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I run ScamStableCrypto. I create a billion ScamStableCoins and claim they are worth $1 each. I give a billion ScamStableCoins to ScamCryptoExchange. ScamCryp

I run ScamStableCrypto. I create a billion ScamStableCoins and claim they are worth $1 each. I give a billion ScamStableCoins to ScamCryptoExchange. ScamCryptoExchange is run by me. ScamCryptoExchange writes an IOU for one billion US dollars and gives it ScamStableCrypto (my right hand gives something to my left hand). I, as ScamStableCrypto, write down in my balance book that I have a billion dollars of Commercial Paper. I announce that ScamStableCoin is fully backed.

ackbar03 5y ago
Sounds like a plan, I'm in!
martin_a 5y ago
Shifting all my savings to ScamStableCoin this evening! To the moon!
jiofih 5y ago
Sounds like fantasy. Whatever they wrote you the IOU for also comes out of your book, so your balance is $0. Doesn’t work like that.
- Clewza313 5y ago
  Tether released a statement of assets. They said nothing at all about liabilities.
  - tambourineman88 5y ago
    No idea if this is worth the paper it is written on but Stuart Hoegner posted this on Twitter: https://tether.to/wp-content/uploads/2021/04/tether-assurance-mar-2021-2.pdf https://tether.to/wp-content/uploads/2021/04/tether-assuranc...
    - DebtDeflation 5y ago
      >"Our opinion is limited solely to the CRR and the corresponding consolidated total assets and consolidated total liabilities as of 31 March 2021" IOW, "They have the total amount of CP, loans, and bonds they say they have. Whether or not the issuers of those IOUs is Bitfinex or some shell company connected to the owners of Tether we have no opinion on"
    - user-the-name 5y ago
      Tether has repeatedly lied about their reserves. There is zero reason to take any claim they make at face value.
- Marazan 5y ago
  Yes, that is the scenario I am describing. I have a billion dollars of liabilities in the ScamStableCoins I issued and a billion dollar in "Assets" from the IOU I wrote myself. THus I am perfectly fully backed.
  - jiofih 5y ago
    Yeah, technically correct I guess. Is there any realistic scenario where this would fly? This would be plain and clear fraud and not something allowed to go on for two years after multiple audits.
    - markonen 5y ago
      What audits? The point is that there hasn’t been anything like an actual audit.
    - grey-area 5y ago
      This is likely very similar to how USDT works. So the answer to your question is it would happen in crypto where there is no regulator and people trust ‘audits’ which verify nothing.
    - Marazan 5y ago
      The NYAG said they were liars who had comitted multiple acts of fraud and fined them. There have been precisely 0 (zero, none) completed audits of Tether's holdings
matheusmoreira 5y ago
I simply don't understand why all this complicated stable coin stuff is even necessary. Why can't exchanges use USD instead of USDT, USDC, BUSD or whatever? There are trading pairs for other currencies like EUR, GBP, AUD, BRL, RUB. Why can't we have USD trading pairs?
- tjader 5y ago
  Real fiat currencies come with much heavier regulation if you want to get money in and out of the traditional banking system. Also, if you want to move money between exchanges or banks you'd have to use the regular transfer methods like ACH, SWIFT, SEPA, which oftentimes are not as fast and cheap as sending USDT between exchanges. That makes it much harder to exploit arbitrage opportunities and drives up the spread overall, for example.
  - mdasen 5y ago
    To echo this a bit: exchanges were cut off from using USD. I'd recommend reading https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/ https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/ (Tether: The Story So Far; by Patrick McKenzie aka patio11) Basically, the US requires money-transmitting entities to know who they're working with (https://en.wikipedia.org/wiki/Know_your_customer https://en.wikipedia.org/wiki/Know_your_customer). When you open a bank account, the bank has to validate your ID. Even if you're opening it online, they have systems that ask you questions to validate your ID. If you're trying to create a non-tracked/anonymous system, you ultimately lose access to the US banking system (and probably the banking systems of a lot of other rich countries). I'd say that it's not just "heavier regulation". That makes it sound like it's just hoops to jump through or delays in the processing. A big part of it is that banks/money transmitters/fintech need to know who their customers are in a lot of countries. It's not just random stuff like, "they need to fill out these forms, file these reports each week, etc." If you're trying to run an anonymous exchange and possibly profit off money laundering, anonymously transmitting payments for prohibited activities, etc. you don't want a system that requires you to know your customers. You just want to be, "it's crypto - things come in, things go out and it's all anonymous!" There are companies like Coinbase which are licensed in the US, but Coinbase probably isn't where you'd want to go if you were looking to launder money. If you're looking to launder money, you don't want to go with a company that has been working with regulators. It would be relatively easy for Coinbase to give you USD, but Coinbase also knows who you are and would comply with warrants. If you're a crypto company that doesn't want to comply with authorities, know your customers, etc. then it might be hard for you to give someone USD. However, it's really easy to give someone USDT - you just put it in your ledger. I can keep a sheet of paper and say "I owe X 100 MyDollars" and say "Every my dollar is backed by a USD in some form". Even if I'm 100% telling the truth, it doesn't mean that I can give you the USD I have in my pocked if you give me a MyDollar. Maybe you don't live near me so I can't give it to you. If I'm cut off from the banking system, I can't just send it to you electronically. I think the point of "they're fully backed" is the idea that someone who does have access to the banking system will give you 1 USD (or close to it) for 1 USDT even if Bitfinex can't. One could imagine a market where someone would give you $0.90 for 1 USDT and then that person would go to Bitfinex and get the actual USD that backed it (assuming it was actually fully backed). The idea being that Bitfinex might not be able to give you an ACH or wire transfer of your USD, but if you showed up at a bank in Country X with a suitcase, you could get cash. I'd recommend the post from patio11 more than this comment. I guess the tl;dr is that it's not just heavier regulation, but that the US and many other governments don't allow anonymous money transfers. Banks and fintech need to know their customers so places like Bitfinex get cut off from the system. USDT is an attempt to offer people a way to turn something into a dollar-like thing without having access to the banking system.
dvh 5y ago
Whitepaper?
- Marazan 5y ago
  I'll publish soon. I think my real invovation for ScamStableCoin is that I won't actually ever let anyone convert ScamStableCoin to USD. That way my lack of actual cash will never be exposed.
jqpabc123 5y ago
Wait? Are you saying that ScamStableCoin is a "scam"? I think you just don't really understand the ScamStableCoin market. I know lots of people making money with ScamStableCoin.

