5 ms·

Your point being? There are many, many ways for businesses to hide their insolvency, for years[1], or even decades[2]. [1] https://en.wikipedia.org/wiki/Wirec

Your point being? There are many, many ways for businesses to hide their insolvency, for years[1], or even decades[2]. [1] https://en.wikipedia.org/wiki/Wirecard#Scandal_and_insolvency https://en.wikipedia.org/wiki/Wirecard#Scandal_and_insolvenc... [2] https://en.wikipedia.org/wiki/Madoff_investment_scandal https://en.wikipedia.org/wiki/Madoff_investment_scandal

sumedh 5y ago
Read OP's point, he/she claimed that a 5% drop in the price of Bitcoin would make Tether literally insolvent, that did not happen when BTC went from 60K to 30K
- jfrunyon 5y ago
  Read MY point, please prove (or show any evidence) that it did not happen. You are claiming something that there is literally NO EVIDENCE of, while vast piles of available evidence points to the very opposite. Tether is, has been, and will continue to be insolvent. The only question is when people will notice.
  - sumedh 5y ago
    > Read MY point, please prove (or show any evidence) that it did not happen. It does not work like that, you are making the claim not me. You have to show the evidence.
    - jfrunyon 5y ago
      I did show the evidence. Again, read MY point. Goodbye, troll. (BTW, actually, you made the claim: https://news.ycombinator.com/item?id=28924975 https://news.ycombinator.com/item?id=28924975 )
      - sumedh 5y ago
        I did not make any claim, that is fact. You can check the BTC price yourself. Where is the evidence that Tether is insolvent?
        deleted 5y ago
        [deleted]
  - perl4ever 5y ago
    I don't believe in Tether, but on the other hand, my logic that insolvency should lead to immediate destruction means...I should believe they are solvent. I mean, that's basically it. Everything points to insolvency, but if it was, it would be history. Therefore, it must not be. Anyone who "notices" should make it all fall apart instantly. And loud mouth short sellers have certainly been wrong before.
    - jfrunyon 5y ago
      > my logic that insolvency should lead to immediate destruction But it doesn't. And it shouldn't. Businesses can and do survive insolvency (sometimes without the public ever knowing!). Insolvency just means that either liabilities are greater than assets, or cash flow does not meet expenditures. Either one can be a temporary situation which can be solved with things like bridge loans. (Or bankruptcy proceedings!) More nefariously, in the case of Tether, so long as they don't see redemptions exceeding their assets, they can continue to hide the fact that they are insolvent indefinitely.
      - perl4ever 5y ago
        You are equating liquidity with solvency, it seems to me. People don't seem to want to admit insolvency is inherently worse than illiquidity. It may be empirically true that entities can hide insolvency. But it doesn't seem logical for anyone who knows they are insolvent to ignore it. If they are solvent, sure, ignore the possibility of a bank run. Why should it start? But if they are insolvent, then someone will lose their money, and you and everyone else who finds out should want to not be last in line, which should make it collapse almost instantly, provided that the information leaks to any number of people. It seems sometimes like a lot of things are sort of like Wile E Coyote not falling until he looks down. Something can be widely known, but not believed until some catalyst makes it impossible to deny or rationalize or BS. Still, learning that something is insolvent ought not to follow that pattern too much, because again, it doesn't matter if everyone else in the world is ignoring the problem, if you are certain it exists, you need to act.
        5y ago
- jcranmer 5y ago
  Insolvent doesn't mean that the company folds up shop immediately. As the person you're replying to points out, it is possible (if unethical) to lie about being insolvent. And, as the other reply to my comment pointed out, there's a decent likelihood that Tether is actually already insolvent and is doing creative accounting to get the numbers to appear to come out to solvency. 100.2%--especially when a significant amount is in as volatile an asset as cryptocurrencies during an upswing--seems too precisely close to 100% to me to not involve some amount of shenanigans.
perl4ever 5y ago
Yes...but. People say this like it's a guarantee that insolvency won't catch up to them before the public panics, i.e. a bank run. I don't believe that's correct. Insolvency seems strictly worse than being solvent. As a depositor, if I don't see anyone else participating in a bank run, assuming the institution is solvent, then I have no reason to. But if I know they are insolvent, even if nobody else in the world does yet, I have an incentive to immediately start a bank run, unless, say, there are bankruptcy proceedings right away that freeze everything. It's the difference between musical chairs with one chair removed vs not.
- jfrunyon 5y ago
  I don't know why you think I've ever said or implied that Tether's insolvency is a good thing?

