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Tether reserves backed by 2.9% cash

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Re: Tether reserves backed by 2.9% cash

#51

Post by initplus »

grey-area wrote: post #28
adflux wrote: post #24

Earlier quoted context omitted.

Also what's the paper and who issued? AAA or dogshit wrapped in catshit?

The giveaway is that they don’t even disclose what this commercial paper is or who the issuers are. Given their history of fraud the most likely explanation is they are shell companies run by the same people and the money doesn’t exist.

I do wonder to what extent Tether has a symbiotic relationship with large exchanges, and what the loans are denominated in.

It's easy to imagine how issuing loans denominated in USDT would be attractive to Tether. And that debt can be converted into an asset on Tether's balance sheet. And voila the tether is backed.

Re: Tether reserves backed by 2.9% cash

#53

Post by initplus »

jbverschoor wrote: post #37

Does it really matter when banks have a reserve requirement of 0% since 2 years?

Tether is acting like a bank, that's the problem. A completely un-auditable bank with a history of shady behavior.

If a bank has 0% reserves, the books say 0% reserves. Tether has no books.

Re: Tether reserves backed by 2.9% cash

#54

Post by seanhunter »

jbverschoor wrote: post #37

Does it really matter when banks have a reserve requirement of 0% since 2 years?

Banks aren't at all like a supposedly pegged cryptocurrency. Secondly banks don't have a 0% reserve requirement against all types of RWA. They have specifically low reserve requirements against certain types of assets but if you look at the balance sheet of a bank you'll see that their capital reserves are not zero. The Fed removed the reserve requirement on eligible deposits and moved to the "ample reserves" system where they pay interest on reserves that depositary institutions lodge with them but which a specific reserve requirement against liabilities is not needed.

Banks are still required to have reserves against risk-weighted assets (remember that deposits are a liability) and to cover liquidity and macroprudential risk. Here's the fed policy note https://www.federalreserve.gov/monetarypolicy/reservereq.htm and here's an explanation of the "ample reserves" system https://www.federalreserve.gov/econres/notes/feds-notes/impl...

Re: Tether reserves backed by 2.9% cash

#55

Post by ur-whale »

sickmate wrote: post #15

As a comparison, USDC reserves are 100% backed by US dollars held in custody accounts, currently 9.3B. https://www.centre.io/hubfs/pdfs/attestation/grant-thorton_c...

One very interesting sentence in that document is the "100'000 USDC token blacklisted"

If you ever thought govt-backed cryptos and centralized tokens like USDC were a good idea, ask yourself this:

Could a stack of greenbacks ever be "blacklisted" (I mean, people have certainly tried with various "tricks")?

One of the nice property of money as we've known it so far was fungibility.

With govt-backed (e-dollar) and/or centralized cryptos (USDC), much like the woolly mammoth the whole notion will soon be extinct.

Decentralized ZKP-powered coins FTW.

Re: Tether reserves backed by 2.9% cash

#56

Post by sorbits »

jbverschoor wrote: post #37

Does it really matter when banks have a reserve requirement of 0% since 2 years?

I believe the U.S. minimum requirement is currently at 10%, but you do remember how bad it all came crashing down 13 years ago, right?

So yes, it does matter if we let financial institutions disregard risk in the pursuit of profit, when they are gambling with other people’s money.

In the case of Tether though, it’s not a traditional bank that issues interest yielding loans based on the lender’s credit profile.

Rather, the suspicion has been that they are simply issuing USDT coins to buy up crypto, which causes the latter to increase in value, but the money to buy these assets were never there in the first place, and that is why today, they can only show a fraction of the cash they claim to have received.

Re: Tether reserves backed by 2.9% cash

#57

Post by ur-whale »

phire wrote: post #30
sickmate wrote: post #15

As a comparison, USDC reserves are 100% backed by US dollars held in custody accounts, currently 9.3B. https://www.centre.io/hubfs/pdfs/attestation/grant-thorton_c...

USDC's "custody accounts" aren't cash either: "US Dollars held in custody accounts are the total balances in accounts held by the Company at federally insured US depository institutions and in approved investments on behalf of the USDC holders at the Report Date."

Yeah, 100% agree.

The notion of counter-party risk is understood by a tiny fraction of the folks who participate in finance.

Re: Tether reserves backed by 2.9% cash

#58

Post by TrackerFF »

ur-whale wrote: post #8

> Chief Technical Officer Paolo Ardoino Can't say this news comes out as a surprise. I'm actually surprised by the fact that there are any reserves at all. What is really interesting about Bitfinex / Tether is to research the history of the people who started these entities, especially their history prior to Bitcoin's existence. Here's a taste: https://nicolaborzi.medium.com/the-lawless-rollercoaster-of-... As much a…

On a tangent - ever since cryptocurrencies gained popularity, every known crook and MLM scam-artist here in Europe shifted their focus to some coin service.

Some of these are of course difficult to soit, as they tend to use numerous different names and identities, and have been in the scamming "game" for decades.

The takeaway from all of this is that one should absolutely do a quick research on founders and key figures when dealing with businesses that focus on crypto. People don't tend to change overnight, and especially not those that have been scamming people for decades before.

Re: Tether reserves backed by 2.9% cash

#59

Post by Traster »

dillondoyle wrote: post #17

This is an opinion piece and the headline & article are clickbait IMHO. From Tether's chart, they literally have 2.9% in cash. So I guess the headline technically checks out. But Tether reported over 75% held in cash equivalents, the same type of liquid assets Apple reports when reporters say Apple is sitting on billions in 'cash' I think maybe more interesting, Tether reports only 1.64% slice of pie has some crypto…

The difference betweeen what Tether says and what Apple says is that Apple actually have to follow regulated practices in reporting their cash. All that Tether is saying is that they have about half their reserves in commercial paper with no details of what the risk profile of that is at all. And given that they don't need to report this to anyone, and they'd get to keep all the profits from riskier bets, it seems quite likely not to follow regulatory standards- which they actively claim to get around by saying they don't operate in the US (despite being a tether for USD)
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