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>There is nothing which proves that Tether actually is backed by anything Also, there is nothing which proves that Tether actually isn't backed by anything. I

>There is nothing which proves that Tether actually is backed by anything Also, there is nothing which proves that Tether actually isn't backed by anything. I see a lot of people jumping to conclusions about a topic they are self admittedly ignorant about. Perhaps wait for the DOJ to do their jobs if you don't have insider knowledge. In response to -dsr's sarcasm below (rate limit), I've got a bit of my own. "I've run a profitable business for years and haven't committed fraud during the time I spent in an unregulated environment. Now that regulators are nearing my doorstep, it's the perfect time to start committing fraud." /s

Marazan 5y ago
The NYAG showed that Tether was not fully backed.
- mikeblackson 5y ago
  >The NYAG showed that Tether was not fully backed. In 2017, when they were busy securing other banking partners due to accounts being shutdown. I consider this a gap due to growing pains, as did the NYAG. How would you shutdown Tether temporarily (2-3 months) if a bank ends a relationship?
  - Majromax 5y ago
    > How would you shutdown Tether temporarily (2-3 months) if a bank ends a relationship? By refusing to take deposits for new Tether, and by shutting down redemptions if necessary while the banking relationship is sorted out. Tether doesn't exist ex nihilo; it requires active management to issue and redeem coins. If it ever cannot live up to its "fully backed" claim, then continuing to operate under a pretense is fraudulent.
    - mikeblackson 5y ago
      >By refusing to take deposits for new Tether, and by shutting down redemptions if necessary while the banking relationship is sorted out. I agree and expect that is the lesson the $18M fine taught them. The key point is, they had a legitimate reason for under-collateralizing during the biggest bull run in crypto history at that point. 2014-2017 was the perfect period to begin fraudulent activity if they were really interested in it. I guess the question is, what is the best time to commit fraud in the crypto space, earlier or later (during-post increased regulatory scrutiny)?
      - user-the-name 5y ago
        Why do you see clear evidence that the company directly lied and acted fraudulently, and immediately assume that this must be the one single time they have ever done so? When I see that a company founded by criminals has lied, I tend to assume that they will be lying again. I think that is a fairly safe bet.
      - Marazan 5y ago
        They siphoned money from Tether to fund Bitfinex. This was while they did have a banking relationship. What was the exscuse then?
      - jfrunyon 5y ago
        You're assuming that they began with the plan to commit fraud, rather than just failing at their business and then lying to cover it up, which is far more likely.
dsr_ 5y ago
As you undoubtedly remember, the universe popped into existence, complete with faked history of all space-time events, seventeen minutes ago. There's no evidence against it.
EpicEng 5y ago
>Also, there is nothing which proves that Tether actually isn't backed by anything. There's nothing proving that the boogyman doesn't exist either.
jcranmer 5y ago
> Also, there is nothing which proves that Tether actually isn't backed by anything. There is a lot of circumstantial evidence though. To wit: * Tether was previously caught lying, in a manner that is attuned to how many big frauds start (you hit a small road bump, so you lie to cover up the road bump, figuring you'll be able to make up the shortfall before too long. But now your lying projections are going faster than your ability to catch up, so what was originally a "small" lie is now a "big" lie). Tether had had the cash, until it was stolen from them, and they started lying to pretend that it wasn't stolen. * Notably, Tether has yet to provide any audited statement of their claimed finances, in over 4 years. Even the attestations that they have come out with don't actually provide much in the way of reassurance. * Their claimed asset breakdown, the closest thing any of us have to being able to being able to validate their claims, is presented in the form of 2 pie charts with vague labels, one of which is so bad that no one knows what it's supposed to mean ("reverse repo notes"). * Doing the math in the above point, they claim to be one of the largest consumers of commercial paper. They haven't said whose commercial paper they're buying, and no one has reported transacting with them. Supposedly this is for privacy, but it is the standard in the entire industry to just list all of your holdings for transparency's sake [1]. * Also, Tether has increased its issuance to the tune of several billion dollars a month. That's the kind of extraordinary claim that requires extraordinary evidence to back it up. [1] Unless you're Bernie Madoff and you're promising awesome financial returns with your secretive trading strategy. Except it also turned out that said strategy was a literal Ponzi scheme. Note that "we're not telling you what we're investing in" is generally one of the red flags for a fraud.
- mikeblackson 5y ago
  >Tether had had the cash, until it was stolen from them, and they started lying to pretend that it wasn't stolen. My understanding is funds in a bank account were seized and the account closed. Describing the shortfall that followed, while they tried to recover said funds, as fraud, is a tremendous mischaracterization. Did somebody at Bloomberg have a BTC short position blowup? They have a long history of publishing FUD to manipulate markets in their favor. I hear people are still looking for the mythical SuperMicro "spy chips"... lol
jfrunyon 5y ago
We have repeatedly seen that they're not backed by what they say they are backed by. I don't think anyone is saying that Tether has $0 - that would be stupid, if nothing else they've probably got cash "in transit". But if they aren't 100% backed - even if they're 99% backed - that's a BIG problem. You know who gets to give out money-tokens without actually having the money? Banks, and only banks. You know why? Because they're subject to a metric fuckton of regulations that Tether are not subject to, and because (in the US anyway, with limits, blabla) the government guarantees that customers won't lose money if they fail which they do not do with Tether.