ackbar03 5y ago

Sounds like a plan, I'm in!

martin_a 5y ago

Shifting all my savings to ScamStableCoin this evening! To the moon!

jiofih 5y ago

Sounds like fantasy. Whatever they wrote you the IOU for also comes out of your book, so your balance is $0. Doesn’t work like that.

Clewza313 5y ago
Tether released a statement of assets. They said nothing at all about liabilities.
- tambourineman88 5y ago
  No idea if this is worth the paper it is written on but Stuart Hoegner posted this on Twitter: https://tether.to/wp-content/uploads/2021/04/tether-assurance-mar-2021-2.pdf https://tether.to/wp-content/uploads/2021/04/tether-assuranc...
  - DebtDeflation 5y ago
    >"Our opinion is limited solely to the CRR and the corresponding consolidated total assets and consolidated total liabilities as of 31 March 2021" IOW, "They have the total amount of CP, loans, and bonds they say they have. Whether or not the issuers of those IOUs is Bitfinex or some shell company connected to the owners of Tether we have no opinion on"
  - user-the-name 5y ago
    Tether has repeatedly lied about their reserves. There is zero reason to take any claim they make at face value.
Marazan 5y ago
Yes, that is the scenario I am describing. I have a billion dollars of liabilities in the ScamStableCoins I issued and a billion dollar in "Assets" from the IOU I wrote myself. THus I am perfectly fully backed.
- jiofih 5y ago
  Yeah, technically correct I guess. Is there any realistic scenario where this would fly? This would be plain and clear fraud and not something allowed to go on for two years after multiple audits.
  - markonen 5y ago
    What audits? The point is that there hasn’t been anything like an actual audit.
  - grey-area 5y ago
    This is likely very similar to how USDT works. So the answer to your question is it would happen in crypto where there is no regulator and people trust ‘audits’ which verify nothing.
  - Marazan 5y ago
    The NYAG said they were liars who had comitted multiple acts of fraud and fined them. There have been precisely 0 (zero, none) completed audits of Tether's holdings

matheusmoreira 5y ago

I simply don't understand why all this complicated stable coin stuff is even necessary. Why can't exchanges use USD instead of USDT, USDC, BUSD or whatever? There are trading pairs for other currencies like EUR, GBP, AUD, BRL, RUB. Why can't we have USD trading pairs?

