The Tether Controversy | Let’s Talk About It

what’s going on everyone my name is Nicolas Merton here at day two – in today is November 27th of 2017 well folks today we have a very large topic to talk about here on the day – – channel and in fact it’s a topic that many of you out there and the data – community have asked me to cover for quite some time we’re gonna be talking today about the controversy and questions tied towards a very popular cryptocurrency used on a variety of exchanges by investors and traders today we’re gonna be talking about the 21st largest cryptocurrency ranked by market capitalization and it is no other than tether or USD T as you might have heard about it on exchanges so today we’re gonna be talking about tether and answering a lot of the questions that many people have as you all know there’s been a recent hack on tether and it’s brought it back into the headlines and a lot of people are still reminiscing over the past few months of controversy and questions tied towards the currency so today I want to be as informative as pot and formative as possible and talk about a few different things first and foremost what tether is at its core at least what it claims to be and along with that a lot of the speculation and information that’s come about in the cryptocurrency community and I’m gonna be linking down all the sources that I’ve used for this video down in the description so you can take a look for it by yourself and see whether or not you have any general fear from this or if you think it’s at the end of it just fought and you know it’s just speculation and conspiracies again I’m not here to claim anything today I’m just simply sharing information trying to break things down as I always do and help you all get a better understanding about the issue okay so without further ado let’s go ahead and jump into it so first and foremost it’s important that all of us watch and understand what tether is at the end of the day and I know many of you out there have asked Nick what’s what is tether and for those of you out there who kindly kind of get with tether is understanding it’s a cryptocurrency but many ask what the difference is between tether and the u.s. dollar because it seems like they’re very close together and they are if that’s what you’re thinking so today I’m going to start off very simple and very neutral and I’ve taken a quote from the website on tether zone website right here on the slide and I’m going to read off the description that they give for real what tether is tether is built on top of the revolutionary and cryptographically secure open blockchain technology and adheres to strict security and global government laws and regulations all tethers are pegged at one to one with matching fiat currency example one u.s. one yet one tether equals one dollar and they are backed by a hundred percent by actual assets in our reserve account as a fully transparent company we publish a real-time record of all the value held and transferred and and out of our reserve account tethers can be securely stored sent and received across the blockchain and cut it are redeemable for cash the underlying asset pursuant to tethers limited Terms of Service well it sounds pretty interesting so it’s this whole system basically at a very base level of understanding tether itself is a way where you can basically hold the dollar in a crypto currency a crypto currency asset known as tether so you basically have ownership of a dollar somewhere stowed away in a bank account that is run or at least managed in a sense by tether limited this company that has created tether and they’ve created it I know many of you probably are curious about how they built this on what blockchain is it is it its own blockchain well they build this on top of what’s known as the Omni protocol it’s a layer on top of the Bitcoin blockchain that allows you to simply kind of securitize certain assets and currencies in this case they created a digital asset for the dollar so you can have practically ownership again so for every tether in circulation you basically have a dollar that’s stored away in a bank account somewhere so it’s a way that you can trade it without having to go through exchanges as we’ll talk about that’s the big reason but basically from this description it’s quite easy to get an understanding of it it’s basically a way that you can hold a dollar in cryptographic format so let’s go ahead here and we’ll be diving through some of the things that they mentioned and here as we go throughout the video but first and foremost as always with coin coverage videos I always tell you all about the supply UST tether supplies around 700 million it’s been growing exponentially over the past few months ever since May of 2017 more turns actually run June as well but the tethers been around since 2015 and really the rampant kind of growth in supply has been over the past few months when cryptocurrencies that become more popular and this generally makes sense to a degree there’s been more use of crypto currencies and trading of crypto currencies so there is a higher demand for liquidity but um we’re gonna talk more about the supply later on so first off tethers core principles so basically this is generally just a quick summary for those of you out there who want it more brief tether serves as a cryptocurrency asset that supposedly has a u.s. dollar backed behind each coin in circulation so if there’s a tether there’s a dollar stowed away