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Of note, Tether values their reserves at redemption value. So if they have a loan to an insolvent company that trades at 25 cents to the dollar, Tether’s attes
by graeme 5y ago
Of note, Tether values their reserves at redemption value.
So if they have a loan to an insolvent company that trades at 25 cents to the dollar, Tether’s attestation values it at 100%.
See emphasis of matter, page 2 of their attestation
https://tether.to/wp-content/uploads/2021/08/tether_assuranceconsolidated_reserves_report_2021-06-30.pdf https://tether.to/wp-content/uploads/2021/08/tether_assuranc...
- FormerBandmate 5y agoThat’s such an insane, non-GAAP way to value fixed income securities. Almost boggles the mind
- graeme 5y agoIt really is. I wish more was made of it. No one has asked Tether to comment publicly, that I know of. It’s a loophole you can drive a truck through.
- Asparagirl 5y agowen mark-to-market?
- darawk 5y agoIt's a little more complicated than that: > Management’s accounting policy is to value assets and liabilities at historic cost plus any accrued interest and less any expected credit losses, or otherwise the redemption value where applicable. The realisable value of these assets and liabilities could be materially different if any key custodian or counterparty incurs credit losses or substantial illiquidity. At least in principle they are supposed to mark down "expected credit losses". It would be nice if they spelled out what that means a little more, though.
- graeme 5y agoNo, there’s a key OR in there. Two options: 1. Cost + interest - credit losses, OR 2. Redemption value Seemingly they are free to choose either