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Tether minted most USDT to just 2 firms – Alameda and Cumberland

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Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#191

Post by IncRnd »

Spivak wrote: post #190
IncRnd wrote: post #185

Earlier quoted context omitted.

I think you are looking at this through rose-colored glasses. Not everything you read on the Internet is true, and Tether is likely to not even pay a small fraction of what they have made. It is almost certain they have stolen an incredible amount of money, using a song and a dance, and made people shill for them - because hey tbey have all the bad parts of banks and none of the good parts - so what's the problem? >…

Yes but FDIC insurance exists because bank runs actually happened! It wasn’t like before FDIC banks kept 100% cash reserves.

Exactly!

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#192

Post by jqpabc123 »

lamontcg wrote: post #150
X6S1x6Okd1st wrote: post #28

If the Commercial Paper that Tether holds to show they have enough cash on hand is issued from Alameda & Cumberland then we've closed the loop on this scam. e.g. Alameda offers to buy 20B USDT in exchange for commerical paper offered by them. It's rated as A or B in part because before the sale they have net positive assets. Tether's sheets look good at a very high level pass ( https://tether.to/wp-content/uploads/20…

I doubt those companies could have been issuing that much actual, proper commercial paper. Where are they getting the USD for those loans? My guess is that they're sitting on collectively about $45B in BTC and other crypto and they take loans out in USDT with that crypto as the collateral. Then they use that USDT to fund crypto ventures, speculate, and fuel arbitrage and wash trading bots. Maybe there's an intermedia…

Where are they getting the USD for those loans?

LOL! They're not loaning USD, they're loaning USDT which they create out of electrons --- and accept an IOU is return --- but only from select individuals/companies.

The rest of the crypto marketplace are the ones who produce USD and exchange it for USDT.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#193

Post by slaman »

X6S1x6Okd1st wrote: post #159
cowvin wrote: post #143

Earlier quoted context omitted.

Actually, that got me curious. Couldn't a billionaire crush tether by shorting so much of it that it exceeded the cash reserves?

You can play games to short it in DeFi which might break the peg on DeFi systems, however if anyone wants to try and arbitrage the difference (e.g. buy USDT at 0.50 USD, take it to Tether and redeem it for 1 USD) then Tether may just say "here take some of our Commerical Paper instead" or even "No you have broken our ToS".

In tether's terms of service they state that they have no obligation to ever give you any money for 1 tether.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#194

Post by slaman »

dalbasal wrote: post #125

>> Over $60 billion worth of USDT now circulates through the crypto ecosystem... Tether has historically never faced a large amount of redemptions. Issuances have outpaced redemptions by more than 20:1. Does that mean that $60bn in net Tether has been sold by the "mint?"

If you print 30 billion and give it to your buddy at an exchange for an IOU/commercial paper.

I guess that counts as a sale, even if the exchange mostly uses it to wash trade the price of cryptocurrencies up.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#195

Post by lamontcg »

jqpabc123 wrote: post #192
lamontcg wrote: post #150

Earlier quoted context omitted.

I doubt those companies could have been issuing that much actual, proper commercial paper. Where are they getting the USD for those loans? My guess is that they're sitting on collectively about $45B in BTC and other crypto and they take loans out in USDT with that crypto as the collateral. Then they use that USDT to fund crypto ventures, speculate, and fuel arbitrage and wash trading bots. Maybe there's an intermedia…

Where are they getting the USD for those loans? LOL! They're not loaning USD, they're loaning USDT which they create out of electrons --- and accept an IOU is return --- but only from select individuals/companies. The rest of the crypto marketplace are the ones who produce USD and exchange it for USDT.

That comment was in the context of the assumption that the backing was real honest-to-god commercial paper being used in the real world. That would take actual tens of billions of dollars to produce that commercial paper. It would also get noticed in the marketplace. That isn't what the commercial paper is. And there isn't $65B in USD in the crypto space anywhere to have produced all that commercial paper in loans. That is my point there.

And to the extent that you're arguing that tether is backed by quite literally nothing and its printed out of entirely thin air, I'll disagree vehemently with that. Then it wouldn't be stable and would have already collapsed, and there's no mechanism to maintain the pin.

USDT is pretty clearly backed by crypto one way or another, which is why USDT issuance increases as bitcoin goes up (and USDT is used to pump bitcoin up, around and around). To the extent that crypto is "just electrons" I'd agree, but I think you were making a dramatic oversimplification which isn't how it all works.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#196

Post by jqpabc123 »

lamontcg wrote: post #195
jqpabc123 wrote: post #192

Earlier quoted context omitted.

