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> Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period fro

> Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period from 2016 through 2018 With how shady they acted I would have assumed that number was 0%. A bit shocked it wasn't a total scam to be honest, even if they did misrepresent that it was in fiat not risky investment assets.

vmception 5y ago
CFTC/FDIC/OCC/NYAG/Congress/all bank users: Collateral requirements for everything we regulate are like 4%. You need $4000 to trade with $100,000. Also everyone: omg tether was not 100% collateralized by fiat dollars at all times, sometimes, but also not at all times! I just feel like the arguments are weak. Tether was controversial because it was centralized at all and requires ongoing trust and its collateral is not verifiable except by the state's subpoenas. Then the argument moved to something much more .... tolerant of their existence but requires completely ignoring how all the rest of finance works to make it an issue with Tether. Strange. At this point I can acknowledge that the market can bear it. Tether, like everything non-crypto, are vulnerable to bank runs, and that works. If people actually wanted fiat, then Tether could be in trouble. But Tether users do not want fiat and redemptions barely occur. People don't want to accept the reality that Tether actually works as stated. Like if you just assume it works as described, using the investigations of multiple US agencies, then it makes sense! Tethers are created when people deposit fiat on Bitfinex, deposit directly with the Tether issuer, sometimes by Tether issuer when Tether trades at a premium (in exchange for other cryptos that are not dollars), and sometimes arbitrarily. But its better to assume the first 3 everytime a big tether print occurs, than to always assume the last one, because the formers are what all the US regulators and enforcement agencies have also found to have occurred most of the time. Not that hard. It is a trusted system, like everything else we are used to. They change their contract to reflect any deviation from 100% usd collateralization and that's not that controversial. Fractional systems also work. Ideology doesn't make something else suddenly not work.
- randomhodler84 5y ago
  Yeah! And the reserve requirements were suspended during the pandemic for banks anyway. Tether is, at least on chain, completely open and auditable. You can trace every token, in ways the global banking system is opaque. A fine, some regs and compliance, and capital still flows.
  - deleted 5y ago
    [deleted]
- roywiggins 5y ago
  > Also everyone: omg tether was not 100% collateralized by fiat dollars at all times, sometimes, but also not at all times! The key point is that it wasn't fully backed and Tether represented that it was: "Tether misrepresented to customers and the market that Tether maintained sufficient U.S. dollar reserves to back every USDT in circulation with the “equivalent amount of corresponding fiat currency” held by Tether and “safely deposited” in Tether’s bank accounts. In fact Tether reserves were not “fully-backed” the majority of the time." Tether can either do a sort of fractional banking or not, but what they're getting fined for is lying about it.
  - vmception 5y ago
    Yes. To me, its more like they leaned into what the assumptions about them because they couldn't shake the assumptions. As in, at first they were doing what they said and people complained anyway, so then they did what people were complaining about because it was a conveniently awesome amount of money and people kept complaining, so then they changed their legal contract to reflect that they can be what people complain about, the state investigated and found the period of time where they did what people complained about and had not updated their legal contract yet.
    - lvs 5y ago
      Leaned into assumptions? Come on. It's just called lying. End of story.
ethbr0 5y ago
Well, it'd be pretty easy to partially back tether. Create new tether, declare 1:1 fiat, sell new tether for 1 fiat each. It only really becomes a problem if they're trying to be completely backed, as new tether isn't an option then.
legulere 5y ago
The longer you keep a scam running the more you can make out of it.

vmception 5y ago

CFTC/FDIC/OCC/NYAG/Congress/all bank users: Collateral requirements for everything we regulate are like 4%. You need $4000 to trade with $100,000. Also everyone: omg tether was not 100% collateralized by fiat dollars at all times, sometimes, but also not at all times! I just feel like the arguments are weak. Tether was controversial because it was centralized at all and requires ongoing trust and its collateral is not verifiable except by the state's subpoenas. Then the argument moved to something much more .... tolerant of their existence but requires completely ignoring how all the rest of finance works to make it an issue with Tether. Strange. At this point I can acknowledge that the market can bear it. Tether, like everything non-crypto, are vulnerable to bank runs, and that works. If people actually wanted fiat, then Tether could be in trouble. But Tether users do not want fiat and redemptions barely occur. People don't want to accept the reality that Tether actually works as stated. Like if you just assume it works as described, using the investigations of multiple US agencies, then it makes sense! Tethers are created when people deposit fiat on Bitfinex, deposit directly with the Tether issuer, sometimes by Tether issuer when Tether trades at a premium (in exchange for other cryptos that are not dollars), and sometimes arbitrarily. But its better to assume the first 3 everytime a big tether print occurs, than to always assume the last one, because the formers are what all the US regulators and enforcement agencies have also found to have occurred most of the time. Not that hard. It is a trusted system, like everything else we are used to. They change their contract to reflect any deviation from 100% usd collateralization and that's not that controversial. Fractional systems also work. Ideology doesn't make something else suddenly not work.

randomhodler84 5y ago
Yeah! And the reserve requirements were suspended during the pandemic for banks anyway. Tether is, at least on chain, completely open and auditable. You can trace every token, in ways the global banking system is opaque. A fine, some regs and compliance, and capital still flows.
- deleted 5y ago
  [deleted]
roywiggins 5y ago
> Also everyone: omg tether was not 100% collateralized by fiat dollars at all times, sometimes, but also not at all times! The key point is that it wasn't fully backed and Tether represented that it was: "Tether misrepresented to customers and the market that Tether maintained sufficient U.S. dollar reserves to back every USDT in circulation with the “equivalent amount of corresponding fiat currency” held by Tether and “safely deposited” in Tether’s bank accounts. In fact Tether reserves were not “fully-backed” the majority of the time." Tether can either do a sort of fractional banking or not, but what they're getting fined for is lying about it.
- vmception 5y ago
  Yes. To me, its more like they leaned into what the assumptions about them because they couldn't shake the assumptions. As in, at first they were doing what they said and people complained anyway, so then they did what people were complaining about because it was a conveniently awesome amount of money and people kept complaining, so then they changed their legal contract to reflect that they can be what people complain about, the state investigated and found the period of time where they did what people complained about and had not updated their legal contract yet.
  - lvs 5y ago
    Leaned into assumptions? Come on. It's just called lying. End of story.

ethbr0 5y ago

Well, it'd be pretty easy to partially back tether. Create new tether, declare 1:1 fiat, sell new tether for 1 fiat each. It only really becomes a problem if they're trying to be completely backed, as new tether isn't an option then.

legulere 5y ago

The longer you keep a scam running the more you can make out of it.