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Federal investigators probe Tether

wsj.com

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Re: Federal investigators probe Tether

#101

Post by earnesti »

jiggawatts wrote: post #97
moat wrote: post #92

Earlier quoted context omitted.

It was formerly understood that Tether was not backed 1:1. My people in the space now believe that they have made up the hole thanks to juicy interest rates (where Tether keeps all the yield).

How is that possible? They were thought to have less than half of the dollars they’re supposed to be holding!

Banks have like 10% or even less the dollars that they are supposed to be holding, but still are doing all fine.

Personally I don't think these tether conspiracy theories were ever true. Maybe they aren't 1:1 backed, but they have always been financially well off enough to keep the company running. And after the interest rates went up, they are probably making a killing. Typical bank has minimal reserves compared to them, and everyone is fine with that.

Re: Federal investigators probe Tether

#102

Post by earnesti »

paulpauper wrote: post #65
JumpCrisscross wrote: post #4

Tether was launched in 2014 [1]. It has over $120bn in outstanding liabilities against unknown assets [2]. When it fails, it will rival the fourth-largest 'bank' failure in U.S. history [3]. This has been a complete failure of U.S. regulatory bodies. [1] https://www.investopedia.com/terms/t/tether-usdt.asp [2] https://coinmarketcap.com/currencies/tether/ [3] https://en.wikipedia.org/wiki/List_of_largest_bank_failures…

Just another reason why crypto is inferior. So much risk , no upside. like investing in mortgage/ bank stocks in 2007.

Tell that to all the Bitcoin billionaires and millionaires, lol.

Re: Federal investigators probe Tether

#103

Post by gws »

pfisherman wrote: post #58
gws wrote: post #51

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

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 securi…

The incentives at work here are that if a CEO of a public company makes false statements of this kind goes to jail. This is like the CEO of the bank that held Bernie Madoff's money going on record before Madoff's fall saying he holds Bernie's money and it's all there. If Tether is unbacked Howard Lutnick is going to jail, so it is irrational to believe Tether is unbacked at this point.

Re: Federal investigators probe Tether

#104

Post by BLKNSLVR »

paulpauper wrote: post #96
BLKNSLVR wrote: post #79

Earlier quoted context omitted.

No upside? Historically, or purely in the context of this article, assuming it's true?

what has the price done over the past 8 months, past 3 years?

At least you've done enough research to very specifically cherry pick your time spans.

That kind of research could have earned you some good money.

Also, I can cherry pick too:

1st Jan 2023 - 31st Dec 2023: 256%

Cherry picking is meaningless. Research and knowledge are where the (digital?) gold is.

Re: Federal investigators probe Tether

#105

Post by a_dabbler »

treyd wrote: post #67
jujube3 wrote: post #38

Earlier 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…

> It would be very simple for Tether to just hold $1 for each 1 Tether coin. It would not be "very simple" for them to do this. No commercial bank lets you walk up to the teller with $1B and ask to deposit it, much less $93B. The financial system doesn't work that way. They have to cycle it through bonds on the repo market, which is what most huge firms do.

HSBC has had money laundering scandals with amounts in excess of 1b$

Re: Federal investigators probe Tether

#106

Post by popcalc »

earnesti wrote: post #100
fallinditch wrote: post #95

Earlier quoted context omitted.

TL:DR "USDT was used to pump other traded pairs in order to avoid raising the price of BTC directly. Once BTC was obtained from the pumps of these currencies, it was then sold immediately for USD, which ‘flooded’ the market and depressed the price of BTC."

As the article states, nothing has been proven. Didn't read further than that. Tether is an operation that is a money printing machine on its own. They absolutely don't need to play pump'n'dump tricks to make money. It doesn't make any sense. Pump'n'dump schemes are risky. Tether has many options to make money with way less risk.

Pump'n'dumps are far less risky than running a massive ponzi?

Re: Federal investigators probe Tether

#107

Post by stephenbez »

timssopomo wrote: post #43
alchemist1e9 wrote: post #26

Earlier quoted context omitted.

I will try to find it. I would also point out they hold excess reserves in Bitcoin. My guess is nobody can get them on not being 1:1 but this idea of AML violations as the attack vector makes a lot of sense.

The issue is that "stablecoin" doesn't mean anything legally. US regulators have collectively abdicated their responsibility to create fair rules that encourage innovation while protecting investors and creditors. Tether publishes their reserves [1], only 4% are Bitcoin. 84% is "cash & cash equivalents & other short-term deposits", 3% is precious metals, 5.55% is "secured loans". They report $5B in net equity, ~4.2%.…

One metric of how bonds are susceptible to interest rate changes is duration [1].

My calculations show that for a 4 week to maturity T-bill, the duration is approximately 0.077, meaning that if interest rates go up by 1%, it loses 0.07%. So even if rates go up by 5% in a week, they only lose 0.35%.

The problem with SVB is they weren’t holding very short dated bonds. Pretty much every large company has to deal with interest rate risk but as long as they keep the average duration low it doesn’t tend to be an issue.

[1] https://en.m.wikipedia.org/wiki/Duration_(finance)

Re: Federal investigators probe Tether

#108

Post by alchemist1e9 »

JumpCrisscross wrote: post #22
alchemist1e9 wrote: post #18

Earlier quoted context omitted.

> 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. Being speculated about is not the same as “known”. In fact every tether investigation seems to end up showing they are even over capitalize and hold more than 1:1! My understanding of the audit situation was that the big accounting firms have refused to do it…

> every tether investigation seems to end up showing they are even over capitalize and hold more than 1:1 The one adversarial investigation I know of found the opposite [1]. > presumably due to pressure from someone to not get involved Not how audit works. [1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...

The NYAG settlement you keep posting didn’t find that Tether was unbacked or below 1:1. It focused on transparency issues and the fact that funds were not always properly segregated. There were periods when reserves included assets like receivables or funds temporarily seized by authorities (e.g., Crypto Capital), but there was NO finding that USDT wasn’t fully backed. In fact, Tether has often shown it holds more than the necessary reserves, as evidenced in various attestations and reports post-settlement, and even in the report you keep posting NEVER they claim USDT isn’t fully solevent!

It’s funny how the no-coiner crowd keeps pushing the idea that Tether is some crypto scam destined to collapse, yet every single investigation, including the NYAG’s, has failed to back up that narrative. The reality is Tether has proven time and again that their USDT is fully backed and their business is profitable. The desperation to prove otherwise is just not supported by the facts.

Re: Federal investigators probe Tether

#109

Post by alchemist1e9 »

JumpCrisscross wrote: post #50
jujube3 wrote: post #38

Earlier 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…

> there is no evidence that they are doing anything else There is a lot of evidence they aren't just buying Treasuries. The only times people looked, the money was being held in weird stuff, including frozen deposits at non-FDIC insured banks and private loans [1]. [1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...

How about you find anything other the NYAG settlement that you keep mischaracterizing?

Re: Federal investigators probe Tether

#110

Post by paulpauper »

BLKNSLVR wrote: post #104
paulpauper wrote: post #96

Earlier quoted context omitted.

what has the price done over the past 8 months, past 3 years?

At least you've done enough research to very specifically cherry pick your time spans. That kind of research could have earned you some good money. Also, I can cherry pick too: 1st Jan 2023 - 31st Dec 2023: 256% Cherry picking is meaningless. Research and knowledge are where the (digital?) gold is.

yeah that is just to recover the 2022 losses lol
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