sumedh 5y ago

Read OP's point, he/she claimed that a 5% drop in the price of Bitcoin would make Tether literally insolvent, that did not happen when BTC went from 60K to 30K

jfrunyon 5y ago
Read MY point, please prove (or show any evidence) that it did not happen. You are claiming something that there is literally NO EVIDENCE of, while vast piles of available evidence points to the very opposite. Tether is, has been, and will continue to be insolvent. The only question is when people will notice.
- sumedh 5y ago
  > Read MY point, please prove (or show any evidence) that it did not happen. It does not work like that, you are making the claim not me. You have to show the evidence.
  - jfrunyon 5y ago
    I did show the evidence. Again, read MY point. Goodbye, troll. (BTW, actually, you made the claim: https://news.ycombinator.com/item?id=28924975 https://news.ycombinator.com/item?id=28924975 )
    - sumedh 5y ago
      I did not make any claim, that is fact. You can check the BTC price yourself. Where is the evidence that Tether is insolvent?
      - deleted 5y ago
        [deleted]
- perl4ever 5y ago
  I don't believe in Tether, but on the other hand, my logic that insolvency should lead to immediate destruction means...I should believe they are solvent. I mean, that's basically it. Everything points to insolvency, but if it was, it would be history. Therefore, it must not be. Anyone who "notices" should make it all fall apart instantly. And loud mouth short sellers have certainly been wrong before.
  - jfrunyon 5y ago
    > my logic that insolvency should lead to immediate destruction But it doesn't. And it shouldn't. Businesses can and do survive insolvency (sometimes without the public ever knowing!). Insolvency just means that either liabilities are greater than assets, or cash flow does not meet expenditures. Either one can be a temporary situation which can be solved with things like bridge loans. (Or bankruptcy proceedings!) More nefariously, in the case of Tether, so long as they don't see redemptions exceeding their assets, they can continue to hide the fact that they are insolvent indefinitely.
    - perl4ever 5y ago
      You are equating liquidity with solvency, it seems to me. People don't seem to want to admit insolvency is inherently worse than illiquidity. It may be empirically true that entities can hide insolvency. But it doesn't seem logical for anyone who knows they are insolvent to ignore it. If they are solvent, sure, ignore the possibility of a bank run. Why should it start? But if they are insolvent, then someone will lose their money, and you and everyone else who finds out should want to not be last in line, which should make it collapse almost instantly, provided that the information leaks to any number of people. It seems sometimes like a lot of things are sort of like Wile E Coyote not falling until he looks down. Something can be widely known, but not believed until some catalyst makes it impossible to deny or rationalize or BS. Still, learning that something is insolvent ought not to follow that pattern too much, because again, it doesn't matter if everyone else in the world is ignoring the problem, if you are certain it exists, you need to act.
      - 5y ago
jcranmer 5y ago
Insolvent doesn't mean that the company folds up shop immediately. As the person you're replying to points out, it is possible (if unethical) to lie about being insolvent. And, as the other reply to my comment pointed out, there's a decent likelihood that Tether is actually already insolvent and is doing creative accounting to get the numbers to appear to come out to solvency. 100.2%--especially when a significant amount is in as volatile an asset as cryptocurrencies during an upswing--seems too precisely close to 100% to me to not involve some amount of shenanigans.

perl4ever 5y ago

Yes...but. People say this like it's a guarantee that insolvency won't catch up to them before the public panics, i.e. a bank run. I don't believe that's correct. Insolvency seems strictly worse than being solvent. As a depositor, if I don't see anyone else participating in a bank run, assuming the institution is solvent, then I have no reason to. But if I know they are insolvent, even if nobody else in the world does yet, I have an incentive to immediately start a bank run, unless, say, there are bankruptcy proceedings right away that freeze everything. It's the difference between musical chairs with one chair removed vs not.

jfrunyon 5y ago
I don't know why you think I've ever said or implied that Tether's insolvency is a good thing?