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I don’t know think people are really engaging with the substance of what is being said here. What he’s saying is that stable coins are backed by funds in money
by Traster 5y ago
I don’t know think people are really engaging with the substance of what is being said here. What he’s saying is that stable coins are backed by funds in money markets. If there is a run on them it’s likely to crash the markets where the backing is because the tethers will have to liquidate fast. This is distinct from the fraud that’s alleged.
- qeternity 5y agoUnlike a money market, Tether has no obligation to redeem (per their own TOS) and to date nobody has ever provided proof that Tethers have been redeemed. Imho, it’s far more likely that Tether has very few assets backing their issuance and that a crypto implosion could spark contagion in other markets.
- yawaworht1978 5y agoThis is the point that is so hard to grasp for me. The exchanges offer tether, maybe they do not even pay tether for this. Is this correct? Nobody is buying tether from tether, but via third party exchanges? They "redeem" on exchanges?
- anon9001 5y agoUSDT has to be minted through the Tether Treasury. Exchanges cannot create USDT themselves. As I understand it, exchanges wire Tether large amounts of USD, and then Tether mints and equal amount of USDT and sends it back to exchanges.
- grey-area 5y agoThat's the story, what probably happens is Tether just prints larger amounts of USDT and sends that to the exchanges in exchange for 'commercial paper' or some other nonsense. Exchanges keep quiet because the whole ecosystem is rife with fraud and it's in their interest for crypto to constantly go to the moon. Then one day it all blows up, the fraud is exposed, and everything goes to zero.
- anon9001 5y agoI don't understand. Why would Tether send USDT if they didn't receive a true deposit of an equal amount of USD? That doesn't seem like it would help Tether at all.
- maxerickson 5y agoYeah, the scam would be if they aren't holding the deposits in reserve.
- CTDOCodebases 5y agoWhat if the USDT was loaned to the exchanges with interest not purchased outright? That way Tether prints USDT out of thin air and makes an income from a sum of money they largely don’t hold while the exchanges get to hold the bulk of fiat that gets deposited. The “commercial paper” could just be these loans owed by exchanges via a seperate shell company.
- jkhdigital 5y agoThis is almost certainly what is happening. Tether is just a central bank for shady crypto exchanges.
- anon9001 5y agoOh, that does make sense.
- cinquemb 5y ago> What if the USD was loaned to the _x_ counterparty who has _y_ cashflows with interest not purchased outright? How existing eurodollar system works… yet people constantly whine about USDT… lol
- CTDOCodebases 5y agoMaybe thats because a government that issues a currency also provides goods and services to its citizens and guarantees to those holding the currency in its banks. Tether is essentially crypto with all the properties of fiat except the good ones. A tool that allows people to trade and avoid triggering tax events in certain jurisdictions because it is still technically a cryptocurrency.
- FireBeyond 5y agoExcept if you believe Tether, exchanges are sending billions of dollars a week to Tether. In 2019, Tether's lifetime holdings were $2.1B and even that was not fully backed, and they're now printing nearly $4B a week. At this rate, and recognizing that comparing to revenue is not a strict apples-to-apples, this would put them on track by the end of 2021 within the top 20 largest companies in the world, eclipsing Alphabet, AT&T, even Samsung and Saudi Aramco. How anyone can say that with a straight face beggars belief.