3 ms·

When it says out of thin air, it means that is some verifiable confirmation of no collateral? Or is the "out of thin air" part just means normal minting?

poetically 5y ago
No one has seen any of their collateral or knows how much of it they actually have. I believe the finance people call this being over-leveraged but I'm not an expert. Seems kinda weird that the SEC hasn't looked into it.
- christophilus 5y ago
  I think the SEC would have to first establish it as a security, no? It’s currently in a legs grey area.
  - poetically 5y ago
    I don't know. I'm not an expert but seems like there should be some institution that figures out whether financial games like stablecoins are actually economically beneficial and whether they should be regulated in some way or other.
- spookthesunset 5y ago
  I mean to be fair, they did have an auditor back in 2018. But the auditor quit before completing their investigation. Auditors quitting is never a good sign. https://www.coindesk.com/markets/2018/01/27/tether-confirms-its-relationship-with-auditor-has-dissolved/ https://www.coindesk.com/markets/2018/01/27/tether-confirms-...
  - gadnuk 5y ago
    It's even worse than that. Tether fired that auditor (Friedman LLC) because they were looking into it in a bit more detail. From the very same article: "Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame." Even Friedman LLP says in the internal memo “Do not rely on this report”. It's been almost 4 years since that and no independent firm has ever audited Tether.
- spuz 5y ago
  The US treasury released a report on stablecoins last month warning that a run on them could disrupt the wider financial system: > In addition to market integrity, investor protection, and illicit finance concerns, the potential for the increased use of stablecoins as a means of payment raises a range of prudential concerns. If stablecoin issuers do not honor a request to redeem a stablecoin, or if users lose confidence in a stablecoin issuer’s ability to honor such a request, runs on the arrangement could occur that may result in harm to users and the broader financial system. Further, to the extent stablecoins are widely used to facilitate payments, disruptions to the payment chain that allows stablecoins to be transferred among users could lead to a loss of payments efficiency and safety and undermine the functioning of the broader economy. The potential for stablecoin arrangements to scale rapidly raises additional issues related to systemic risk and concentration of economic power. I see this as the government equivalent of shouting from the rooftops. It's just a shame no one will treat it that way. https://home.treasury.gov/system/files/136/StableCoinReport_Nov1_508.pdf https://home.treasury.gov/system/files/136/StableCoinReport_...
wmf 5y ago
Tether is super shady but this headline is unnecessarily editorialized. Also, this USDT is "authorized but not yet issued" so technically it only needs to be backed once it's issued. https://tether.to/tether-issuance-primer/ https://tether.to/tether-issuance-primer/ https://thecaspiancey.medium.com/understanding-tether-mission-ummpossible-8e6f846dba50 https://thecaspiancey.medium.com/understanding-tether-missio...
- diveanon 5y ago
  This is the only knowledgeable answers in this thread. Minting is the first step in the process.
JohnHaugeland 5y ago
Lol, are you demanding people prove collateral doesn't exist, after the other collaterals they lied about became so clear with time? . "Or is the "out of thin air" part just means normal minting?" There is no normal minting with a coin that claims to be verifiably one to one backed by hard assets.

poetically 5y ago

No one has seen any of their collateral or knows how much of it they actually have. I believe the finance people call this being over-leveraged but I'm not an expert. Seems kinda weird that the SEC hasn't looked into it.

christophilus 5y ago
I think the SEC would have to first establish it as a security, no? It’s currently in a legs grey area.
- poetically 5y ago
  I don't know. I'm not an expert but seems like there should be some institution that figures out whether financial games like stablecoins are actually economically beneficial and whether they should be regulated in some way or other.
spookthesunset 5y ago
I mean to be fair, they did have an auditor back in 2018. But the auditor quit before completing their investigation. Auditors quitting is never a good sign. https://www.coindesk.com/markets/2018/01/27/tether-confirms-its-relationship-with-auditor-has-dissolved/ https://www.coindesk.com/markets/2018/01/27/tether-confirms-...
- gadnuk 5y ago
  It's even worse than that. Tether fired that auditor (Friedman LLC) because they were looking into it in a bit more detail. From the very same article: "Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame." Even Friedman LLP says in the internal memo “Do not rely on this report”. It's been almost 4 years since that and no independent firm has ever audited Tether.
spuz 5y ago
The US treasury released a report on stablecoins last month warning that a run on them could disrupt the wider financial system: > In addition to market integrity, investor protection, and illicit finance concerns, the potential for the increased use of stablecoins as a means of payment raises a range of prudential concerns. If stablecoin issuers do not honor a request to redeem a stablecoin, or if users lose confidence in a stablecoin issuer’s ability to honor such a request, runs on the arrangement could occur that may result in harm to users and the broader financial system. Further, to the extent stablecoins are widely used to facilitate payments, disruptions to the payment chain that allows stablecoins to be transferred among users could lead to a loss of payments efficiency and safety and undermine the functioning of the broader economy. The potential for stablecoin arrangements to scale rapidly raises additional issues related to systemic risk and concentration of economic power. I see this as the government equivalent of shouting from the rooftops. It's just a shame no one will treat it that way. https://home.treasury.gov/system/files/136/StableCoinReport_Nov1_508.pdf https://home.treasury.gov/system/files/136/StableCoinReport_...

wmf 5y ago

Tether is super shady but this headline is unnecessarily editorialized. Also, this USDT is "authorized but not yet issued" so technically it only needs to be backed once it's issued. https://tether.to/tether-issuance-primer/ https://tether.to/tether-issuance-primer/ https://thecaspiancey.medium.com/understanding-tether-mission-ummpossible-8e6f846dba50 https://thecaspiancey.medium.com/understanding-tether-missio...

diveanon 5y ago
This is the only knowledgeable answers in this thread. Minting is the first step in the process.

JohnHaugeland 5y ago

Lol, are you demanding people prove collateral doesn't exist, after the other collaterals they lied about became so clear with time? . "Or is the "out of thin air" part just means normal minting?" There is no normal minting with a coin that claims to be verifiably one to one backed by hard assets.