They will have to spin up 41,000,000 more Tethers to pay for this!
And pay their fine with it
Tether Fined $41M for Lying About Reserves
241–250 of 267 posts
Re: Tether Fined $41M for Lying About Reserves
#242Earlier quoted context omitted.
> Which is why we don't let private companies create currency willy-nilly anymore. As I understand, private banks extend loans, which while not being printing money, the loans being deposits (which can be withdrawn) the effect of creating currency is the same.
Private banks can only extend loans so much as they have the money already. Yes, it's a juggling act: Person A still has $1000 on the ledger in their deposit even if the bank lends $800 of that to Person B, so if the people with deposits want to cash out all at the same time, and the bank can't pull back what they've lended out fast enough, you have big problems! But they aren't just adding numbers to a cell in a spr…
> Yes, it's a juggling act: Person A still has $1000 on the ledger in their deposit even if the bank lends $800 of that to Person B
Fractional reserve banking isn't up-to-date with the modern banking system, where in many cases, like in the UK, and in the US as of 2020, there are no reserve requirements. [1]
> But they aren't just adding numbers to a cell in a spreadsheet without having the money to back it
I disagree; this is the reality. Banks don't have to wait for deposits to extend loans. When creating a loan involves novel financial instruments to hide or offload the loan's risk, this has caused massive bubbles, as in the 2008 mortgage crisis.
This credit they extend to customers is "broad money" that, while not being created by the central bank, is effectively the same, as it is the deposit for someone else, which can be withdrawn.
Re: Tether Fined $41M for Lying About Reserves
#243Earlier quoted context omitted.
Lending rates for USDT on the major decentralized lending platforms are more favorable than other stablecoins.
The lending rates are higher because lenders are paid a premium for owning a potentially worthless (USDT denominated) credit. The idiom that comes to mind is "picking up pennies in front of a steamroller".
This might not entirely accurate.
I would speculate that the premium is because of USDTs network effects -- the USDT/crypto trading pairs are the most liquid on centralized exchanges.
There is no reason that holding any "worthless" commodity by itself should incur any premium on the market.
Re: Tether Fined $41M for Lying About Reserves
#244Earlier quoted context omitted.
If cryptocurrencies were a better solution, they would have been widely adopted. Instead, they have been adopted by people who can't use real money for one reason or another, e.g. criminals. Which tells us they are a poor substitute for real money.
Or those without decent banking access
I don't know that one can use crypto without a bank account. Is there a black market where you can buy/sell crypto with/for cash?
Re: Tether Fined $41M for Lying About Reserves
#245Lol all crypto is a scam and useful only to cranks and criminals
Re: Tether Fined $41M for Lying About Reserves
#246Earlier quoted context omitted.
The CFTC doesn't have that authority; a company can only get shut down for a criminal offense and Tether is not accused of any crime. Only the Department of Justice can prosecute or investigate crimes, the CFTC is an independent agency and as such has no authority to do so. All the CFTC can do is levy a fine, so both parties are fairly indifferent as to whether that money comes from a judgement or from a settlement.…
> The CFTC doesn't have that authority; a company can only get shut down for a criminal offense and Tether is not accused of any crime. Fraud is a crime.
> Fraud is a crime.
CFTC does not prosecute crimes. CFTC could make a referral to DoJ, but where a regulatory agency can both engage in civil enforcement actions and make criminal referrals, even when it does both in the same case, the civil action will usually be filed and often resolved before any visible action (indictment, etc.) on the criminal referral.
So, the resolution of the civil case doesn’t mean anything with regard to any potential criminal charges.
Re: Tether Fined $41M for Lying About Reserves
#247Earlier quoted context omitted.
That's nice, but regardless, the law stood for forty years, even surviving the Supreme Court^. Society abrogates individual rights by its very existence, and anarchic utopias that exclude all abrogation tend to fail comically^^ and/or catastrophically^^^. It turns out that compromise is a necessary factor of coexistence with other human beings, especially those we disagree with. If you don't feel that your rights are…
A relatively recent large-scale case from the U.S. that comes to mind is the internment of Japanese-Americans. I'm not sure if I can point to a specific Constitutional amendment that it violated (4th amendment on seizing a person without probable cause? Probably 9th amendment, that there are are additional rights not enumerated), but I think most declarations of rights cover a right to liberty unless one is charged w…
> We haven’t gotten as far as large-scale violations in the U.S. of a right to not be killed by official government policy
If you ignore the genocide of Native Americans, which in many cases did not stop once those Native Americans accepted US government jurisdiction, maybe.
Re: Tether Fined $41M for Lying About Reserves
#248Earlier quoted context omitted.
> Isn't this pretty much the description of every company? For the most part, sure. But that's the parent's point, I think. Central banks are not companies, they are part of the public financial infrastructure of a nation (or, in the EU case, group of nations).
> Central banks are not companies Actually... it's complicated. The Bank of England, for example, was nationalized only in 1946, and it remains technically a company which is owned by the state, not actually part of the government. In the US, the Fed is... well, it's not a company, but it's also not not a company... or group of companies... See https://en.wikipedia.org/wiki/Federal_Reserve_Bank
The decision-making body of the Federal Reserve System – the thing that sets monetary policy, among other things – is a government agency (the Board of Governors of the Federal Reserve.)
The rest of the system is, as you note, complicated, but the rest of the system doesn’t set monetary policy.
Re: Tether Fined $41M for Lying About Reserves
#249Earlier quoted context omitted.
>I'm more surprised that anyone still holds Tether, The price BTC shooting up right now (it is around $61k as I write this) is probably because lots of USDT holders are starting to realize what a bad idea that is. If you were in their shoes ... what would you be doing right now?
If Tether holders were fleeing, they would be going into other stablecoins like USDC, not BTC.
> If Tether holders were fleeing, they would be going into other stablecoins like USDC, not BTC.
That's assuming other stablecoins are:
a) actually backed up by non-risky assets, Quite a stretch.
b) can easily be exchanged to USD in large quantities
c) can be purchased with USDT
If I was holding USDT right now (I am not, thank god), my preferred exit route would most definitely be BTC. And in very short order.
Re: Tether Fined $41M for Lying About Reserves
#250Earlier quoted context omitted.
> But in practice there was not and nobody suffered any damage, zero, nada, nicht. So I guess its ok. Might as well pack it up and let them carry on with manipulation, lying and profiting. I don't get your rationale whatsoever.
It doesn’t make it okay, it just means it’s less bad than if there was actual harm. Despite their lies, they were apparently able to meet their obligation to exchange tether for dollars for everyone who wanted it.
Bernie Madoff was able to do that for decades, too. Until he couldn’t.