supposedly it’s a crypto currency issued on top of the Bitcoin blockchain via the omni protocol and remember I’m gonna flash a photo of the website if you don’t want to take a look at it later and the slide show and along with that the main purpose of it is to be primarily used as a tool by investors and traders when they’re trading bitcoins so this is why you see USD T Bitcoin on bit tricks you see it on Bob I think Polonia X as well bid fin X all the exchanges out there practically have tether compared to trading with Bitcoin so it’s a way that you don’t need to go all the way let’s say for example I wanted to cash out it was a trader and I made $1,000 on my Bitcoin holdings I wanted to cash out but I don’t want to go through coin base and pay the ridiculous fee that I know they’re gonna charge me well this is where tether comes in it’s a way that you can do it on exchange you can still technically hold almost an ownership in dollars and then later buy Bitcoin if you wanted to buy it so you don’t have to go to the exchange if you know you’re gonna be you know continuing to trade Bitcoin so it seems like a very great practical tool it sounds fantastic on paper and really at the end of the day they said that they’re you know a fully transparent company you can go check how much they have on their books you know it seems really good however this is where we really have to go towards the more speculoos ID as much as I want to sit here and be as positive as I can on tether there isn’t really much positive upside to it’s not like other crypto currencies where all this could be seen as value to something more over time not really because it’s pegged to a dollar at the end of the day supposedly so we’re gonna go ahead and kind of get towards more of the controversial speculative side again remember I have all the resources down in the description I want to keep this as informative and open as we can and again also be specific at the same time talking about certain things so let’s go ahead here and remember you can always check out the Omni website if you want to learn more about that not really relevant at this time but again we want to talk about the growing fears here okay this is really what the controversy is around so keep in mind as well tether limited is what runs tether itself so they add new tether to the supply of the overall circulating supply of tether this isn’t a decentralized currency keep that in mind they are responsible for keeping a 1 to 1 pegged ratio of dollars to u.s. each other that is supposedly what they claim on their website and the white paper and everywhere that they’ve generally talked about us to each other so that’s basically the concept there it’s a centralized company so this means that we have to manage and watch the practices of these companies we have to keep them on track because you know if they just you know print a ton of USD tether out of thin air that’d be a really big issue so let’s go ahead and dive into some of the worries and concerns as well as some of the connections that people found and I want to first and foremost say that I have not found the mass majority of this this was and mostly in part found by people like bit for next and other people in the community who have been discussing this it’s been a growing community that’s been talking about the tether issue for quite some time ok so first off a rapidly increasing supply so we took a look at this at the beginning of the video and now I have a little more of a stretched out chart so you really start to see a kick into high gear over the course of 2017 so the tether supply over time was relatively small it’s been around actually for a decent amount of time it was founded in 2015 and as you can see the supply here was relatively low there was basically no tether in circulation and then along the beginning of 2017 you start to see a real addition of tethers so you can see as we have the numbers listed over here we had around a million dollar supply back in January 2016 in January of 2017 and the entire year later and only an increase to 15 million and then practically halfway through the year not even all the way through you know another year’s course were hardly up to 3 20 million and then still without even reaching January of 2018 here in November of 2017 we’ve practically reached over 700 million teather so the growth is getting exponential you can see it right here the charts been blowing up now a lot of people would make the argument this is actually a very fair point that you know as as crypto markets continue to have more traders and investors in them you need more liquidity you need more cash flow coming through you need more dollars to circulate through see you can you know trade for the increasing value of cryptocurrency that would make general sense however this has been rapidly expanding and for one single you know company tether limited to be able to get this kind of capital remember we have to keep towards the rules that they have a dollar back behind each of these this would mean that within the course have less than a year they’ve been able to increase the supply from January 2017 to November 2017 they’ve been able to increase the supply by hundreds of millions of dollars so that means it’s stowed away in a bank account somewhere according to their rules supposedly so you can keep that in mind here this is quite rapid expansion not once in no single company that I can think of can go out of its way to get hundreds