Tether's scheme


#1

I was puzzled about Tether’s profit model because they sell Tether at 1$ and buy at same price.
But now it’s very clear that they had a very ambitious plan: cooperated with big exchange, print Tether from thin air, pump the BTC price then make a lot of money by holding/selling BTC, also they can redeem the Tether with profit.

The difference between Nu and Tether is: They have much more capital and can manipulate BTC price while our tiny Nu can only use BTC as trade pair.

Tether will never become a long term success, we must find our way to become the first Hayek money issuer.


#2

It should be a question of time when their scheme is revealed?


#3

I have some questions:

You are saying the present bull run is due to crypto dealers and “insiders” (exchanges, etc.) as opposed to institutional investors getting involved - but how do you know? What led you to this view?

How does an exchange/Tether pump the price? Surely, there has to be fresh money coming in.


#4


The fresh money is the new printed Tether by themselves. They are a small FED. To mimic their scheme, we can also pump NSR price with new printed NBT on B&C exchange, as long as NSR has enough liquidity, it will probably successful. Nu tried to pump NSR in 2015, but NSR price dropped due to low liquidity. Of course, this kind of manipulation is not healthy, but sometimes effective. We need to fix the quantity of NSR!


#5

Thanks for the link. It says, “Tether Limited is likely issuing bogus Tethers, which is equivalent to 1 USD, which can then be used to buy Bitcoin”.

That is exchanging one token with another - except that people selling bitcoin for tether are being told every tether it is backed by a dollar

If Tether Ltd is simply printing them, it is fraud


#6

Not so simple, Tether must hold quite some BTC, if they pump BTC price with Tether from nowhere, their backing reserve also increases, because their BTC value soars, BTC is money, they can sell BTC for real USD.

Nu’s reserve is 1 million USD more than liability, as @jooize said, thanks for BTC’s price.


#7

So we can speculate that Tether reserves in USD are negligible compared to the reserves in BTC.
Now the question is their fractional ration.
In Nu, it s around 40% but before the peg failure it was 10% I think.
If Tether is not able to keep track of their reserve ration they are likely to end up with some kind of failure.


#8

They are playing dangerous game, if they stop now, they will get tons of profit as a BTC “long position". But we don’t know what’s their plan for future.


#9

btc is indeed going up in a big way.


#10

Does this analysis still hold given the current market conditions?