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The speculation in this thread is silly. While Tether is certainly opaque (you could say shady), it's incredibly doubtful that it's unbacked to a significant e

The speculation in this thread is silly. While Tether is certainly opaque (you could say shady), it's incredibly doubtful that it's unbacked to a significant extent. Even if it's only backed at 50% (which would be really shocking to me), it would take 39B$ to flow through the system to actually cause a depeg. That's very unlikely, and just the logistics of it means it would leave a lot of time to Tether to clear the air. Consider that being "nakedly" unbacked (no underlying assets) in any meaningful capacity would qualify Tether's leadership for a quick trip to prison — as they've repeatedly said they were fully backed. The real risk is them sitting on "commercial paper" (short term debt) that is now worthless or significantly discounted. I still doubt they would have lost more than 50% of reserves this way. I think it's also interesting that SBF (FTX's founder) is fairly confident in Tether (of UST he said months ago "we know how this ends"). He seems better informed than most, and it seems unlikely to me he'd stake his company (which has extensive dealing with Tether) on a system that cannot be sustained. I have no chip in this fight, and honestly, I do agree Tether is riskier than alternative, which is why I've never even held it. But UST and Tether are vastly different beasts in term of risk profiles.

ceejayoz 4y ago
> Consider that being "nakedly" unbacked (no underlying assets) in any meaningful capacity would qualify Tether's leadership for a quick trip to prison — as they've repeatedly said they were fully backed. They said on their website they were regularly audited, too, and never completed one. There’s years worth of clear lies from Tether.
- hanniabu 4y ago
  They did internal audits but not external ones, which of course it's what everyone assumes
  - ineedasername 4y ago
    They claim they did, but the problem is trust. If they were dishonest about their collateralization there's no reason the believe they'd be honest about the audit results. And the firm they hired is itself under investigation. They'd have to be much more open to convince me they're as well backed as they claim.
  - ceejayoz 4y ago
    Why did they feel the need to post misleading third-party documents they claimed were audits, then? Why did they admit to dissolving their relationship with their auditor without completing one? 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-... > We confirm that the relationship with Friedman is dissolved. 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. https://www.cftc.gov/PressRoom/PressReleases/8450-21 https://www.cftc.gov/PressRoom/PressReleases/8450-21 > The Tether order finds that since its launch in 2014, Tether has represented that the tether token is a stablecoin with its value pegged to fiat currency and 100% backed by corresponding fiat assets, including U.S. dollars and euros. However, the Tether order finds that from at least June 1, 2016 to February 25, 2019, 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. The order further finds that Tether failed to disclose that it included unsecured receivables and non-fiat assets in its reserves, and that Tether falsely represented that it would undergo routine, professional audits to demonstrate that it maintained “100% reserves at all times” even though Tether reserves were not audited.
- norswap 4y ago
  I remember they showed some auditor's attestations, but they're not releasing the details of the audit, just the conclusion.
gitgud 4y ago
> Even if it's only backed at 50% (which would be really shocking to me) Is it shocking? Aren't traditional banks only backed by a tiny fraction of what they give out?
- whimsicalism 4y ago
  They don't claim to be fully backed.
  - gitgud 4y ago
    I'm saying it's likely they only have a tiny fraction of backing, the GP was saying they would be surprised if it wasn't at least 50% backed.
gizzlon 4y ago
> Even if it's only backed at 50% (which would be really shocking to me) Why would that be shocking? It seems clear to me that they are full of shit. Maybe it's 80% or 8% or basically 0% . Who knows..
- drexlspivey 4y ago
  Because if they are backed to only say 20% where did the rest of the money go? Did $80B disappear or what? And what are the reason to believe they did other than conspiracy theories? Why would they not just buy $80B worth of bonds to collect free interest on them?

ceejayoz 4y ago

> Consider that being "nakedly" unbacked (no underlying assets) in any meaningful capacity would qualify Tether's leadership for a quick trip to prison — as they've repeatedly said they were fully backed. They said on their website they were regularly audited, too, and never completed one. There’s years worth of clear lies from Tether.

hanniabu 4y ago
They did internal audits but not external ones, which of course it's what everyone assumes
- ineedasername 4y ago
  They claim they did, but the problem is trust. If they were dishonest about their collateralization there's no reason the believe they'd be honest about the audit results. And the firm they hired is itself under investigation. They'd have to be much more open to convince me they're as well backed as they claim.
- ceejayoz 4y ago
  Why did they feel the need to post misleading third-party documents they claimed were audits, then? Why did they admit to dissolving their relationship with their auditor without completing one? 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-... > We confirm that the relationship with Friedman is dissolved. 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. https://www.cftc.gov/PressRoom/PressReleases/8450-21 https://www.cftc.gov/PressRoom/PressReleases/8450-21 > The Tether order finds that since its launch in 2014, Tether has represented that the tether token is a stablecoin with its value pegged to fiat currency and 100% backed by corresponding fiat assets, including U.S. dollars and euros. However, the Tether order finds that from at least June 1, 2016 to February 25, 2019, 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. The order further finds that Tether failed to disclose that it included unsecured receivables and non-fiat assets in its reserves, and that Tether falsely represented that it would undergo routine, professional audits to demonstrate that it maintained “100% reserves at all times” even though Tether reserves were not audited.
norswap 4y ago
I remember they showed some auditor's attestations, but they're not releasing the details of the audit, just the conclusion.

gitgud 4y ago

> Even if it's only backed at 50% (which would be really shocking to me) Is it shocking? Aren't traditional banks only backed by a tiny fraction of what they give out?

whimsicalism 4y ago
They don't claim to be fully backed.
- gitgud 4y ago
  I'm saying it's likely they only have a tiny fraction of backing, the GP was saying they would be surprised if it wasn't at least 50% backed.

gizzlon 4y ago

> Even if it's only backed at 50% (which would be really shocking to me) Why would that be shocking? It seems clear to me that they are full of shit. Maybe it's 80% or 8% or basically 0% . Who knows..

drexlspivey 4y ago
Because if they are backed to only say 20% where did the rest of the money go? Did $80B disappear or what? And what are the reason to believe they did other than conspiracy theories? Why would they not just buy $80B worth of bonds to collect free interest on them?