of millions of dollars like that and steadily in a bank account for some cryptocurrency especially as we look at the terms of services later now that’s definitely what gets kind of worrying now this goes in line with what we were just wondering about you know having the money in reserves well if you don’t know what auditing is it’s in very simple terms it’s a way that you know a third party company comes in and they check the books they check to see if you’ve got everything in account you’ve got the money they’re your you know everything in the sense of your financials and really there’s been a lack of auditing with tether in this case or tether limited so let’s go ahead and take a simple look at this tether States on their website that and this is directly and a graphic from their website the tether is transparent our reserve holdings are published daily and subject to frequent professional audits all tethers in circulation always match our reserves now again a lot of this is sounding like repeat of what we’ve heard about earlier but they also have a new part in there we haven’t talked about yet that they’ve been subject to frequent professional audits oh it’s okay so if that’s the case they’ve probably gone through some audits and we don’t have to worry about it that obviously means they’ve they’ve had people come and analyze their accounts and made sure that they actually have the cash to back up the tether that they’re you know printing out and you know distributing into the circulating supply when in reality heather has not conducted an official audit now keep in mind I’m not going to be completely conspiracy conspiracy theorist here I if this project was two or three months old and it had maybe like 10 to 15 million dollars in circulation or USD tetherin circulation I wouldn’t be too skeptical about this I really wouldn’t the other day I would not you know got on my way to criticize this and I’d say give it time let them go through an audit audits don’t know it happened overnight that’s fair the tethers been around since 2015 and this is a company which is claiming they have over 700 million dollars in reserves in a bank account somewhere or multiple bank accounts whatever maybe and they have yet to go through an official audit yet that’s quite concerning I gotta say there’s not too many companies who can say that they’ve have this much on their balance sheet and not go through an audit so definitely concerning especially something that’s claiming that it has over 7 million u.s. dollars now a lot of people out there on the tub in the teller community would probably you know start arguing against me Nick they came out with an audit by Friedman LLP and which is an accountant advisor service and they’ve come out and they obviously proven you wrong Nick they have an obvious audit report right there well it’s actually not an audit report and bit for next covered this on his one of his medium blog posts and stuff I’m just looking into it and it’s actually what he claims as an internal memo so there’s no actual financial reporting on liabilities it states very generic statements and even tether limited themselves came on it stated that this is not an audit so there still has yet to be not it even tether claims that so we haven’t gone through an official audit there’s a company that’s claiming to have 700 million dollars of course nothing I would say right off the bat that seems criminal but it seems very suspicious so again keep that in mind just one of the many things that we’re gonna look at another thing is wash trading so for those of you out there who don’t know about wash trading this might seem a little bit confusing that this is something we should definitely talk about another thing credited a bit for next for finding bid for next found that there was actual evidence of washe trading going on today I’m going to be explaining to you what wash Trading is because it’s important to understand what it is so you can understand how other would be using this so I have a description here on the left hand side and I’ll read through it and I’ll break it down for you wash trading is the practice of purposely buying and selling a stock commodity or currency in this case crypto currency at a specific price through either a single exchange or multiple exchanges in aims to manipulate prices so in very simple terms I think I think the description does a pretty good job of defining it but basically it’s one or multiple parties who are connected or colluding with one another who are working on either one exchange or a variety of exchanges and they’re continuously placing sell orders for something they own at a certain price in buying it at that certain price so basically it’s it’s a fake market order in a sense you’re plugging in something you know is going to get bought up either by yourself on another account or another exchange or by someone else out there in the trading space of your colluding with so why would you as Dee tether use this well we’ve seen this ironically on the one exchange crankin that allows you to transfer USD teller to US dollars it’s the only exchange only exchange out there and on this exchange we can see clearly that there are sell and buy orders coming through that are showing sense of wash trade now before I dive into that why would they want to use this why would they want to do it that’s it’s the first logical thing you should ask yourself the reason being is because they want to in my opinion at least