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Exposing Tether [video]

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Re: Exposing Tether [video]

#41

Post by Clewza313 »

jkhdigital wrote: post #18
gruez wrote: post #3

>35 minutes Anyone got a summary? Is there anything new in here that hasn't already been said in previous tether posts?

The only part that I wasn’t aware of is that Tether produced a pie chart of their holdings, which made it immediately clear that Tether’s reserves are simply a hedge fund. But this isn’t breaking news; I just hadn’t kept up on it in a while.

A "hedge fund" seems unnecessarily charitable. The majority of their holding is apparently unspecified "commercial paper", which in all likely is near-worthless IOUs from linked entities like Bitfinex.

Re: Exposing Tether [video]

#42

Post by qeternity »

raesene9 wrote: post #17

The challenge with Tether is that it's basically impossible to prove or disprove their financial status. They don't have audited books, so no-one knows. So you need to decide whether they're a risk or not. To me, the idea of having what is effectively a bank with a $60b+ balance sheet that has no auditor and no regulators, seems kind of risky. We also know, via the NYAG case, that they have in the past, said things t…

> The challenge with Tether is that it's basically impossible to prove or disprove their financial status.

It's impossible for outsiders to prove or disprove. It would be trivial for Tether to do, which begs the question of why they don't (their reserves pie chart does not qualify).

Tether claims that it's basically the only $60B+ institution in the world incapable of being audited. And given their ludicrously simple business model, it's mind boggling that they can even say this with a straight face.

Of course the real reason they can't be audited is because it would ruin their business. And thus, here we are.

Re: Exposing Tether [video]

#43

Post by dannyw »

AndrewStephens wrote: post #38
dannyw wrote: post #5

Tether is "USD-ramp-as-a-service". In the crypto world, there are many anonymously operated exchanges, with no fiat-money banking relationships. Those exchanges tend to offer features that a lot of traders want, like providing a market for any arbitrary token (regulated exchanges tend to be slower with token listings, due to always pondering if something is a security). And yes, if your money is tainted (whether it's…

> Tether provides a means for people and exchanges to transfer units of accounting, pegged to the US dollar, between each other without a hard AML or KYC wall; as Tether is a crypto token. That is probably why Tether was initially created but what Tether is now is a mechanism for insiders to cash out real money while leaving lots of "liquidity" in the market to keep the tasty scam going. Retail investors (AKA suckers…

OK, so if you're saying that the entire crypto world is operating on a giant fake dollar Ponzi scheme, then how can a US-regulated exchange like Coinbase (who operates another stablecoin, USDC) be listed on the NASDAQ?

You'd think no one in the entire US government apparatus would let the SEC know?

> The next economic downturn will wipe out the whole exercise.

People have been calling the demise of bitcoin since 2008.

Re: Exposing Tether [video]

#44

Post by espadrine »

fuzzybear3965 wrote: post #25
overtonwhy wrote: post #22

Earlier quoted context omitted.

Tether actually was forced to release a break down of their assets and they have https://www.coindesk.com/tether-first-reserve-composition-re...

All assets liquidated today, what do you think the true value of a Tether is? $.70 USD? The answer is not clear to me, but it seems like this is an important value. Also, aren't some of those assets (like treasury bills) interest-accruing? That would seem to offset some of the losses incurred by a short-term, high-volume liquidation event.

> All assets liquidated today, what do you think the true value of a Tether is? $.70 USD?

Given that only 3% of each dollar is backed by fiat, they can only guarantee $0.03 on each dollar requested.

In the case of a bank run, the commercial paper etc. would be considered valueless, and unlike a real bank, their deposits are not insured.

So the value of a Tether would theoretically fall to $0.03.

In practice however, it is plausible that it would result in them blocking redemption and fleeing the country to avoid jail, so the value would be much closer to $0.

Re: Exposing Tether [video]

#45

Post by notwedtm »

raesene9 wrote: post #24
overtonwhy wrote: post #22

Earlier quoted context omitted.

Tether actually was forced to release a break down of their assets and they have https://www.coindesk.com/tether-first-reserve-composition-re...

