5 ms·
It’s not a ponzi per se. My guess is that they take the money from exchanges, mint more tokens at no cost to themselves and buy a bunch of junk bonds with high
by redisman 5y ago
It’s not a ponzi per se. My guess is that they take the money from exchanges, mint more tokens at no cost to themselves and buy a bunch of junk bonds with high yields and pocket the 8% or whatever they make in those. Given their market cap that is a lot of money.
They always use precise wording about their holdings “commercial paper”. I’m guessing it’s not US treasury bonds equivalents or they would say that explicitly
- carnitine 5y agoCommercial paper is not junk bonds, and is pretty standard for a money market fund to hold. It’s a pretty specific thing and doesn’t really deserve scare quotes.
- michaelt 5y agoPerhaps the "scare quotes" are because Tether can't get anyone reliable to certify their "commercial paper" actually exists.
- raducu 5y agoIt is a ponzi/illegal bank scheme the moment they mint more tokens than they have liquid assets. Could they come clean, will there be a bank/USDT run? Depends of how much USDT real clients hold and how much USD they hold, and how likely it is that EVERYONE wants to convert USDT back to USD -- it would take a very catastrophic collapse of cryptos for that to happen. USDT has intrinsic value for money laundering, so even if all other cryptos would go to 0, not everyone would want their USDT converted to cash. While I don't like USDT, and I don't think that's the case --someone printing USDT could have already amassed a great fortune, and if he was benevolent enough, could probably redeem all USDT of all the real people holding USDT.
- thebean11 5y agoPonzi has a pretty specific meaning..illegal banking scheme sure.
- jimmydorry 5y agoAbsolutely an illegal banking scheme