forthcoming, the doubts are as pervasive as ever.
I have to admit my biggest fear is that Tether will go down and take the entire crypto economy with it in a Mt Gox like crash. Hopefully with the encouraging signs from the west we will see more exchanges like Bittrex adopting real USD instead of Tether so we can slowly pull back on their broad reaching influence. I like the idea behind Tether but their lack of auditing is shady as fuck.
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No really. Bitfinix takes home 300million plus in a 2 week span. It’s easy to believe they can cover the 2billion dollar bill.
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If regulatory bodies wanted to they could raid any exchange around the world and seize everything in an instant. That doesn't seem to be their game for now. Look at the recent buyout, that was done under pressure from the SEC that the alternative was potential prosecution.
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Yes they can raid any institution, but they need either firm jurisdiction or probable cause. They can’t just raid because they can, it would not shine the in the correct light
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Tether going down coud indeed spell disaster but I don't see that happening in the nearest future maybe because half of almost everybody with cryptocurrency has a stake in it directly or indirectly even the governments though they pretend to be against it. Still it is a worthwhile investment regardless of the risk.
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it will turn out well.. Hopefully @contentjunkie
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I used to play that often,..I already vote yes
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Excellent perspective!
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Thanks for this - I think that there are a lot of ticking time bombs in the crypto market. Teether could well be the biggest one that could do the most damage though!
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Call it a ticking time bomb, but didn't even mention the fact that Tether lacks a lot of banking ties that are required. It also say it won't buy tethers back from you. There are just so many potential issues with Tether that the blog/article didn't even mention. @contentjunkie
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I agree. It is a great idea but with no transparency, how can you trust it. It flies in the face of everything the industry is supposed to be about.
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