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Tether executives said to face criminal probe into bank fraud

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Re: Tether executives said to face criminal probe into bank fraud

#61

Post by nateberkopec »

gruez wrote: post #42
jasonlaramburu wrote: post #14

Edit: Isn't it a huge red flag that Tether doesn't make any money off transaction fees? Their daily volume is almost 2x that of BTC. They could fully support the company with a tiny transaction fee and avoid all the regulatory uncertainty/FUD. How does tether make money (aside from potential fraud)? Is there a transaction fee that supports the people and cost of running tether (the company)?

If I were running it as a 100% legal/safe operation I'd invest the balance in short term treasuries. If you multiply tether's liabilities ($61.9B) by the current 1 year treasury rate (0.09%), you get $55.7M, which seems like plenty of money to run such an operation.

How much of a chunk of the 1-year treasury market is $61.9B? Can't figure out how to look that up.

Seems like it could be a decent business if it was legit.

Re: Tether executives said to face criminal probe into bank fraud

#62

Post by [deleted] »

deepvibrations wrote: post #43
spookthesunset wrote: post #30

Earlier quoted context omitted.

And yet people are so bought into crypto hype they look the other way. These dudes have been running this scam in plain sight for years now. It always amazes me that the whole house of cards continues to stand and hasn’t completely blown up.

We don't truly know the severity of it yet, but we do know that money has been moving over to other stablecoins such as USDC over the past year or so and so risk is slowly decreasing. There is a huge amount of innovation in the space and i think to gloss over it as a 'house of cards' is a bit naive - there is no denying it is a volatile market, but it is here to stay, so best to embrace it and see if there are actual…

[deleted]

Re: Tether executives said to face criminal probe into bank fraud

#63

Post by johnnyApplePRNG »

gjsman-1000 wrote: post #22
Tenoke wrote: post #19

Earlier quoted context omitted.

>Tether usually has 2-3x the volume of bitcoin in any given day. And no one seems to know anything about how it works. I think these are both bad arguments. If the most used stablecoin is used for most BTC volume as well as other crypto trades, you'd expect it to be more. >. And no one seems to know anything about how it works What? People do know how it works, or at least as much as with many other projects.

Nobody knows where the USD supposedly backing it goes. Most of it is in “commercial paper” they said, but the investors who work in that industry say they’ve never heard of them. This seems impossible because at their scale, that would make them, like, the 5th largest commercial paper investor on Wall Street. How could commercial paper investors not heard of them?

>Nobody knows where the USD supposedly backing it goes.

Every single time that ifinex was upfront about where the money was going, their bank accounts would be closed with little notice.

I can understand why they would stay tight lipped about where they are stashing $60B+.

Re: Tether executives said to face criminal probe into bank fraud

#64

Post by EpicEng »

johnnyApplePRNG wrote: post #63
gjsman-1000 wrote: post #22

Earlier quoted context omitted.

Nobody knows where the USD supposedly backing it goes. Most of it is in “commercial paper” they said, but the investors who work in that industry say they’ve never heard of them. This seems impossible because at their scale, that would make them, like, the 5th largest commercial paper investor on Wall Street. How could commercial paper investors not heard of them?

>Nobody knows where the USD supposedly backing it goes. Every single time that ifinex was upfront about where the money was going, their bank accounts would be closed with little notice. I can understand why they would stay tight lipped about where they are stashing $60B+.

Well they're currently being accused of fraud for misleading banks, so...

Re: Tether executives said to face criminal probe into bank fraud

#65

Post by EpicEng »

mikeblackson wrote: post #38
onepointsixC wrote: post #27

Earlier quoted context omitted.

