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Tether isn't a fraud perse... In the worst case it's a severely overleveraged bank that operates outside of traditional regulatory regimes akin to many eurodol

by fny 6y ago

Tether isn't a fraud perse... In the worst case it's a severely overleveraged bank that operates outside of traditional regulatory regimes akin to many eurodollar banks. My bet is they hold something around 5% in reserves. Reserve requirements in the US have dropped from 10% to 0% thanks to the fed, so our fractional reserve system has turned into an inverted ponzi scheme of sorts. The biggest risk for tether is a liquidity event. If everyone cashes in for dollars at once, tether is probably dead. But honestly, I might consider buying the dip.

phire 6y ago
The problem is that Teather advertises themselves as 'non-fractional'. They are meant to hold 100% reserves. As for their actual holdings: "On 30 April 2019 Tether Limited's lawyer claimed that each tether was backed by only $0.74 in cash and cash equivalents"* That's better than your pessimistic 5% estimate, assuming their statements can be trusted.
- arcticbull 6y ago
  That was really, really old data lol. That was from when they had about $3B in market cap. Today they have $33B in market cap. What a difference a year or two makes! In fact, they printed in the last week the entire market cap they had when that statement was made, in $1B USDT increments. That figure comes from the time when Bitfinex reached into the Tether kitty and snagged $850M (leaving an IOU) to make up for the money seized by world governments as being the proceeds of money laundering. That happened when their money launderer, CryptoCapital, got shut down. CryptoCapital was run by former NFL player Reginald Fowler [1] whose lawyers just withdrew from his case because he's broke. Luckily Tether has since moved on, and they bank with Deltec in the Bahamas, whose chairman is the guy who created inspector fucking gadget. [2] I'm not sure 5% is all that far off, given the 33 billion USD they're supposed to have is more than the entire Bahamian banking system has on deposit in USD according to regulators. By like, a lot. [1] https://coingeek.com/crypto-capital-ny-court-grants-reginald-fowler-lawyers-motion-to-withdraw/ https://coingeek.com/crypto-capital-ny-court-grants-reginald... [2] https://en.wikipedia.org/wiki/Jean_Chalopin https://en.wikipedia.org/wiki/Jean_Chalopin
- user-the-name 6y ago
  The one fact we can gather from that statement is "Tether is comfortable lying about their reserves".

by fny 6y ago

phire 6y ago

The problem is that Teather advertises themselves as 'non-fractional'. They are meant to hold 100% reserves. As for their actual holdings: "On 30 April 2019 Tether Limited's lawyer claimed that each tether was backed by only $0.74 in cash and cash equivalents"* That's better than your pessimistic 5% estimate, assuming their statements can be trusted.

arcticbull 6y ago
That was really, really old data lol. That was from when they had about $3B in market cap. Today they have $33B in market cap. What a difference a year or two makes! In fact, they printed in the last week the entire market cap they had when that statement was made, in $1B USDT increments. That figure comes from the time when Bitfinex reached into the Tether kitty and snagged $850M (leaving an IOU) to make up for the money seized by world governments as being the proceeds of money laundering. That happened when their money launderer, CryptoCapital, got shut down. CryptoCapital was run by former NFL player Reginald Fowler [1] whose lawyers just withdrew from his case because he's broke. Luckily Tether has since moved on, and they bank with Deltec in the Bahamas, whose chairman is the guy who created inspector fucking gadget. [2] I'm not sure 5% is all that far off, given the 33 billion USD they're supposed to have is more than the entire Bahamian banking system has on deposit in USD according to regulators. By like, a lot. [1] https://coingeek.com/crypto-capital-ny-court-grants-reginald-fowler-lawyers-motion-to-withdraw/ https://coingeek.com/crypto-capital-ny-court-grants-reginald... [2] https://en.wikipedia.org/wiki/Jean_Chalopin https://en.wikipedia.org/wiki/Jean_Chalopin
user-the-name 6y ago
The one fact we can gather from that statement is "Tether is comfortable lying about their reserves".