5 ms·

Tether publishes ... two pie charts of its reserves

25 points by davidgerard 5y ago

thebean11 5y ago
Why didn't Tether collapse last time crypto crashed 80%?
- davidgerard 5y ago
  When crypto crashed in March 2020, I understand that a lot of the exchanges got together to keep Tether fueled. Note that actual-cash - dollars and treasuries - is the same now as it was in Hoegner's affidavit to the NYAG in 2019. Everything added to the "reserve" since then is not-cash. As I note in the linked article: the market for tethers don't care about Tether's backing, only about Bitcoin number go up. I'm eagerly awaiting Cas Piancey and Bennett Tomlin finishing their book on Tether ...
  - thebean11 5y ago
    > I understand that a lot of the exchanges got together to keep Tether fueled. Keep it fueled how? What were they purchasing it with? > As I note in the linked article: the market for tethers don't care about Tether's backing, only about Bitcoin number go up. I totally get this, but what I don't understand is why Tether doesn't trade at a discount, neither in crypto pairs or USDT/USD pairs (say on Coinbase or Kraken).
    - davidgerard 5y ago
      I don't get it either. But nobody ever seems to stress the USDT pairs? I'm amazed nobody's trying to cash out of tether with the pair on Coinbase. Easier to move bitcoins from the tether exchanges to Coinbase and cash out there, I guess.
      - graeme 5y ago
        Has coinbase started full USDT-USD trading yet? Their announcement said there were three phases to full trading: https://blog.coinbase.com/tether-usdt-is-launching-on-coinbase-pro-3a1353060e41 https://blog.coinbase.com/tether-usdt-is-launching-on-coinba...
        thebean11 5y ago
        I see the USDT/USD pair on Coinbase Pro, I think it's tradable? You could always go USDT -> BTC -> USD, just more fees that way.
      - ryanlol 5y ago
        > I'm amazed nobody's trying to cash out of tether with the pair on Coinbase. Nobody is having trouble cashing out from tether.
        davidgerard 5y ago
        no, because Tether's TOS literally says they can't!
        ryanlol 5y ago
        The TOS is pretty meaningless given current exchange volumes. If you somehow ended up with billions of dollars in tether you’d have no difficulty cashing it out to usd.
garyclarke27 5y ago
Not looking pretty, Tether scam will soon unravel, precipitous Bitcoin price drop to follow.
ffggvv 5y ago
i don’t get how you can say corporate paper is part of your reserve. it’s very illiquid and you could be screwed if there’s a bank run. it also has duration risk. the whole point of a tether is it should be backed 1 for 1 by cash. that’s like saying my coin is backed by gold and then trading that gold for us treasuries
- davidgerard 5y ago
  Before the 2008 financial crisis, a lot of banks listed commercial paper as assets. The highest-quality, highest-rated commercial paper! Backed by solid assets, such as mortgage-backed securities!
frnkng 5y ago
My advice for anyone who believes tether will explode: Take a loan in tether with another coin as security. Then sell the tether. Should tether really go south, repay cheaply. Risks: tether will not explode and one has to repay everything plus interest. As tether can‘t exceed the value of one US dollar, there is no risk of increasing asset prices. My guess: tether will not explode in the foreseeable future. No matter if it is sufficiently backed by US dollar or not. It had enough chances to crash and it never happened. Edit: Current interest rates for tether ranges (https://defirate.com/lend/ https://defirate.com/lend/) between 9% and 13%. It won‘t be a cheap move to short sell.
- davidgerard 5y ago
  The trouble with shorting tether is how to collect when the platform is part of your risk/threat model. This is already the case for shorting crypto - the exchanges have always front-run the customers. And notice how when the price goes down, all the exchanges go down for sudden unscheduled maintenance, like they did just this week.
  - eloff 5y ago
    If you can't pay back the loan, you don't have to, so that shouldn't be a problem with this specific strategy.

25 points by davidgerard 5y ago

thebean11 5y ago

Why didn't Tether collapse last time crypto crashed 80%?

davidgerard 5y ago
When crypto crashed in March 2020, I understand that a lot of the exchanges got together to keep Tether fueled. Note that actual-cash - dollars and treasuries - is the same now as it was in Hoegner's affidavit to the NYAG in 2019. Everything added to the "reserve" since then is not-cash. As I note in the linked article: the market for tethers don't care about Tether's backing, only about Bitcoin number go up. I'm eagerly awaiting Cas Piancey and Bennett Tomlin finishing their book on Tether ...
- thebean11 5y ago
  > I understand that a lot of the exchanges got together to keep Tether fueled. Keep it fueled how? What were they purchasing it with? > As I note in the linked article: the market for tethers don't care about Tether's backing, only about Bitcoin number go up. I totally get this, but what I don't understand is why Tether doesn't trade at a discount, neither in crypto pairs or USDT/USD pairs (say on Coinbase or Kraken).
  - davidgerard 5y ago
    I don't get it either. But nobody ever seems to stress the USDT pairs? I'm amazed nobody's trying to cash out of tether with the pair on Coinbase. Easier to move bitcoins from the tether exchanges to Coinbase and cash out there, I guess.
    - graeme 5y ago
      Has coinbase started full USDT-USD trading yet? Their announcement said there were three phases to full trading: https://blog.coinbase.com/tether-usdt-is-launching-on-coinbase-pro-3a1353060e41 https://blog.coinbase.com/tether-usdt-is-launching-on-coinba...
      - thebean11 5y ago
        I see the USDT/USD pair on Coinbase Pro, I think it's tradable? You could always go USDT -> BTC -> USD, just more fees that way.
    - ryanlol 5y ago
      > I'm amazed nobody's trying to cash out of tether with the pair on Coinbase. Nobody is having trouble cashing out from tether.
      - davidgerard 5y ago
        no, because Tether's TOS literally says they can't!
        ryanlol 5y ago
        The TOS is pretty meaningless given current exchange volumes. If you somehow ended up with billions of dollars in tether you’d have no difficulty cashing it out to usd.

garyclarke27 5y ago

Not looking pretty, Tether scam will soon unravel, precipitous Bitcoin price drop to follow.

ffggvv 5y ago

i don’t get how you can say corporate paper is part of your reserve. it’s very illiquid and you could be screwed if there’s a bank run. it also has duration risk. the whole point of a tether is it should be backed 1 for 1 by cash. that’s like saying my coin is backed by gold and then trading that gold for us treasuries

davidgerard 5y ago
Before the 2008 financial crisis, a lot of banks listed commercial paper as assets. The highest-quality, highest-rated commercial paper! Backed by solid assets, such as mortgage-backed securities!

frnkng 5y ago

My advice for anyone who believes tether will explode: Take a loan in tether with another coin as security. Then sell the tether. Should tether really go south, repay cheaply. Risks: tether will not explode and one has to repay everything plus interest. As tether can‘t exceed the value of one US dollar, there is no risk of increasing asset prices. My guess: tether will not explode in the foreseeable future. No matter if it is sufficiently backed by US dollar or not. It had enough chances to crash and it never happened. Edit: Current interest rates for tether ranges (https://defirate.com/lend/ https://defirate.com/lend/) between 9% and 13%. It won‘t be a cheap move to short sell.

davidgerard 5y ago
The trouble with shorting tether is how to collect when the platform is part of your risk/threat model. This is already the case for shorting crypto - the exchanges have always front-run the customers. And notice how when the price goes down, all the exchanges go down for sudden unscheduled maintenance, like they did just this week.
- eloff 5y ago
  If you can't pay back the loan, you don't have to, so that shouldn't be a problem with this specific strategy.