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Parent was probably implying that the Secret Service would sieze the tainted assets and the auction them off to new bidders, thus removing the taint for the new
by jaycroft 8y ago
Parent was probably implying that the Secret Service would sieze the tainted assets and the auction them off to new bidders, thus removing the taint for the new owner. the reason for the auction instead of just funding the treasury is that the USG deals in dollars, not in securities or other obligations or paper instrumnets. Compare the actions of the US Marshalls after siezing the Silk Road Bitcoins.
- VMG 8y agoThat doesn't help with the problem of accepting possibly tainted tokens, and the resulting loss of the stablecoin stability.
- lallysingh 8y agoWouldn't the auction of stablecoins basically have to be at face value? Just by market forces: You don't auction dollars. Then they'd just cash then in at coinbase, right?
- JumpCrisscross 8y ago> Wouldn't the auction of stablecoins basically have to be at face value? Almost certainly not. They would trade at a premium or discount, depending on a number of factors.
- lallysingh 8y agoWhich factors? Who'd buy them at a premium? Wouldn't any auction of >1 bidders stabilize at face value?
- JumpCrisscross 8y ago> Which factors? Who'd buy them at a premium? Wouldn't any auction of >1 bidders stabilize at face value? Think of the stablecoin as an ETF. If people need to launder money or take advantage of a programmatic bug, that would raise the stablecoin price over $1. By default, I'd imagine the reduced liquidity and counterparty risk (relative to dollars) would cause the stablecoin to trade at a discount to cash, particularly when auctioned by the government. (You have to spend resources monitoring the auction, closing the transaction, and cashing out to complete the arbitrage.)