What we wanted: a more resilient and fairer financial system
What we got: the ability to watch bank runs in real time
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I’d say socializing the failure of banks as happened in 2009 was far worse; here only bitfinex/tether depositors suffer, and the contagion is limited.
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AFAIK, only one exchange redeems USDT for USD and that is BFX. Other exchanges only offer markets where their clients can trade USDT vs other assets but the bags belong to the holders, not the exchange. Exchanges are only liable for processing USDT w/d’s, not doing redemptions.
Bitfinex stopped redeeming months ago when they unpegged it