what I’ve observed is maintain a sense of trust a trust of a lot in the sense that there is always people exchanging USD teather for US dollars so there’s that kind of connection it shows that US see people are obviously showing trust in it they’re obviously showing that u.s. to each other can be transferred to u.s. dollars so no fear here well at the end of the day you can right here in this video this is a video from bit the next channel I turned into a little gif here and you can see the sell orders continue to come through and buy orders and ironically enough there’s a lot of small little orders here with these same exact numerical values 5.5 to repeating or continuing on from there and the same exact values coming in not to mention they’re all coming at the same time as well and eventually there’s by orders that come in to match a multitude of those orders so you can see here we have the orders here for 5.5 and then eventually you’ll have a buy order comment that says 16.5 so simply do the math there you have the buys coming in to me those sell orders and they’re meeting at the pre agreed prices and stuff this is what’s known as wash training and I don’t know if I made it clear yet not only is does this sound very scummy it’s illegal on US exchanges to do this now keep in mind crack in all these crypto exchanges they’re very under regulated they’re very new and because of that things like this go unattained no one covers it it’s nice to see people like BitFenix covering this but this is going on hunc RIKEN from time to time with the u.s. each other trading and you can go watch the video for yourself I have it linked down below but this is concerning this is there’s a reason it’s an illegal practice it’s because it’s market manipulation and you don’t have to just do it to maintain a certain price you can do it to lead towards buyouts for sell off source are people buying it is something to increase the price or selling off lowering prices you can do it both ways so it’s very very concerning here that this is going on with us t10 the only exchange ironically we’re used each other is transacted to US dollars again very concerned anything as well legal policies this is something that I think most people know about if they’ve looked into the tether situation and it only takes going to look at their website in their terms of services and the legal positive term of services these are actual quotations from their website I haven’t touched them outside of putting some underlines in your certain parts let’s go ahead and read through them 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 monetary instruments they’re also not stored value or currency the big part that stands out in that is the fact that they state that there’s no stored value because there is supposed to be a stored value they’re supposed to be a dollar back in each one but let’s continue on read on 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’s no guarantee against losses when you buy trade sell or redeem tethers at the bottom part the reason why I didn’t underline it is it’s understandable to state that there’s no guarantee of losses when you buy a trade or sell tethers however it is concerned to say that you can’t redeem tethers and as they stated in the bigger quotation they don’t guarantee any right of redemption or exchange of two others for money so at the end of the day if that’s the case if no one’s going to be withdrawing tethers from the from the accounts and stuff to US dollars if they don’t have a right to it they could really so long as that audit doesn’t come through continue to print as many tethers as they want so very worrying this is again it’s supposed to be as they stated in minute cases a redeemable system or at least what many people miss you know misinterpret is that it’s a redeemable system so I don’t know it’s very worrying here that they have these kind of legal policies in here and they say that supposedly this these quotations involve worries of money laundering and things of that regard maybe I don’t know but to be fair it’s just it’s genuinely concerning to me at the end of the day but again there’s much more controversy out there to be debated over this one thing but definitely look into it read it for yourself and stuff again have the link down below the hacks don’t stop this is something that mostly has probably led a lot of you to understanding or at least looking into tether recently tether claimed to have a recent 30 million dollar hack into the the treasure the tether treasury wallet and there was over 30 million almost thirty 1 million tether stolen so this obvious shows that there’s some security flaws and this is stolen from a multi sake wallet that they had the tether Treasury wallet and right now they’re still supposedly working to correct the situation and figure out what’s going wrong now for some odd reason when they posted an article talking about what had happened and how much tether had been stolen they removed the article later but what was really cool i think is coin Despero in telegraph where I got this from and I’ll link it down in the description they have this piece right here not to mention they actually have the actual archived article that you can go to and you can go see but this was the main quote that around 31 million two other was removed from the tether treasury wallet on November 19th of 2017 and sent to an unauthorized Bitcoin address as tether is the issue of the USD team management