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Indeed there were some interesting pieces in that. They would argue that the composition showed that they had the required reserves, others would argue it showe

Indeed there were some interesting pieces in that. They would argue that the composition showed that they had the required reserves, others would argue it showed they were insolvent :) As tether specifies the right to repay any redeemed tokens in securities, assuming the securities they hold actually keep their value, it seems like they'd be fine From https://tether.to/legal/ https://tether.to/legal/ "Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves." Of course the $60b question is, what are all the non-cash reserves they have, and how much are they worth.

notwedtm 5y ago
It's all broken down in the video. A very large chunk is on "commercial paper" which is unsecured loans to...?
- raesene9 5y ago
  Indeed that's the question to... it's a huge variance depending on who it's to, the terms of the loans and the interest rates received. No Basel II capital adequacy requirements here :)
ethbr0 5y ago
The broader historical observation is: given a large amount of money, a requirement to keep it continuously invested, and a cloak behind which to operate, what financial institution in the history of humanity has made good choices? At best, they're choosing investments incompetently. (Chance Tether's team is equivalent to professionals at major banks?) At worst, they're choosing investments to maximize personal gain. Or to put it another way, what sort of company do you think is knocking on Tether's door, offering a good deal in exchange for a few billion "worth" of notes? It ain't Coke.
- raesene9 5y ago
  Yep it definitely seems probable that there's risky behaviour at the least.
- qeternity 5y ago
  > At worst, they're choosing investments to maximize personal gain. At worst, they don't have any investments.
  - ethbr0 5y ago
    It's possible, but given a choice between "flagrantly lying to the New York AG who just investigated you" vs "buying cheap debt no one else would touch and then overvaluing it, because you aren't regulated", the latter seems like a less legally perilous way of keeping things going.
    - qeternity 5y ago
      Yes, that might be more likely. I was just framing things "at worst". Deltec, the bank that Tether bought, has a desk specializing in zombie debt, so it's entirely possible they have loads of debt bought for pennies on the dollar, that they have through accounting/market shenanigans recognized at par as their "commercial paper".
      - ethbr0 5y ago
        I mean... technically they're completely unregulated, right? So they don't even have to perform shenanigans. They can just buy $1 par debt at $0.01 from Bob's Used Cars and value / declare it at $1. It's a super shady move, and would shake confidence if known, but would seem legally defensible. ("We valued it at a fair price. It turned out we were wrong and overvalued it. Oops.") They could probably declare it at >$1 if they really wanted to, but why do hard fraud instead of easy fraud?
        qeternity 5y ago

notwedtm 5y ago

It's all broken down in the video. A very large chunk is on "commercial paper" which is unsecured loans to...?

raesene9 5y ago
Indeed that's the question to... it's a huge variance depending on who it's to, the terms of the loans and the interest rates received. No Basel II capital adequacy requirements here :)

ethbr0 5y ago

The broader historical observation is: given a large amount of money, a requirement to keep it continuously invested, and a cloak behind which to operate, what financial institution in the history of humanity has made good choices? At best, they're choosing investments incompetently. (Chance Tether's team is equivalent to professionals at major banks?) At worst, they're choosing investments to maximize personal gain. Or to put it another way, what sort of company do you think is knocking on Tether's door, offering a good deal in exchange for a few billion "worth" of notes? It ain't Coke.

raesene9 5y ago
Yep it definitely seems probable that there's risky behaviour at the least.
qeternity 5y ago
> At worst, they're choosing investments to maximize personal gain. At worst, they don't have any investments.
- ethbr0 5y ago
  It's possible, but given a choice between "flagrantly lying to the New York AG who just investigated you" vs "buying cheap debt no one else would touch and then overvaluing it, because you aren't regulated", the latter seems like a less legally perilous way of keeping things going.
  - qeternity 5y ago
    Yes, that might be more likely. I was just framing things "at worst". Deltec, the bank that Tether bought, has a desk specializing in zombie debt, so it's entirely possible they have loads of debt bought for pennies on the dollar, that they have through accounting/market shenanigans recognized at par as their "commercial paper".
    - ethbr0 5y ago
      I mean... technically they're completely unregulated, right? So they don't even have to perform shenanigans. They can just buy $1 par debt at $0.01 from Bob's Used Cars and value / declare it at $1. It's a super shady move, and would shake confidence if known, but would seem legally defensible. ("We valued it at a fair price. It turned out we were wrong and overvalued it. Oops.") They could probably declare it at >$1 if they really wanted to, but why do hard fraud instead of easy fraud?
      - qeternity 5y ago