Marazan 5y ago

The NYAG showed that Tether was not fully backed.

mikeblackson 5y ago
>The NYAG showed that Tether was not fully backed. In 2017, when they were busy securing other banking partners due to accounts being shutdown. I consider this a gap due to growing pains, as did the NYAG. How would you shutdown Tether temporarily (2-3 months) if a bank ends a relationship?
- Majromax 5y ago
  > How would you shutdown Tether temporarily (2-3 months) if a bank ends a relationship? By refusing to take deposits for new Tether, and by shutting down redemptions if necessary while the banking relationship is sorted out. Tether doesn't exist ex nihilo; it requires active management to issue and redeem coins. If it ever cannot live up to its "fully backed" claim, then continuing to operate under a pretense is fraudulent.
  - mikeblackson 5y ago
    >By refusing to take deposits for new Tether, and by shutting down redemptions if necessary while the banking relationship is sorted out. I agree and expect that is the lesson the $18M fine taught them. The key point is, they had a legitimate reason for under-collateralizing during the biggest bull run in crypto history at that point. 2014-2017 was the perfect period to begin fraudulent activity if they were really interested in it. I guess the question is, what is the best time to commit fraud in the crypto space, earlier or later (during-post increased regulatory scrutiny)?
    - user-the-name 5y ago
      Why do you see clear evidence that the company directly lied and acted fraudulently, and immediately assume that this must be the one single time they have ever done so? When I see that a company founded by criminals has lied, I tend to assume that they will be lying again. I think that is a fairly safe bet.
    - Marazan 5y ago
      They siphoned money from Tether to fund Bitfinex. This was while they did have a banking relationship. What was the exscuse then?
    - jfrunyon 5y ago
      You're assuming that they began with the plan to commit fraud, rather than just failing at their business and then lying to cover it up, which is far more likely.

dsr_ 5y ago

As you undoubtedly remember, the universe popped into existence, complete with faked history of all space-time events, seventeen minutes ago. There's no evidence against it.

EpicEng 5y ago

>Also, there is nothing which proves that Tether actually isn't backed by anything. There's nothing proving that the boogyman doesn't exist either.

jcranmer 5y ago

> Also, there is nothing which proves that Tether actually isn't backed by anything. There is a lot of circumstantial evidence though. To wit: * Tether was previously caught lying, in a manner that is attuned to how many big frauds start (you hit a small road bump, so you lie to cover up the road bump, figuring you'll be able to make up the shortfall before too long. But now your lying projections are going faster than your ability to catch up, so what was originally a "small" lie is now a "big" lie). Tether had had the cash, until it was stolen from them, and they started lying to pretend that it wasn't stolen. * Notably, Tether has yet to provide any audited statement of their claimed finances, in over 4 years. Even the attestations that they have come out with don't actually provide much in the way of reassurance. * Their claimed asset breakdown, the closest thing any of us have to being able to being able to validate their claims, is presented in the form of 2 pie charts with vague labels, one of which is so bad that no one knows what it's supposed to mean ("reverse repo notes"). * Doing the math in the above point, they claim to be one of the largest consumers of commercial paper. They haven't said whose commercial paper they're buying, and no one has reported transacting with them. Supposedly this is for privacy, but it is the standard in the entire industry to just list all of your holdings for transparency's sake [1]. * Also, Tether has increased its issuance to the tune of several billion dollars a month. That's the kind of extraordinary claim that requires extraordinary evidence to back it up. [1] Unless you're Bernie Madoff and you're promising awesome financial returns with your secretive trading strategy. Except it also turned out that said strategy was a literal Ponzi scheme. Note that "we're not telling you what we're investing in" is generally one of the red flags for a fraud.

mikeblackson 5y ago
>Tether had had the cash, until it was stolen from them, and they started lying to pretend that it wasn't stolen. My understanding is funds in a bank account were seized and the account closed. Describing the shortfall that followed, while they tried to recover said funds, as fraud, is a tremendous mischaracterization. Did somebody at Bloomberg have a BTC short position blowup? They have a long history of publishing FUD to manipulate markets in their favor. I hear people are still looking for the mythical SuperMicro "spy chips"... lol

jfrunyon 5y ago

We have repeatedly seen that they're not backed by what they say they are backed by. I don't think anyone is saying that Tether has $0 - that would be stupid, if nothing else they've probably got cash "in transit". But if they aren't 100% backed - even if they're 99% backed - that's a BIG problem. You know who gets to give out money-tokens without actually having the money? Banks, and only banks. You know why? Because they're subject to a metric fuckton of regulations that Tether are not subject to, and because (in the US anyway, with limits, blabla) the government guarantees that customers won't lose money if they fail which they do not do with Tether.