Unlike Bitcoin, Eth, and other coins, Tether was always claimed to be backed by something which ensured it's stable value. Tether the company claims that their tether coins are each worth $1. There are now >$60Bn worth of Tether coin issued. With that much money they'd be a very serious private financial institution, and yet they only have 13 employee's. They have never been audited by any independent third party. Th…

>There is nothing which proves that Tether actually is backed by anything Also, there is nothing which proves that Tether actually isn't backed by anything. I see a lot of people jumping to conclusions about a topic they are self admittedly ignorant about. Perhaps wait for the DOJ to do their jobs if you don't have insider knowledge. In response to -dsr's sarcasm below (rate limit), I've got a bit of my own. "I've ru…

>Also, there is nothing which proves that Tether actually isn't backed by anything.

There's nothing proving that the boogyman doesn't exist either.

Re: Tether executives said to face criminal probe into bank fraud

#66

Post by Majromax »

mikeblackson wrote: post #59
Marazan wrote: post #53

Earlier quoted context omitted.

The NYAG showed that Tether was not fully backed.

>The NYAG showed that Tether was not fully backed. In 2017, when they were busy securing other banking partners due to accounts being shutdown. I consider this a gap due to growing pains, as did the NYAG. How would you shutdown Tether temporarily (2-3 months) if a bank ends a relationship?

> How would you shutdown Tether temporarily (2-3 months) if a bank ends a relationship?

By refusing to take deposits for new Tether, and by shutting down redemptions if necessary while the banking relationship is sorted out.

Tether doesn't exist ex nihilo; it requires active management to issue and redeem coins. If it ever cannot live up to its "fully backed" claim, then continuing to operate under a pretense is fraudulent.

Re: Tether executives said to face criminal probe into bank fraud

#67

Post by [deleted] »

nateberkopec wrote: post #61
gruez wrote: post #42

Earlier quoted context omitted.

If I were running it as a 100% legal/safe operation I'd invest the balance in short term treasuries. If you multiply tether's liabilities ($61.9B) by the current 1 year treasury rate (0.09%), you get $55.7M, which seems like plenty of money to run such an operation.

How much of a chunk of the 1-year treasury market is $61.9B? Can't figure out how to look that up. Seems like it could be a decent business if it was legit.

[deleted]

Re: Tether executives said to face criminal probe into bank fraud

#68

Post by graeme »

carrja99 wrote: post #57
phpnode wrote: post #48

Earlier quoted context omitted.

Where would these real USD come from if USDT is worthless? Why would a holder of USDC or DAI accept USDT in return if USDT is worthless?

Yeah, if you move fictional dollars in the form of USDT to USDC then you are just shifting the imaginary amount around, it doesn't change the fact $61B is rendered worthless.

And that’s actually been happening. For week’s usdc’s biggest trading pair has been usdt. So some people are dumping usdt on usdc holders at 1:1 ratios.

Why anyone holding usdc would exchange one for a usdt at par is a question I don’t have an answer to, but it’s happening en masse.

Re: Tether executives said to face criminal probe into bank fraud

#69

Post by graeme »

runbathtime wrote: post #33

What if Tether the company just throws in the towel? Take the reserves and run? What incentive do they have not too?

Jail or death. They’re rumoured to be heavily involved with drug cartels for money laundering.

But jail is a near certain outcome if they just took the money and ran off.

So they’re stuck with it. Once it implodes they’ll also face jail, but they can kick the can down the road.

Re: Tether executives said to face criminal probe into bank fraud

#70

Post by knownjorbist »

spookthesunset wrote: post #30
pwned1 wrote: post #10

An interesting primer on Tether, and whether it is a scam: https://www.zerohedge.com/crypto/what-effect-would-tether-be... (Yes, I know it's zerohedge, but this is a decent article) Tether usually has 2-3x the volume of bitcoin in any given day. And no one seems to know anything about how it works. So in my estimation, it probably is a scam...

And yet people are so bought into crypto hype they look the other way. These dudes have been running this scam in plain sight for years now. It always amazes me that the whole house of cards continues to stand and hasn’t completely blown up.

I'd err on the side of you not fully understanding the crypto picture rather than it being an enormous scam.
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