asset we will not redeem any of the stolen tokens and we are in the process of attempting token recovery to prevent them from entering the broader ecosystem so they don’t want where ever it got sent to to be distributed towards a variety of different wallets and being used for wrong purposes or anything like that again going back to the worry of money laundering okay so this is you know honestly the end of the day I the reason why I titled us the hacks don’t stop is because there’s always hacks and the cryptocurrency space this is not something we should just hit tether on this is something that has happened everywhere however it’s how they’re handling this and what they’re doing during a recent hack on November 19th that is quite concerning and very at least a my opinion no matter where you stand highly unprofessional so let’s go adhere to the next line so teller states that nearly 30 or 31 million dollars worth of its digital tokens I’m in stolen after a hack okay well why is it that on the omni explorer where you can go see any time when they add new tethers the dave recently over the past 20 for less than a 24 hour period over last night in today added 50 million new USD tether just like that they’ve created 50 million tether now there’s a lot of things that rush through my head here first and foremost I think it’s just generally highly unprofessional to do that not to mention when you just had a hack but this is in itself stating if we’re following off of tethers basis that there is a bank somewhere that has granted them the money to continue doing this even with even with the hack of 30 million tether and whether it was beforehand or afterwards of the hack that they were granted this money that that Bank does not want their money back that in fact it’s still in the reserves of tether and that they are happily printing out new tether millions by the past few hours into new circulation interesting enough I just I that’s the biggest thing to me the biggest question I would ask is why more than anything even if they have the money in reserves if they do actually back it up why are they creating 50 million you tether when they haven’t even come out and made a clear statement as to whether or not they’ve you know fix the issue at their multi-sig wallet or however they got hacked and then also brought any resolution to tell their holders because that’s a concern for the thousands of people who own tether who own hundreds of millions of dollars worth of tether out there so I don’t get why they aren’t transparent about that again a genuine concern to keep in mind and to be fair I’m not gonna be the only one talking about this there’s people out there on many article sites many youtubers many people in the space they’re gonna start talking about this it’s not just me folks it’s not just some kind of conspiracy people are getting a little bit concerned this more than anything I think should be a cause for concern the fact that they’re so eager to print more tether without coming out and stating how to fix the issue so again you wanna read the article link it down below and stuff but again very concerning stuff more tether higher Bitcoin another correlation that bit FedEx just found and I give him high credit for is the fact that over time that he’s continued to add all of the tether increases in supply over the Bitcoin Bitcoin price over time so you can see here all these markings are different drops what kind of money drops of tether where they’ve added a new new tether to the supply so you can see here they have some large ones some eighty million dollar ones some small ones like 20 million the first one is 10 million 120 million right here during the correction back in September 230 million and then 50 million extra right here just over the past few days so you know we can get a little bit speculative here this is something of course that’s course could just be coincidence you know not something that I would I would get extremely worried about but it is ironic that the mass majority of when they add tether is when pull backs are occurring so for example 60 million here there’s a pullback over this long period of time when when bitcoins going through general pullback hundreds of millions another created over here the China Fahd kicks in Bitcoin pulls back 120 million tether entered into circulation over here as well a lot of the larger periods where this was added was either down here or when the pullback came into fruition and been we have up here at the peak 50 million new tether create so of course it doesn’t always happen on sell offs but it Quinn sedan what happens a lot on sell ups that’s the part that I found really interesting and of course if you’re curious about the colors as he states here red and blue or just alternating tether cycles it’s just so you don’t get them mixed up but there general cycles that are correlated together in a certain period of time as you can see there’s big gaps in between here for the additional tether so again just an adjusted odd coincidence who knows but it’s ironic that it happens a lot when there’s market pullback so and last but not least is a lack of communication this more than anything kind of upsets me because there’s been many I’ve watched many videos and interviews with tether I’ve heard audio clips were there talking with different individuals they also had someone from the tether based community community ever started was a it was one of the big communities for tether