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$1M bounty for details on Tether’s backing

hindenburgresearch.com

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Re: $1M bounty for details on Tether’s backing

#131

Post by PKop »

thebean11 wrote: post #112
PKop wrote: post #98

Earlier quoted context omitted.

Tether is pervasive in DeFi. You could borrow Tether through a smart contract, exchange for another stable or asset. Pay the interest until it collapses in the future and, buy back worthless Tether cheap to pay off loan and get collateral back.

The danger is that the smart contract you borrow from becomes insolvent and you lose your collateral. This becomes way more likely if Tether/crypto is crashing. Some of them are more prone to that than others, I'm sure, but all of them require collateral > the amount you borrow, so the risk is large.

Yes that is the basic structure of all crypto loans, I'm just describing a mechanism by which you could short Tether. I get what you mean that if Tether collapses, crypto assets like ETH, BTC would crash too. But you could short Tether against USDC w/ USDC as collateral too. I can definitely envision a scenario where USDC holds relatively stable even if USDT crashes.

Nearly all of the smart contract loans are over collateralized, so collateral > borrow isn't too hard to achieve...but yes, probably only likely in crash if collateral is another stable that holds peg.

Just to be clear, I think shorting Tether is a bad idea lol

Re: $1M bounty for details on Tether’s backing

#132

Post by NovemberWhiskey »

shoo wrote: post #11
graeme wrote: post #2

This is very interesting. Hindenburg is the real deal. One challenge may be that, like the Mafia, Tether keeps its inner circle and employs family members. They have ~15 employees for a 70 billion dollar operation. The CTO’s wife is a manager, and the CEO’s daughter works for an unnamed crypto family office, which may be related. Their counterparties in Chinese commercial paper may not know they are counterparties du…

not clear if it is the easiest target to short, given that many people who use tether are fairly skeptical about how/if the tokens are backed by assets but use it anyway (if the recent Bloomberg story is accurate).

Seriously, how would you short Tether at scale? It's not like you can call up your prime brokerage.

Re: $1M bounty for details on Tether’s backing

#133

Post by seibelj »

aazaa wrote: post #108

It may be counterintuitive, but the best thing that could happen to Bitcoin would be for Tether to collapse in a cloud of dust. Tether is continually cited as a large risk factor to Bitcoin by people who have gotten past the "it's not real money" objection. But I think it's worth considering what happens if the collapse never comes. If government investigation, findings of wrongdoing, admission of lies, and punishmen…

The price of Bitcoin would rise precipitously as traders tried to exit tether any way possible, as would all other cryptos.

Re: $1M bounty for details on Tether’s backing

#134

Post by wpietri »

Dma54rhs wrote: post #93
perl4ever wrote: post #35

Earlier quoted context omitted.

When people say "hey, Tether is no worse than the existing financial system" I wonder if they don't understand the difference between holding a fraction of deposited money as reserves, and only having a fraction of deposited money as assets, period. As far as I know, when the latter happens in a real bank, they get shut down, shareholders lose their money, and only the FDIC saves the depositors. Just because that's t…

I've never held any coin but why can't it be true? The money is imaginary anyway and while you can talk about backing dollars with tanks and bomb at the end of the day is there are believers there is a market snd one market can outlive another. Saving depositors in regular banking is pure belief as well.

> Saving depositors in regular banking is pure belief as well.

Not in the same way. FDIC insurance goes back more than 90 years. Its value has been proven through major financial crises. It is pretty transparent about what it does, and it's accountable to the public. There is also arms-length regulatory verification between banks and their various regulators to make sure that they aren't taking on too much risk.

Tether, on the other hand is intentionally opaque, run by a small number of people, has mysterious relationships with other players, and has been caught lying about their backing. It has never been tested by a serious crisis. And of course there's no real regulation, so you basically have to take the word of people who have demonstrated they're not trustworthy.

Re: $1M bounty for details on Tether’s backing

#135

Post by shukantpal »

JumpCrisscross wrote: post #70
hmate9 wrote: post #48

Earlier quoted context omitted.