Where are they getting the USD for those loans? LOL! They're not loaning USD, they're loaning USDT which they create out of electrons --- and accept an IOU is return --- but only from select individuals/companies. The rest of the crypto marketplace are the ones who produce USD and exchange it for USDT.

That comment was in the context of the assumption that the backing was real honest-to-god commercial paper being used in the real world. That would take actual tens of billions of dollars to produce that commercial paper. It would also get noticed in the marketplace. That isn't what the commercial paper is. And there isn't $65B in USD in the crypto space anywhere to have produced all that commercial paper in loans. T…

Then it wouldn't be stable and would have already collapsed, and there's no mechanism to maintain the pin.

But there is a method to maintain the pin --- cooperative collusion from the exchanges.

You are assuming that the exchanges are honest, "free market" promoters like those found in regulated stock and currency markets. You have no way to know or verify this. They are accountable to noone but themselves.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#197

Post by rwiggum »

ceejayoz wrote: post #178
rfd4sgmk8u wrote: post #155

Earlier quoted context omitted.

I used to believe this -- "too good to be true", then I played with the tech and realized the folk borrowing the money at a higher rate (of course) were earning 2x that via various defi contracts. Most of the defi world is a scam, however, stablecoin stablecoin liquidity pools are handling millions of dollars and paying the liquidity providers handsomely at 0.1%. It is then that you understand who exactly is making b…

> I used to believe this -- "too good to be true", then I played with the tech and realized the folk borrowing the money at a higher rate (of course) were earning 2x that via various defi contracts. Bernie Madoff's ponzi scheme survived for decades before it was revealed to be "too good to be true". If those defi contracts collapse, your savings that got loaned out to them are gone. You're not getting that APR, and y…

That's not how it works. If the defi contracts collapse, the borrowers get margin called. The borrowers must overcollateralize quite a bit, usually 1.5x or 2x what they are borrowing. You could argue that the sell order will fall through in the case of a total market collapse. But the market has fallen 90% in the past and this has not happened.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#198

Post by themagician »

querulous wrote: post #138
themagician wrote: post #44

Earlier quoted context omitted.

USDC is better than Tether but far from “solid”. They still hold commercial paper, just 10% instead of 50%. The audit is a joke. Who knows what is really considered “cash equivalent”. Hell, it’s possible USDC holds Tether.

remember the pirateat40 bitcoin ponzi scam? he was paying 7% interest A WEEK on deposits and all these copycat "funds" popped up paying 6% or 5% or whatever that were "safer". when the original ponzi collapsed all the "safer" funds were revealed to have just been taking their deposits and depositing them with pirateat40 and pocketing the difference. the whole ecosystem collapsed

This is (always) the way.

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#199

Post by crazydoggers »

IncRnd wrote: post #188
crazydoggers wrote: post #184

Earlier quoted context omitted.

Capital requirements mean the bank won’t go bankrupt, ie it can pay its employees etc. But does not deal with deposit reserve. FDIC insurance also covers only $200,000 and that’s insured by the US government. Reserve requirements were lowered to zero percent in 2020 to ease lending during the pandemic: https://www.federalreserve.gov/monetarypolicy/reservereq.htm Also a good read on the implications… basically banks c…

One can infer from your comment that you expect people to purchase more than $200,000 in Tether. Someone who does so might want to perform more research than reading shills on the Internet. It be far more rational to start one's own crypto-currency in order to remove distrust from the equation.

This makes no sense

Re: Tether minted most USDT to just 2 firms – Alameda and Cumberland

#200

Post by crazydoggers »

jqpabc123 wrote: post #187
crazydoggers wrote: post #183

Earlier quoted context omitted.

And that’s why I asked the question! Thank you, I hadn’t seen that before. I would say that’s definitely problematic. Still wouldn’t call it a scam. That’d be like calling Lehman Brothers a scam.

Still wouldn’t call it a scam. A scam is pretending something is true when it clearly is not --- for financial gain. The scam here is the fact that the exchanges cooperate to keep the price of USDT pegged at $1 USD --- even after Tether itself has admitted they do NOT have $1 USD for each USDT minted and they are NOT obligated to redeem 1 USDT for $1 USD.

What is being pretended as true? The link was published by Tether themselves! It’s not a scam if I can see that they’re backed by commercial paper. I can then make a decision if I want to use the service.

The big miss with tether everyone makes is that it’s not an investment. It’s a tool to support liquidity. The average investor uses it then converts it, buys or sells.

The companies holding it are the ones providing liquidity to investors. So if anyone is getting scammed it’s these large companies offering liquidity services.

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