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> Now that there's strong evidence the commercial paper is just fake money Tether is issuing loans of USDT against collateral in the form of crypto and calling

> Now that there's strong evidence the commercial paper is just fake money Tether is issuing loans of USDT against collateral in the form of crypto and calling that "commercial paper". The whole idea that anyone would be sending $70B of actual USD to Tether is now "fucking ludicrous". But the idea that anyone is selling $70B of crypto to Tether during a massive bull market in crypto (and it should be now quite apparent that this is still a bull market) is also "fucking ludicrous". There's no counterparty that massively stupid for either side of those trades. What makes sense is that people sitting on large cold wallets of BTC are using that as collateral to get USDT loans. They then trade it between themselves and any retail "investors" on a USDT exchange. The loans are USD denominated which provides an incentive to maintain the USDT-USD peg. Since they're loans against collateral and aren't redeemable that removes a lot of the risk of a run on the bank. It is still crypto-backed wildcat banking script, which won't end well. I don't understand why so many people who are Tether-skeptics believe them that their commercial paper is something the banking system would regard as commercial paper. And try graphing Tether issuance denominated in BTC rather than $USD and it is much more stable at around 1M BTC.

wesapien 5y ago
We need to have crypto death penalty for scams. Ya know, a firing squad.
graeme 5y ago
Would those loans be called commercial paper by any accountant’s definition? We have two data points: * Moore Cayman, the auditing firm doing Tether’s attestations, says they have commercial paper. They risk penalties for blatant lies * Bloomberg reporter Zeke Faux say Tether’s accounts and said they have “a lot” of Chinese commercial paper The massive loophole in the attestation regarding CP is Tether management policy is to value it at redemption value, even if the CP trades below par. So, they could buy the worst quality CP, for say $5 billion, with a redemption value of $30 billion, and the accountants would say “yup, $30 billion of CP per management policy” That seems easier than a pure lie. NYAG has also seen the statements for recent months. I suspect a total lie would carry more risk than the blatant misleadingly accurate statements I outlined above. Some of the paper could also be to crypto exchanges, collateralized the way you say. Then it would technically be CP. Tether has denied taking CP from affiliated entities but they use a narrow definition. Only majority ownership counts as affiliated I believe, since they consider their loans to Celsius non-affiliated despite part owning celsius. Also those Celsius loans are USDT denominated with crypto collateral.
- JumpCrisscross 5y ago
  > seems easier than a pure lie Aren't Tether and Bitfinex firms with a documented track record of repeatedly telling "pure" lies?
  - graeme 5y ago
    Yes, but not through accountants. Recall one incident where they transferred in a few hundred million to a formerly empty account. Moore Cayman accounting accurately reported they say money in the account. Then the money was transferred out after accountants looked at it. Much more complex than just lying. They used the accountant’s true report to cover the truth.
- lamontcg 5y ago
  > Would those loans be called commercial paper by any accountant’s definition? We're talking about crypto here, blantant lying is pretty rampant, and Tether has clearly blatantly lied in the past. > They risk penalties for blatant lies If the amount they're being paid for those attestations exceeds the risk then it makes sense to blatantly lie. They are also not audits, but attestations, so Tether can be blatantly lying to them. > Also those Celsius loans are USDT denominated with crypto collateral. And that is it right there.

wesapien 5y ago

We need to have crypto death penalty for scams. Ya know, a firing squad.

graeme 5y ago

Would those loans be called commercial paper by any accountant’s definition? We have two data points: * Moore Cayman, the auditing firm doing Tether’s attestations, says they have commercial paper. They risk penalties for blatant lies * Bloomberg reporter Zeke Faux say Tether’s accounts and said they have “a lot” of Chinese commercial paper The massive loophole in the attestation regarding CP is Tether management policy is to value it at redemption value, even if the CP trades below par. So, they could buy the worst quality CP, for say $5 billion, with a redemption value of $30 billion, and the accountants would say “yup, $30 billion of CP per management policy” That seems easier than a pure lie. NYAG has also seen the statements for recent months. I suspect a total lie would carry more risk than the blatant misleadingly accurate statements I outlined above. Some of the paper could also be to crypto exchanges, collateralized the way you say. Then it would technically be CP. Tether has denied taking CP from affiliated entities but they use a narrow definition. Only majority ownership counts as affiliated I believe, since they consider their loans to Celsius non-affiliated despite part owning celsius. Also those Celsius loans are USDT denominated with crypto collateral.

JumpCrisscross 5y ago
> seems easier than a pure lie Aren't Tether and Bitfinex firms with a documented track record of repeatedly telling "pure" lies?
- graeme 5y ago
  Yes, but not through accountants. Recall one incident where they transferred in a few hundred million to a formerly empty account. Moore Cayman accounting accurately reported they say money in the account. Then the money was transferred out after accountants looked at it. Much more complex than just lying. They used the accountant’s true report to cover the truth.
lamontcg 5y ago
> Would those loans be called commercial paper by any accountant’s definition? We're talking about crypto here, blantant lying is pretty rampant, and Tether has clearly blatantly lied in the past. > They risk penalties for blatant lies If the amount they're being paid for those attestations exceeds the risk then it makes sense to blatantly lie. They are also not audits, but attestations, so Tether can be blatantly lying to them. > Also those Celsius loans are USDT denominated with crypto collateral. And that is it right there.