tjader 5y ago
Real fiat currencies come with much heavier regulation if you want to get money in and out of the traditional banking system. Also, if you want to move money between exchanges or banks you'd have to use the regular transfer methods like ACH, SWIFT, SEPA, which oftentimes are not as fast and cheap as sending USDT between exchanges. That makes it much harder to exploit arbitrage opportunities and drives up the spread overall, for example.
- mdasen 5y ago
  To echo this a bit: exchanges were cut off from using USD. I'd recommend reading https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/ https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/ (Tether: The Story So Far; by Patrick McKenzie aka patio11) Basically, the US requires money-transmitting entities to know who they're working with (https://en.wikipedia.org/wiki/Know_your_customer https://en.wikipedia.org/wiki/Know_your_customer). When you open a bank account, the bank has to validate your ID. Even if you're opening it online, they have systems that ask you questions to validate your ID. If you're trying to create a non-tracked/anonymous system, you ultimately lose access to the US banking system (and probably the banking systems of a lot of other rich countries). I'd say that it's not just "heavier regulation". That makes it sound like it's just hoops to jump through or delays in the processing. A big part of it is that banks/money transmitters/fintech need to know who their customers are in a lot of countries. It's not just random stuff like, "they need to fill out these forms, file these reports each week, etc." If you're trying to run an anonymous exchange and possibly profit off money laundering, anonymously transmitting payments for prohibited activities, etc. you don't want a system that requires you to know your customers. You just want to be, "it's crypto - things come in, things go out and it's all anonymous!" There are companies like Coinbase which are licensed in the US, but Coinbase probably isn't where you'd want to go if you were looking to launder money. If you're looking to launder money, you don't want to go with a company that has been working with regulators. It would be relatively easy for Coinbase to give you USD, but Coinbase also knows who you are and would comply with warrants. If you're a crypto company that doesn't want to comply with authorities, know your customers, etc. then it might be hard for you to give someone USD. However, it's really easy to give someone USDT - you just put it in your ledger. I can keep a sheet of paper and say "I owe X 100 MyDollars" and say "Every my dollar is backed by a USD in some form". Even if I'm 100% telling the truth, it doesn't mean that I can give you the USD I have in my pocked if you give me a MyDollar. Maybe you don't live near me so I can't give it to you. If I'm cut off from the banking system, I can't just send it to you electronically. I think the point of "they're fully backed" is the idea that someone who does have access to the banking system will give you 1 USD (or close to it) for 1 USDT even if Bitfinex can't. One could imagine a market where someone would give you $0.90 for 1 USDT and then that person would go to Bitfinex and get the actual USD that backed it (assuming it was actually fully backed). The idea being that Bitfinex might not be able to give you an ACH or wire transfer of your USD, but if you showed up at a bank in Country X with a suitcase, you could get cash. I'd recommend the post from patio11 more than this comment. I guess the tl;dr is that it's not just heavier regulation, but that the US and many other governments don't allow anonymous money transfers. Banks and fintech need to know their customers so places like Bitfinex get cut off from the system. USDT is an attempt to offer people a way to turn something into a dollar-like thing without having access to the banking system.

dvh 5y ago

Whitepaper?

Marazan 5y ago
I'll publish soon. I think my real invovation for ScamStableCoin is that I won't actually ever let anyone convert ScamStableCoin to USD. That way my lack of actual cash will never be exposed.

jqpabc123 5y ago

Wait? Are you saying that ScamStableCoin is a "scam"? I think you just don't really understand the ScamStableCoin market. I know lots of people making money with ScamStableCoin.