Indeed there were some interesting pieces in that. They would argue that the composition showed that they had the required reserves, others would argue it showed they were insolvent :) As tether specifies the right to repay any redeemed tokens in securities, assuming the securities they hold actually keep their value, it seems like they'd be fine From https://tether.to/legal/ "Tether reserves the right to delay the r…

It's all broken down in the video. A very large chunk is on "commercial paper" which is unsecured loans to...?

Re: Exposing Tether [video]

#46

Post by ethbr0 »

raesene9 wrote: post #24
overtonwhy wrote: post #22

Earlier quoted context omitted.

Tether actually was forced to release a break down of their assets and they have https://www.coindesk.com/tether-first-reserve-composition-re...

Indeed there were some interesting pieces in that. They would argue that the composition showed that they had the required reserves, others would argue it showed they were insolvent :) As tether specifies the right to repay any redeemed tokens in securities, assuming the securities they hold actually keep their value, it seems like they'd be fine From https://tether.to/legal/ "Tether reserves the right to delay the r…

The broader historical observation is: given a large amount of money, a requirement to keep it continuously invested, and a cloak behind which to operate, what financial institution in the history of humanity has made good choices?

At best, they're choosing investments incompetently. (Chance Tether's team is equivalent to professionals at major banks?)

At worst, they're choosing investments to maximize personal gain.

Or to put it another way, what sort of company do you think is knocking on Tether's door, offering a good deal in exchange for a few billion "worth" of notes?

It ain't Coke.

Re: Exposing Tether [video]

#47

Post by dannyw »

beforeolives wrote: post #37
dannyw wrote: post #8

Earlier quoted context omitted.

Do you really think the New York Attorney General would have settled with a "ponzi scheme" with a $62 billion market cap? The USA isn't shy about pursuing crypto operators. It's also hard to call a 0% interest, zero return token, a ponzi scheme.

> It's also hard to call a 0% interest, zero return token, a ponzi scheme. Much easier if we mention that only 3-4% of the entire Tether supply is backed by actual dollars.

The same way your bank account is Welcome to fractional reserve banking. It's been this way, with every single account, for decades now.

Re: Exposing Tether [video]

#48

Post by beforeolives »

dannyw wrote: post #47
beforeolives wrote: post #37

Earlier quoted context omitted.

> It's also hard to call a 0% interest, zero return token, a ponzi scheme. Much easier if we mention that only 3-4% of the entire Tether supply is backed by actual dollars.

The same way your bank account is Welcome to fractional reserve banking. It's been this way, with every single account, for decades now.

No, it's not the same at all. Tether is not a bank. Banks are audited and bank deposits are insured. Banks can't print money unilaterally. Tether doesn't have the same regulations apply to it.

Re: Exposing Tether [video]

#49

Post by notwedtm »

tiku wrote: post #20

They do not need to have 100% USD at Tether. Exchanges buy UDST from Tether, that means that there is an exchange. It would be problematic if they would give it for free to the exchanges. The exchanges won't give you free USDT either, they charge something in return. The only way this could be a problem if they would use USDT from within Tether to buy crypto. I have not seen any evidence of this.

Or loaned large amounts of cash to an exchange to help them avoid insolvency.

Re: Exposing Tether [video]

#50

Post by qeternity »

skylabmelody wrote: post #39

I agree on the massive risk associated with the usage of Tether and stable coins in general. It's working until one day the music stops. Regarding how it would affect the market, it seems all experts automatically assume that it would impact the price of cryptos negatively however: • Could a panic exit from Tether push people to immediately buyback cryptos at any price? • Could a flash pump of BTC while USDT/USD is u…

> Could a sudden pump of BTC while USDT/USD is unpegging be the signature of the downfall itself?

Likely, but that is not bullish BTC. People who hold USDT at a given moment do so because they don't want to hold crypto. So you would likely see BTCUSDT panic bid (until the Tether exchanges presumably stop withdrawals) and relentless selling of BTCUSD. For those who managed to get out, they will have round tripped their USDT to USD, but BTCUSD will be a bloodbath.

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