5 ms·

Edit: Isn't it a huge red flag that Tether doesn't make any money off transaction fees? Their daily volume is almost 2x that of BTC. They could fully support th

Edit: Isn't it a huge red flag that Tether doesn't make any money off transaction fees? Their daily volume is almost 2x that of BTC. They could fully support the company with a tiny transaction fee and avoid all the regulatory uncertainty/FUD. How does tether make money (aside from potential fraud)? Is there a transaction fee that supports the people and cost of running tether (the company)?

vgeek 5y ago
The float from _allegedly_ having $xx,xxx,xxx,xxx in assets.
- gjsman-1000 5y ago
  If you had literally more than $5 billion per employee under management, swiping a few billion because what are the odds of a bank run becomes extremely tempting…
shawabawa3 5y ago
They invest the funds backing the Tether in dubious investments (mostly short term loans to unknown companies, but some precious metals, bonds, funds, and even some crypto (all according to them, but completely unaudited)
- Clewza313 5y ago
  The obvious source of commercial paper is that they sell Tethers at a steep discount to an exchange they're buddy-buddy with, and the exchange gives them an IOU in return. Hey presto, "commercial paper" backing the Tethers.
runbathtime 5y ago
All of those reserves are technically theirs, they do not belong to token holders.
gruez 5y ago
If I were running it as a 100% legal/safe operation I'd invest the balance in short term treasuries. If you multiply tether's liabilities ($61.9B) by the current 1 year treasury rate (0.09%), you get $55.7M, which seems like plenty of money to run such an operation.
- nateberkopec 5y ago
  How much of a chunk of the 1-year treasury market is $61.9B? Can't figure out how to look that up. Seems like it could be a decent business if it was legit.
  - deleted 5y ago
    [deleted]
  - deleted 5y ago
    [deleted]
  - CrazyStat 5y ago
    As of the latest published data (June 2021) there are $4.275 trillion in outstanding marketable Treasury bills (<1 year maturation) [1]. [1] https://www.treasurydirect.gov/govt/reports/pd/mspd/2021/opdm062021.pdf https://www.treasurydirect.gov/govt/reports/pd/mspd/2021/opd...
- xenadu02 5y ago
  > If I were running it as a 100% legal/safe operation I'd invest the balance in short term treasuries. If you multiply tether's liabilities ($61.9B) by the current 1 year treasury rate (0.09%), you get $55.7M, which seems like plenty of money to run such an operation. If we're playing that game I'd do the same but invest in tax-free municipal bonds and the like which can currently earn 3-5%. That would earn you $1.86 billion on the low end. Keep staff & expenses low, pay everyone insane salaries (eg 5m per year is less than 100m given their staffing levels), and coast until acquisition. Everyone gets rich now and again later when you sell. That's what is so ridiculous about Tether... they have plenty of ways to go legit if they wanted to do so. Heck even if they were only spending half of every $ they took in to actually back the Tethers (and pocketed the other half) they could have invested in the US Stock market over the past four years to make up the difference, then presented public financials this year proving they have enough currency, bonds, stocks, and paper to fully back every Tether. They'd have pulled the same trick lots of big time crooks did and gone fully legit. The fact that they aren't doing that indicates they're either really stupid, really greedy, or both.
lottin 5y ago
They make a lot of money (potentially). They sell USDT tokens which cost nothing to produce for dollars. Then they take these dollars and invest them in various places. Holders of USDT tokens have no claim on the profits (unlike investors in money market funds) so the profits are all Tether's.
deleted 5y ago
[deleted]

vgeek 5y ago

The float from _allegedly_ having $xx,xxx,xxx,xxx in assets.

gjsman-1000 5y ago
If you had literally more than $5 billion per employee under management, swiping a few billion because what are the odds of a bank run becomes extremely tempting…

shawabawa3 5y ago

They invest the funds backing the Tether in dubious investments (mostly short term loans to unknown companies, but some precious metals, bonds, funds, and even some crypto (all according to them, but completely unaudited)

Clewza313 5y ago
The obvious source of commercial paper is that they sell Tethers at a steep discount to an exchange they're buddy-buddy with, and the exchange gives them an IOU in return. Hey presto, "commercial paper" backing the Tethers.

runbathtime 5y ago

All of those reserves are technically theirs, they do not belong to token holders.

gruez 5y ago

If I were running it as a 100% legal/safe operation I'd invest the balance in short term treasuries. If you multiply tether's liabilities ($61.9B) by the current 1 year treasury rate (0.09%), you get $55.7M, which seems like plenty of money to run such an operation.

nateberkopec 5y ago
How much of a chunk of the 1-year treasury market is $61.9B? Can't figure out how to look that up. Seems like it could be a decent business if it was legit.
- deleted 5y ago
  [deleted]
- deleted 5y ago
  [deleted]
- CrazyStat 5y ago
  As of the latest published data (June 2021) there are $4.275 trillion in outstanding marketable Treasury bills (<1 year maturation) [1]. [1] https://www.treasurydirect.gov/govt/reports/pd/mspd/2021/opdm062021.pdf https://www.treasurydirect.gov/govt/reports/pd/mspd/2021/opd...
xenadu02 5y ago
> If I were running it as a 100% legal/safe operation I'd invest the balance in short term treasuries. If you multiply tether's liabilities ($61.9B) by the current 1 year treasury rate (0.09%), you get $55.7M, which seems like plenty of money to run such an operation. If we're playing that game I'd do the same but invest in tax-free municipal bonds and the like which can currently earn 3-5%. That would earn you $1.86 billion on the low end. Keep staff & expenses low, pay everyone insane salaries (eg 5m per year is less than 100m given their staffing levels), and coast until acquisition. Everyone gets rich now and again later when you sell. That's what is so ridiculous about Tether... they have plenty of ways to go legit if they wanted to do so. Heck even if they were only spending half of every $ they took in to actually back the Tethers (and pocketed the other half) they could have invested in the US Stock market over the past four years to make up the difference, then presented public financials this year proving they have enough currency, bonds, stocks, and paper to fully back every Tether. They'd have pulled the same trick lots of big time crooks did and gone fully legit. The fact that they aren't doing that indicates they're either really stupid, really greedy, or both.

lottin 5y ago

They make a lot of money (potentially). They sell USDT tokens which cost nothing to produce for dollars. Then they take these dollars and invest them in various places. Holders of USDT tokens have no claim on the profits (unlike investors in money market funds) so the profits are all Tether's.

deleted 5y ago

[deleted]