that was doing an interview on off the chain Jimmy song’s channel and they had bit the next on there as well and they were saying that they’re very open about communication they haven’t answered a lot of questions that are out there in the community and these are just some of them some of them in I have some that many other people are wondering as well when will the audit be conducted for tether how many funds do they have where are those funds and are there any liabilities etc we should know this information this is a multi hundred million dollar cryptocurrency for for Christ’s sake I mean this is really worrying along with this where does tether bank and under what jurisdiction this is something that bit FedEx has asked on his website and I think it’s a very fair question as well why are more tethers being created 50 million over the past few few hours right after the 31 million dollar hack just days after folks this isn’t you know months after and they’ve resolved everything nope they added 50 million more has there been any progress towards correcting the hack or preventing future ones I think this is an important question to ask both for exchanges for individuals who are currently holding tether and then also just for the the sake of showing that you’re a stable company and to draw more banks to give you more capital for more tether you should be pretty clear about whether or not you figured out how you got hacked and then also how you’re going about correcting it and keeping it from mapping in the future because we’ll learn that tether not only has had this reason hacked but the people who were tied to tether have had bad history of hacks as well and last but not least are there any fears or worries government cracking down on tether being backed by the dollar now this is something I’ve through a credit to crypto investor one of my favorite youtubers out there in the space for trading and investing he brought this very good point about how tether itself is claiming to you know be backed by dollar and even if it is at the end of the day everything is foolproof there is a genuine worried that a government would not like that and I could I couldn’t doubt it for a second that they don’t like it and if they were to come in and shut down this centralized company money goes away by by tethers gone if it can’t be used on exchanges there’s no Rainier value doesn’t matter if there was a dollar backing in or if there wasn’t so that’s a very genuine worry as well the someone we haven’t really even talked about but I’m curious if teller would have a response to that more than anything so again we’ve talked about a lot of things here today and again I’m sorry if it seems like a little a little biased on it but the more and more I dug into research on it and the more time I spent on it I spent the past few days really looking into it I’ve gotten more and more worried about it and as Bitcoin moves higher and higher and as we see the correlation of price not to mention just a lot of unanswered questions this has got me genuinely worried and I know there is many of you out there who use tether in a daily basis so that’s why I wanted to be clear transparent with you all and for those you who are confused about the topic at least explain it and break it down and des sense of all the controversy and what tether is okay so the next part we’re going to be talking about as I said there are connections tied to this or potential connections the BitFenix connections is going to be part two of this topic a lot of people as you all know you know probably know a bit the next a lot of people in the community have been tying all these issues with tether to BitFenix because BitFenix has a lot of the people’s there’s been a lot of documents recently relating the – there’s been a lot of documents relating the ownership and leaders of Tanith tether being tied to the leaders of BitFenix so very interesting stuff again keep in mind that Finex is a pretty under regulated exchange and they’ve a both shared both companies have shared some banking issues over the past few months in 2017 so we’re gonna be talking about all of that on the channel later down the road and hopefully we can get as much awesome resources as we can get hopefully we could probably possibly get bit for next and other people in the community on get a debate going I want to talk about it because this genuinely concerns me if we’re playing with hundreds and millions of dollars here and there’s really a lack of transparency that tether has yet to answer on so that being said everyone that’s it for the video thank you all so much for watching guys I want to hear what you all think about this again let’s start the discussion now what do you all think about tether do you think that there is enough to really kind of instigate some serious questioning here for both tether and possibly bid for next if you know about all the connections I’d love to hear what you all think down in the comments down below if you think this is really just fought at the end of the day again not here to try to scare the market or do anything I’m just simply here to share what I’ve learned share what I’ve you know kind of researched over the past few days and help you won’t get a better understanding of it and a broken down format alright anyways everyone that’s it for the video thank you all so much for watching and I’ll see you all in the next one stay tuned

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