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Federal investigators probe Tether

wsj.com

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Re: Federal investigators probe Tether

#21

Post by alchemist1e9 »

qqqult wrote: post #17
JumpCrisscross wrote: post #15

Earlier quoted context omitted.

> Tether obituary thread Timing its collapse is foolhardy. Concluding it must collapse isn't. It's a shadow bank run without deposit insurance nor AML.

Why must it collapse?

Governments don’t like stable coins so even if it is perfectly 1:1 they will still try to find a way to go after them.

Other commenters have hinted the path is “sanctions” for not enforcing some controls..

Personally I can’t wait for governments to go after stable coins, then Bitcoin will really “moon”!

Re: Federal investigators probe Tether

#22

Post by JumpCrisscross »

alchemist1e9 wrote: post #18
satvikpendem wrote: post #5

Ah, 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, 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...

Re: Federal investigators probe Tether

#23

Post by JumpCrisscross »

alchemist1e9 wrote: post #21
qqqult wrote: post #17

Earlier quoted context omitted.

Why must it collapse?

Governments don’t like stable coins so even if it is perfectly 1:1 they will still try to find a way to go after them. Other commenters have hinted the path is “sanctions” for not enforcing some controls.. Personally I can’t wait for governments to go after stable coins, then Bitcoin will really “moon”!

> Governments don’t like stable coins so even if it is perfectly 1:1 they will still try to find a way to go after them

There are plenty of regulated stablecoins [1]. Hell, my state is launching one [2].

Governments usually have to subpoeana banks to get transaction records. With a stablecoin, those records are centralised.

[1] https://home.treasury.gov/system/files/136/StableCoinReport_...

[2] https://www.ledgerinsights.com/state-of-wyoming-plans-stable...

Re: Federal investigators probe Tether

#24

Post by cool_dude85 »

alchemist1e9 wrote: post #18
satvikpendem wrote: post #5

Ah, 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, 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…

Can you link one of these investigations that show that tether is backed more than 1:1 with the USD?

Re: Federal investigators probe Tether

#25

Post by charliebwrites »

My unsubstantiated conspiracy theory on this is that not only is Tether not backed 1:1 USD > USDT but that they are so disproportionately not backed that they basically printed money during the peak of the pandemic, causing real measurable inflation in the crypto markets

Re: Federal investigators probe Tether

#26

Post by alchemist1e9 »

cool_dude85 wrote: post #24
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…

Can you link one of these investigations that show that tether is backed more than 1:1 with the USD?

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.

Re: Federal investigators probe Tether

#27

Post by JumpCrisscross »

alchemist1e9 wrote: post #26
cool_dude85 wrote: post #24

Earlier quoted context omitted.

Can you link one of these investigations that show that tether is backed more than 1:1 with the USD?

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.

> they hold excess reserves in Bitcoin

We had precisely the same amount of information about FTX's Bitcoins as we do for Tether, for what it's worth.

Re: Federal investigators probe Tether

#29

Post by wmf »

I don't know why, but the one thing cryptobros fear is OFAC. They shrug off fraud, securities violations, and money laundering but when sanctions are mentioned people start running away. We saw this with Tornado Cash and hopefully Tether will get OFACed next.

BTW, Tether probably is backed 1:1 or better because they bought $XXB of US treasury bonds at >4% which return billions in profit per year. BTC is also (currently) near all time highs. Whatever hole they had was probably filled in.

Re: Federal investigators probe Tether

#30

Post by TheAlchemist »

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…

Exactly - a massive failure of regulatory bodies. I wonder why. It was similar with Madoff - there were people literally sending documents showing it's a fraud, and they did nothing for years.

I don't follow crypto lately, but it seems that Tether is printing money in high interest rate period.

But back before that, it was a complete joke - it was so apparent that they published only made up numbers that didn't really add up, pretended to get legitimate transfers of billions of $ on Sundays etc.

They were investigated once by a US A.G. and found out to have lied on the reserves in the past, but nothing really serious happened. They got a fine and were forced to published a pseudo balance sheet, which was a joke (still a bit better than FTX's Excel spreadsheet).

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