Shorting Tether is a great play. Either everyone loses faith and nobody trusts them anymore or.... it stays at $1. You are not going to lose. You just have to pay funding fees for your short which on FTX is around 4% a year. Do you think there is a great chance that Tether is a massive scam and will find its doom within the next 25 years? My answer to that is yes.

> Shorting Tether is a great play Why do you think there will be a functioning market to pay you out if and when it collapses?

You get paid immediately when opening a short position

Re: $1M bounty for details on Tether’s backing

#136

Post by UncleOxidant »

IgorPartola wrote: post #116
javajosh wrote: post #99

Earlier quoted context omitted.

Never thought about this, but I guess you might be on the hook for fraud if you violated an agreement for profit. That is, an employee violating an NDA for profit might be considered committing fraud against their employer. It's strange - Tether seems shady but I don't think Hindenburg's offer is on firm ethical or legal ground. What if Hindenberg offered $1M for access to a private list of donors to a [prominent abo…

An NDA would be a civil matter, I would think. It is a remedy for monetary damages, right? Of course I have no idea if offering someone a large sum of money to violate any kind of contract is in any way illegal or even actionable in civil law since the person can always refuse the money and uphold their contract. If it made you criminally liable, wouldn’t every job offer to someone under contract with a competitor le…

> Of course I have no idea if offering someone a large sum of money to violate any kind of contract

Hindenburg isn't expressly offering the money for someone to break some contract or NDA. They're just offering money for information. Yes, the person with the information may have to break an NDA to share the information, but that doesn't seem like Hindenburg's problem. It's also possible that some insider with knowledge isn't under an NDA and would be willing to share information for $1M.

Re: $1M bounty for details on Tether’s backing

#137

Post by fleddr »

tppiotrowski wrote: post #74

How can one profit from a crypto bubble? I’ve heard of an ETF for shorting Bitcoin but never saw any specifics. Can anyone provide a reputable brokerage for shorting crypto currencies?

You don't need an ETF for that, you can directly short any crypto at many exchanges. To profit from the short you should obviously time the market well.

Re: $1M bounty for details on Tether’s backing

#138

Post by PKop »

omgwtfbyobbq wrote: post #28
paulpan wrote: post #21

Last week CFTC fined both Tether and Bitfinex $42.5M for allegedly not holding enough reserves and colluding together. https://www.cftc.gov/PressRoom/PressReleases/8450-21 Seems like a fairly small fine in grand scheme of things no? If the critics are right and $70B+ supply is just made up paper money, then it'll be huge losses for all Tether holders. I'd conjecture it would tank the entire crypto market - and possib…

Why do you think it would tank the equity market?

It's all tied together. If one asset class is crashing people sell others to grab cash. Another way, according to Janet Yellen, that Tether and other stables can destabalize markets, is that they have large portions of reserves in corporate debt, a crisis in these coins would cause a fire sale of billions of corporate debt they hold, itself probably cascading into all risk markets.

Re: $1M bounty for details on Tether’s backing

#139

Post by wpietri »

PKop wrote: post #103
xur17 wrote: post #16

Earlier quoted context omitted.

> Even if the origin, operation of Tether is highly suspicious: if it functions, is widely adopted and does what is expected … may last longer than people think. I think you're right about this point, and I've been trying to imagine what might cause Tether to collapse - you really need a run on the bank situation triggered by something causing them to become insolvent.

A crash in the corporate paper they hold, which would destroy the rest of the economy even more. Tether would be a footnote to that event.

That they claim to hold. They won't prove it, and many financial industry insiders have suggested they couldn't possibly hold what is normally thought of as "commercial paper" in the quantities they claim.

Re: $1M bounty for details on Tether’s backing

#140

Post by adrr »

rexstjohn wrote: post #12

Federal Reserve was crafted in a secret meeting on Jekyll Island ( https://en.m.wikipedia.org/wiki/Federal_Reserve ) between industry and government. Still exists and functions today. Lot of people don’t like it, but it’s there regardless. Even if the origin, operation of Tether is highly suspicious: if it functions, is widely adopted and does what is expected … may last longer than people think. Best response is mor…

Didn't they pay a huge fine for lying about actually being fully backed by assets? This is crypto's biggest problem, the amount of scams.
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