Anyone Seen Tether’s Billions? • Hacker News Board

Re: Anyone Seen Tether’s Billions?

#151

Post by jkhdigital » Thu, Oct 07, 2021, 11:48 PM UTC

endisneigh wrote: post #87

TacticalCoder wrote: post #86

Earlier quoted context omitted.

USDC is backed by Coinbase (USDC are issued by Centre, a joint venture of Coinbase and Circle if I'm not mistaken). And Coinbase is an HN unicorn. Everybody at Coinbase is known, it's operated from the US. Coinbase ain't anywhere, not even remotely, like tether/bitfinex. There totally exists a world in which USDT goes to 0 while USDC is still worth 1 USD.

So your logic is that big, known entities can’t go bankrupt or be scams?

No, the logic is that it is less likely. Anyways, Coinbase allows on-demand conversion of USDC to USD so you really only have to hold the USDC (and Coinbase’s counterparty risk) for about a day for that process to complete. At some point that window might close but given that Coinbase is a publicly traded stock in the US and must report financials, there is quite a bit less risk compared to Tether.

Re: Anyone Seen Tether’s Billions?

#152

Post by m3kw9 » Thu, Oct 07, 2021, 11:50 PM UTC

qeternity wrote: post #92

jkhdigital wrote: post #73

Earlier quoted context omitted.

You bring up a very important but often overlooked point about market panics: the problem is not really everyone rushing for the door, it is market makers pulling bid liquidity so that “normal” selling volumes tank the price (which triggers the avalanche).

What? Who told you this? Market makers, especially in crypto, do not have long holding periods. The big moves in crypto are because of coordinated manipulation to trigger stops and liquidations (forced, price insensitive buying and selling). I don’t know if this is /r/wsb leaking but markets do not tank because market makers pull back…that’s just not the business they are in.

Yeah they delta hedge anyways so no need to pull back

Re: Anyone Seen Tether’s Billions?

#153

Post by axus » Thu, Oct 07, 2021, 11:51 PM UTC

If I read that correctly, they have $15 billion in Deltec Bank in the Bahamas, and $45 billion moved into other banks.

Re: Anyone Seen Tether’s Billions?

#154

Post by jcranmer » Thu, Oct 07, 2021, 11:51 PM UTC

jazzyjackson wrote: post #133

jcranmer wrote: post #48

Earlier quoted context omitted.

A bank having assets to only cover 100% of its liabilities would be in violation of banking regulations. Since the 2008 financial crisis, the general breakpoint you're looking for is about 110% as the minimum asset-to-liability ratio for a viable bank. There's also this not-small matter of making sure that banks aren't relying on overly optimistic valuations that won't bear out, especially in a dire market (if you're…

Maybe you can explain this message from the Federal Reserve [0] to me, because I must be misunderstanding. > As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions. I've been swayed by the MMT videos on youtube which I know are controversial, but it seems to me that when a bank m…

There are several different kinds of requirements that banks have.

The "reserve requirement ratio" basically means that for every $1000 the bank has in deposits, it is required to keep $X in its account with a Federal Reserve bank. Very specifically, it has to be money sitting in that account--a literal stack of $20 bills doesn't count for the reserve requirement. This has dropped to 0% because the Federal Reserve figures there's better ways of maintaining bank solvency.

Instead, most attention nowadays is paid on the capital ratio. This basically says that the bank needs to hold $X equity for every $100 of risk-weighted assets. My understanding is a little fuzzy here, but I believe that the equity here is completely separate from what's normally counted as assets for a bank.

Re: Anyone Seen Tether’s Billions?

#155

Post by jaggederest » Thu, Oct 07, 2021, 11:51 PM UTC

jkhdigital wrote: post #149

NelsonMinar wrote: post #88

Earlier quoted context omitted.

It's like you never heard of the 2008/2009 financial crisis and how financial contagion works. Also Coinbase is not so pristine or pure. They were misleading customers with a gentler version of the same thing Tether did. "Coinbase Vowed Token’s All-Cash Backing; That’s Not True". https://www.bloomberg.com/news/articles/2021-08-11/coinbase-...

Doesn’t matter that much whether it’s “100% backed” or whatever. The time it takes to (1) send USDC to Coinbase, (2) convert that USDC to USD, and (3) withdraw the USD to a bank account is short enough (less than a day by wire transfer) that the counterparty risk is pretty darn minimal.

Until it's not. Part 1 and 2 of your list require Coinbase's implicit consent and cooperation, and if there is a bank run on USDT, that cooperation may be in short supply.

I would bet money that Coinbase has a button on their admin panel that says "Pause redemption of USDC" or equivalent, so you're just hoping they don't push that button in extremis. I find that silly, if what we're hypothetically betting on is that the crypto system will be in extremis.

Re: Anyone Seen Tether’s Billions?

#156

Post by jkhdigital » Thu, Oct 07, 2021, 11:53 PM UTC

graeme wrote: post #59

jkhdigital wrote: post #57

Earlier quoted context omitted.

So convert the USDC to dollars and withdraw the dollars. Done.

