5 ms·

I have thought tether was a scam for years. I am very deep in the industry. I now think tether is neither a scam nor a Ponzi scheme in the classic sense of the

I have thought tether was a scam for years. I am very deep in the industry. I now think tether is neither a scam nor a Ponzi scheme in the classic sense of the word (they’re not borrowing from Peter to pay Paul). What tether is doing is reframing what 1:1 collateralization means. Typically when we think of a fully collateralized stablecoin, we think a 1:1 mapping of dollars to synthetics. Tether is backed by ‘dollars or other dollar equivalent assets’. Whether ‘other dollar equivalent assets’ will actually add up to dollars in the event of a crash is an exercise for the reader. As for these current charges, they definitely did not have the dollars they said they did once upon a time. They definitely have a ton of money now but whether that’s the right ton of money in the event the market moves a lot is anyone’s guess. For now, the seemingly unstoppable rampage that is tether continues on… Edit: just to be clear I don’t hold tether and don’t make use of the currency personally but I understand why others do.

ceejayoz 5y ago
> What tether is doing is reframing what 1:1 collateralization means. Which is, to be clear, fraudulent. Their website long claimed that for every 1 USDT, that they held $1 in USD. This claim fell apart years ago, as did their claim to regular audits (they still never completed one). It may indeed be that they are collateralized now, but they got there via fraud.
- JumpCrisscross 5y ago
  > It may indeed be that they are collateralized now, but they got there via fraud They claim to be collateralized with commercial paper which, without further information, is worthless. They could print a billion Tethers, sell them to a buddy for an IOU, and be "collateralized" by that definition.
jcranmer 5y ago
> What tether is doing is reframing what 1:1 collateralization means. Or in simpler terms, Tether is a crypto money market fund, combining the convenience of money market funds with the transparency of a Ponzi scheme. If you read even the little transparency they do provide very carefully, it doesn't exclude the possibility that they're lying through their teeth about their backing: the commercial paper is described as being valued at face value, which, combined with the extreme reluctance to even hint out which industry the commercial paper is in, is not reassuring at all.

ceejayoz 5y ago

> What tether is doing is reframing what 1:1 collateralization means. Which is, to be clear, fraudulent. Their website long claimed that for every 1 USDT, that they held $1 in USD. This claim fell apart years ago, as did their claim to regular audits (they still never completed one). It may indeed be that they are collateralized now, but they got there via fraud.

JumpCrisscross 5y ago
> It may indeed be that they are collateralized now, but they got there via fraud They claim to be collateralized with commercial paper which, without further information, is worthless. They could print a billion Tethers, sell them to a buddy for an IOU, and be "collateralized" by that definition.

jcranmer 5y ago

> What tether is doing is reframing what 1:1 collateralization means. Or in simpler terms, Tether is a crypto money market fund, combining the convenience of money market funds with the transparency of a Ponzi scheme. If you read even the little transparency they do provide very carefully, it doesn't exclude the possibility that they're lying through their teeth about their backing: the commercial paper is described as being valued at face value, which, combined with the extreme reluctance to even hint out which industry the commercial paper is in, is not reassuring at all.