For those doubting that Tether is fully backed, note that Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment banks and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds
Federal investigators probe Tether
51–60 of 127 posts
Re: Federal investigators probe Tether
#52Ah, finally, will Tether get its day in the litigious sun? It's well known in cryptocurrency circles that their coin is not backed 1:1 to USD, similar to FTX, only that FTX crashed and this was found out the easy way. Cracking Tether will be much harder as they resist audits.
> It's well known in cryptocurrency circles that their coin is not backed 1:1 to USD Its well known in the legal space and has already been addressed by multiple US courts. They're not looking for that and this isn't controversial. Those court cases already happened in 2018-2020. Tether just needed to update its language. A financial institution not backed 1:1 to USD isn't a problem in any part of the banking sector,…
> a probe about violating AML laws and sanctions. Which would likely only involve specific addresses in crypto and some onramps. But otherwise crypto-crypto trading won't be a part of this.
You think a dollar stablecoin won't be affected by being prohibited from touching dollars or the dollar financial system?
Re: Federal investigators probe Tether
#53For those doubting that Tether is fully backed, note that Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment banks and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds
> Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment bank and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds
Source? I'm seeing Fitzgerald say "Cantor Fitzgerald manages 'many many' of" Tether's assets (not all) and that he can vouch for their balance sheet [1]. But not that Cantor manages all of its assets nor that it's all in Treasuries.
[1] https://www.bloomberg.com/news/articles/2024-01-16/tether-s-...
Re: Federal investigators probe Tether
#54For those doubting that Tether is fully backed, note that Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment banks and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds
> Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment bank and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds Source? I'm seeing Fitzgerald say "Cantor Fitzgerald manages 'many many' of" Tether's assets (not all) and that he can vouch for their balance sheet [1]. But not that Cantor manages all of its ass…
The most comprehensive and forceful statements are in this video:
https://youtu.be/IjR3Hj0aRW4?si=s2D0wjQOIS5uiFKh
Re: Federal investigators probe Tether
#55Earlier quoted context omitted.
It would be very simple for Tether to just hold $1 for each 1 Tether coin. They could invest their cash in safe assets like treasury bills that yield 4% or more. Meanwhile, they pay no interest in Tethers. So they get a 4% return for doing nothing at all. As far as I know, there is no evidence that they are doing anything else. (There is some evidence that they did something else in the past, when interest rates were…
If it was that easy then we'd probably see more banks that do just that.
That is what banks do.
But it’s more complicated because the current trading value of a bond is not the same as the expected return you’d get if you hold it to maturity. Last year Silicon Valley Bank and others got into trouble for this reason.
Let’s say you invested $100M into a 10-year bond when interest rates were at 2%. With interest, you’ll be getting back about $122M in ten years. Nice.
But what if you’re a bank and suddenly every depositor wants to withdraw that $100M? You can’t wait ten years. You need to sell the bond. Now you face the problem that interest rates are at 4%. Somebody with $100M can invest it in a 10-year bond that will return $148M instead of your measly $122M. So nobody will pay full price for your 2% bond because they can get a better return elsewhere.
Re: Federal investigators probe Tether
#56Good timing, along with the election. Going by history there's the likelihood of a ~20% dip in the BTC price before it takes a couple of big steps up in the last few months of the bull run part of the 4-year cycle. If it happens, accumulate.
Don't buy a pizza with it, or help Aunt Mildred with an expense, or loan your brother $4k though, because it's useless for any practical purposes.
Re: Federal investigators probe Tether
#57I'm very curious to see how this investigation plays out, especially considering the debt situation here in the US. It appears (according to tether's audit reports) that tether went from about 64 billion in treasuries mid-2023 to about 92 billion mid-2024. That's 27 billion in demand for treasuries over that one year period which (if my math and research is correct) is about 3% of all treasury demand for roughly that time period.
It does appear that tether holds short-term maturity treasuries, and I don't know how that fits into the larger demand picture.
https://assets.ctfassets.net/vyse88cgwfbl/63oJePOHqIvrcnXWMP...
https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtYg...
https://ticdata.treasury.gov/resource-center/data-chart-cent...
Re: Federal investigators probe Tether
#58For those doubting that Tether is fully backed, note that Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment banks and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds
What are the incentives at work here? What is their risk exposure to a collapse of tether? What would be the reputation al risk to their firm if tether was a scam?
I personally would take this with a grain of salt as they have a direct financial interest in Tether looking solid and prestigious and continuing its present operations.
I am old enough to remember when investment banks touting their mortgage backed securities business before the collapse in 2008.
Re: Federal investigators probe Tether
#59Earlier quoted context omitted.
> It's well known in cryptocurrency circles that their coin is not backed 1:1 to USD Its well known in the legal space and has already been addressed by multiple US courts. They're not looking for that and this isn't controversial. Those court cases already happened in 2018-2020. Tether just needed to update its language. A financial institution not backed 1:1 to USD isn't a problem in any part of the banking sector,…
> a probe about violating AML laws and sanctions. Which would likely only involve specific addresses in crypto and some onramps. But otherwise crypto-crypto trading won't be a part of this. You think a dollar stablecoin won't be affected by being prohibited from touching dollars or the dollar financial system?
I didn't say that, that statement doesn't imply that or suggest that.
The result of this probe likely won't be that as the DOJ is just emboldened by their Binance and CZ conviction, where the founder spent a couple months at a Southern California Federalbsummer camp and the DOJ got a few billion dollars, and Binance continues to operate as before and no further regulatory overhang is above them and all the money coming in and out is magically seen as clean.
Re: Federal investigators probe Tether
#60This is just another example of how shorting Bitcoin during market hours is such an effective strategy, which is as profitable now at $60k as it was at $20k. This takes advantage of the tendency of bad news to drop when the stock market is open. Federal government offices are closed on weekends, so if bad news is dropped or a rumor of bad news, it will be on a weekday and when the market is open, as has been the case.
Good news can also drop, but there is a major asymmetry favoring bad news and liquidations, and consequently sudden drops of the Bitcoin price. You don't have to work at a hedge fund to find great methods like this.
It also shows why Bitcoin is an inferior investment compared to tech stocks, in which investors do not have to worry about these regulatory risks (except for antitrust, which is a slow, drawn-out process and this can be mitigated with diversification). QQQ has far outperformed Bitcoin even as far back as 2020.