In the event Tether busts, the entire crypto markets will freeze up, and it’s plausible usdc will not be redeemable or face a run. USDC aren’t dollars and have been opaque about their backing. The bulk of their assets are in “cash and cash equivalents” which sound good, except they include less than 90 day commercial paper here! They also don’t state its quality or say how much of their cash/equivalents are CP rather…

It’s called leverage. Every player in the financial system uses it; some have cut deals with the government to socialize catastrophic losses so we pretend the leverage doesn’t exist but there it is. As long as Coinbase allows on-demand redemptions nobody is going to care about an audit because it’s trivially easy to just convert all your USDC to real dollars almost immediately. Can’t say the same for Tether.

Re: Anyone Seen Tether’s Billions?

#157

Post by oars » Thu, Oct 07, 2021, 11:56 PM UTC

sbierwagen wrote: post #128

impostervt wrote: post #31

People have been yelling about Tether for years, myself included. But nothing seems to stop it. Not lawsuits, not major news articles. The conclusion I draw is that, yes, the game is rigged - AND EVERYONE IS OK WITH IT. As long as it's making everyone money, no one will really complain. What I also find interesting, is that if tether ever DOES crash, the result might be a big boost for Bitcoin. If you hold Tether, an…

The most plausible conspiracy theory I've seen for the complete lack of regulatory action against Bitcoin or Tether is that they're being used to launder money by the US intelligence community.

Do you have any resources or links where I can learn more about this?

I'm very interested in exploring this concept.

Re: Anyone Seen Tether’s Billions?

#158

Post by trident5000 » Thu, Oct 07, 2021, 11:57 PM UTC

iSnow wrote: post #29

Does crypto do anything but cause troubles? If it's not actively destroying the environment, then it's endangering financial stability. How does the government not step in here?

Yeah, it gives an exit for people avoiding a total financial wipe-out from irresponsible governments around the world who cant keep their greedy little fingers off the printing press to stay in power. Amongst other things. Remember when it took 3 days to transfer money before crypto showed up? That was ridiculous and other things still are (like banks taking your money and giving you almost no interest for the profits they make off it).

Re: Anyone Seen Tether’s Billions?

#159

Post by qeternity » Thu, Oct 07, 2021, 11:57 PM UTC

SilasX wrote: post #150

qeternity wrote: post #139

Earlier quoted context omitted.

> Margin has "come to" DEX the moment smartcontracts offer collateralized DeFi lending, which they have, so I'm not sure what you mean here. Ok, fair. What I mean is high leverage, which is the fuel for the type of manipulation I’m referring to. To your point about CEX lying about price, that’s a very risky proposition for the arbitrage reasons you mention (CEX arbitrage actually easier for a number of reasons, but I…

>Ok, fair. What I mean is high leverage, which is the fuel for the type of manipulation I’m referring to. Why does that make a difference? And how is it any more coherent to talk about margin "coming to" DEX? The moment anyone can borrow on margin, it has "come to" DEX. You keep speaking with a mental model of DEX that doesn't jibe with reality, like they're walled gardens rather than platforms open to anyone with li…

> If that's what you meant, then it's coming from the same dubious mental model I complained about above

It’s not, because I’m saying something different than you think I am.

> when you enter into a liquidity pool, you are providing liquidity to the entire cryptocurrency's network, not just people who are "on" that DEX (which isn't a coherent concept).

Um, what?!? I’m really not sure you understand how this works. What do you think it means to be an LP?

> Several protocols look at the entire DEX market to find the best (combination of) price(s). You do not need to be in multiple liquidity pools (which, again, not a coherent concept).

No, just no. You keep saying it’s not coherent but I don’t think you understand how it works. You might be in an optimizer that moves your capital around, but a given unit of capital can only be providing liquidity for one LP at a time.

> LPs are not something you have to "be in";

Uh, if you’re not in it, then you’re not providing liquidity. This whole conversation is premised on providing $X liquidity to Y market. In a DEX that requires $X, whereas in a CEX, it requires a maximum of $X and in practice a fraction of $X.

Re: Anyone Seen Tether’s Billions?

#160

Post by FireBeyond » Thu, Oct 07, 2021, 11:57 PM UTC

Ice_cream_suit wrote: post #120

LOL ! "The chief financial officer is Giancarlo Devasini, a former plastic surgeon from Italy who was once described on Tether’s website as the founder of a successful electronics business. The only reference to him that turned up in a search of Italian newspapers showed he was once fined for selling counterfeit Microsoft software. Elsewhere on the website, there’s a letter from an accounting firm stating that Tether…

Well, Bitfinex uses Deltec as their bank. A bank that claimed at the start of this year that they were "55 years old and whose customers were predominantly asset managers and high net worth individuals", until they did a website redesign (more on that below) and overnight were "70 years old".

A bank that had a 33 year old "Deputy CEO" who gave interviews from his gaming rig.

Who claimed to have graduated from HEC Lausanne in Switzerland with a Masters in Science when he was 15...

and then immediately get a job as Professor of Finance at a Lebanese university...

while dividing his time between running funds in Switzerland and oh ... Jacksonville Florida (actually, that last part is the most believable), where he worked for himself, managing a fund that he couldn't even spell correctly on his own LinkedIn profile (Independance[sic] Weath[sic] Management).

Of course, the last interview he gave, the bank removed him from their website within hours once the ridicule started piling on. When people started questioning that, they very quickly re-added him. And then removed the site entirely. And put up a WordPress template website with completely non functional links and buttons a few days later.

I keep waiting for Yakety Sax to start playing, but to the true believers, it never does, and apparently all us nay-sayers are just neanderthal and don't see "the vision".