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Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

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Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#161

Post by Traster »

keymone wrote: post #143

So are all of the banks in the world? It’s called fractional reserve. Don’t like to defend tether in these posts, there’s clearly shady shit going on, but it’s been FUD’ed against for years now and yet USDT has kept within few percent of USD. I still don’t buy the argument that bitfinex is printing money to prop up BTC.

Right but I think the obvious point is that if you Google Tether you get

"Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets ..."

The entire selling point is that they aren't a fractional reserve bank.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#162

Post by tinco »

Scoundreller wrote: post #128
foobarbazetc wrote: post #120

Earlier quoted context omitted.

Who’s making 5% risk free? Can you point me in their direction?

You take some risk while externalizing the risk of insolvency to your customers. It’s what every insurance company and bank does. Or if you don’t want to do that, put it in treasuries or something and take your 1,2,3% of whatever it may be. Tether could have replicated either strategy, but seems to not have. They could also have profited from those that lost their keys (it happens).

Even treasuries are not risk free, nor are they unbounded. Tether is trying to play in the big league, I'm not certain what the rules are, but I'm pretty sure making 1%-2% annually on the float is a pretty good deal, and that might even be a conservative estimate.

In addition you have to keep in mind that it is also about absolute numbers. No one invested these billions with them, no one is charging them some kind of relative rent. Every dollar is profit. If you could make 0.001% off storing 5 billion, that would still be an attractive business model.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#163

Post by gpresot »

xref wrote: post #158
gpresot wrote: post #154

Earlier quoted context omitted.

There is some premium on the BTCUSDT pair, compared to BTC/USD pair. You can still, for a relatively small premium buy BTC with your USDT and change them back to fiat USD. And it seems that plenty of traders are ready to accept that premium and accept the risk of holding tether. This effectively solves any liquidity issues that Tether might have. And as other have noticed, 74% coverage is a lot more than many were fe…

Remember it’s simply Bitfinex saying they have 74% reserves, just like they used to say they had 100% reserves. There has still never been an audit. Nobody has seen their books. They don’t recognize the jurisdiction of the NY AG. Bitfinex is the only one who can give a number, and a company in that position usually places themselves in the most generous light, and they still only claimed 74%.

They claimed this 74% in filings to the NY Supreme Court, so, while I agree it is not as strong as an auditors' report, it is also a bit stronger than a PR release or a Twitter burst.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#164

Post by luckydata »

SimonPStevens wrote: post #160

Everyone talking about how tether should have profited from either investing the cash, or buying and selling tethers at slightly different rates is missing the point. The original value propitiation of tether was... "A one to one, 100% reserved USD backed cryptocurrency that you can buy/sell any time directly from them" They originally promised a website where you could buy/sell tethers directly for 1 USD. This is di…

Wow, an actor of the crypto-verse doing something unethical, almost unheard of.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#165

Post by xref »

gpresot wrote: post #163
xref wrote: post #158

Earlier quoted context omitted.

Remember it’s simply Bitfinex saying they have 74% reserves, just like they used to say they had 100% reserves. There has still never been an audit. Nobody has seen their books. They don’t recognize the jurisdiction of the NY AG. Bitfinex is the only one who can give a number, and a company in that position usually places themselves in the most generous light, and they still only claimed 74%.

They claimed this 74% in filings to the NY Supreme Court, so, while I agree it is not as strong as an auditors' report, it is also a bit stronger than a PR release or a Twitter burst.

I’d strongly disagree, seeing as that filing was in a court they see as a joke

> Bitfinex and Tether dispute that the court has jurisdiction over the companies because, among other reasons, they do not operate in the U.S., and because both companies bar New York residents from doing business on their platforms.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#166

Post by YawningAngel »

b_tterc_p wrote: post #69
stordoff wrote: post #63

Earlier quoted context omitted.

What parent claims used to be true: > 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 is no guarantee against losses when you buy, trade, sell, or redeem Tethers. https://web.archive.org/web/20171224172135/https://tether.to... Currently: > Tether reserves the r…

Wow. The US ban seems... unbelievable considering it’s USD based. Surely this breaks some sort of commercial law that the government can swoop in on?

Why does it seem unbelievable? The US is a pathological jurisdiction that frequently tries to indict people with no direct connection to it and extradite them. Avoiding it seems pretty reasonable to me, I'd consider doing the same.

Whether doing so breaks US commercial law seems by-the-by given that they are very pointedly not operating within US jurisdiction.

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#167

Post by wickoff »

granaldo wrote: post #145

This is going to sound absurd, why is the cryptocurrency market not reacting negatively? In fact prices are green and well https://www.coingecko.com/en Market is uninformed and do not know better...

This poll should provide some context: https://twitter.com/thecryptomonk/status/1123265349175119872

Seasoned cryptocurrency traders are used to Tether breaking its dollar peg from time to time, its reputation is infamous. Honestly it's a relief that it's not a complete scam, 74% is better than most people expected.

https://imgur.com/42Nn10h

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#168

Post by askmike »

SimonPStevens wrote: post #160

Everyone talking about how tether should have profited from either investing the cash, or buying and selling tethers at slightly different rates is missing the point. The original value propitiation of tether was... "A one to one, 100% reserved USD backed cryptocurrency that you can buy/sell any time directly from them" They originally promised a website where you could buy/sell tethers directly for 1 USD. This is di…

> Now they never actually delivered any of that.

Yes they did, they delivered exactly this for years, ever since US banks shut them down. A whole ecosystem was built on top of this which to this day seems to run smooth (poloniex, bittrex, binance).

> And I suspect they did actually make a stack of profit by printing tether and selling them on exchanges. But that makes it a scam because they weren't following their own rules that they laid down at the start.

The only thing that has come to light after numerous of subpoenas and investigations is the Crypto Capital mess. Your claim is very much unsubstantiated. Yes, Bitfinex&Tether did some things against their original promises, but clearly to keep the system running. And clearly with the intention to resolve everything once they got their money from CC back (I'm not saying that was ever going to work).

Re: Tether Says Stablecoin Is Only Backed 74% by Cash, Securities

#169

Post by darawk »

mikeyouse wrote: post #155
darawk wrote: post #132

Earlier quoted context omitted.

It does whether or not they're trustworthy. You may think the loan will not get repaid...but it's in their interest to repay it. They're making plenty of money at Bitfinex. The idea that they're going to run some elaborate ponzi scheme to steal money, when they're making several hundred thousand dollars per day in fees is kind of silly.

Their account is over $700 million short right now.. Several hundred thousand per day isn't exactly going to move that dial.

It's a loan. The way loans work is that you make payments on them over time. $300,000/day generates ~100mm/year in revenue. That's enough to repay the loan in 7 years. However, the loan is actually for $625 million, so a bit shorter than that. But you get the point.
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