4 ms·

Tether's market cap dropping without a price drop is indication that they are liquid and able to handle (to date) almost $20 billion in withdrawal over a 1 mont

Tether's market cap dropping without a price drop is indication that they are liquid and able to handle (to date) almost $20 billion in withdrawal over a 1 month period. That is impressive and a sign of their robustness. They are passing a stress test so far. Their blog counters much of the FUD out there: https://tether.to/en/news/ https://tether.to/en/news/

Animats 4y ago
"The valuation of the assets of the Group have been based upon normal trading conditions and do not reflect an unexpected large-scale sale of assets, or the case of any key custodians or counterparties defaulting or experiencing substantial illiquidity, which may result in materially different or delayed realisable values. No provision for expected credit losses was identified by management at the financial reporting date." Yesterday, Voyager could have said that.
adrr 4y ago
Whats the limit on withdraws before they have liquidity issues? Easiest way to make investors confident is due a full audit with a top 4 auditing firm.
- marcell 4y ago
  https://tether.to/en/transparency/#reports https://tether.to/en/transparency/#reports They claim 85% cash/cash equivalents, 15% less liquid assets. Cash equivalents is broken down also, 55% is Treasury bonds.
  - adrr 4y ago
    Thats meaningless unless it's an audited by a top 4 firm.
    - TedDoesntTalk 4y ago
      You mean like Earnst & Young who was just fined $100 million for overlooking cheating by their employees on the ETHICS portion of the CPA exam? I agree something is severely broken about Tether, but it’s also clear that auditing firms can be crooked, too. I would not trust an audit to expose Tethers shortcomings. After all, the auditors can only report on the documentation provided to them … they specifically do not determine the legitimacy or validity of the documents provided (iow, false documents are not vetted in any way). Remember WireCard’s fraud? If not: https://en.m.wikipedia.org/wiki/Wirecard_scandal https://en.m.wikipedia.org/wiki/Wirecard_scandal E&Y: https://www.msn.com/en-us/money/markets/ernst-26-young-cheating-scandal-the-e2-80-98largest-fine-ever-imposed-e2-80-99-against-audit-company/ar-AAZ05UM https://www.msn.com/en-us/money/markets/ernst-26-young-cheat...
      - jjfoooo4 4y ago
        If you’re arguing the auditing firms can be games and Tether can’t seem to pass an audit by them, that seems worse
    - propogandist 4y ago
      they have committed to being audited by a Top 12 accounting firm, which is laughable https://twitter.com/WatcherGuru/status/1538815060298063873 https://twitter.com/WatcherGuru/status/1538815060298063873
      - jcranmer 4y ago
        Their audit has been forthcoming for over 5 years at this point. I wouldn't hold my breath. (Also note that attestation ≠ audit.)
        aenis 4y ago
        One only needs to look at the "signature" under the attestation doc to know its fraud.
roywiggins 4y ago
It seems like it would be pretty binary. That is, withdrawals would be orderly... until they are suddenly not. It's not very good evidence for the state of their backing now. Maybe they've chewed through all their liquid assets and will explode tomorrow, maybe not. That is, withdrawals wouldn't shake the Tether price at all until someone is told "no you can't withdraw today" and decides to sell their Tethers on the market at a discount instead of withdrawing at par.
- marcell 4y ago
  That’s an often stated truism that is false. You could have a situation where Tether is 80% capitalized, in which case one USDT is worth $0.80. Or a situation where they have money locked in Treasury bonds for 1 year. In that case, the value of USDT depends on your discount rate and is around $0.95.
- atwood22 4y ago
  Yes, it’s possible that Tether is suddenly unable to be exchanged for dollars, but it’s pretty impressive they’ve been able to handle a sudden outflow of 20B. They’ve certainly proven their most harsh critics wrong, but there is still risk of course.
  - roywiggins 4y ago
    I dunno, if I put $80 of cash into a black box and pull out $20, that doesn't tell you that much about the remaining $60, just that the box wasn't secretly a paper shredder the whole time. Which is great news for the lucky early redeemer. Not much use to later redeemers though, if it turns out that the remainder was eaten by hungry rodents.
    - manquer 4y ago
      Depends on how you see it, I am impressed there was even $20 in the box given how poorly and non transparently they are governed. The current global market climate makes it tough to keep the $80Billion in investments both liquid and on par even if they invested in traditional portfolio baskets, a traditional bank would likely struggle if quarter of their deposits liquidated in a month and may not be able to easily meet cash reserve ration requirements to support future withdrawals.
EwanToo 4y ago
I think this FT article suggests the blog isn't entirely comprehensive Tether’s mystery commercial paper exposure - https://on.ft.com/3yzXTua https://on.ft.com/3yzXTua via @FT
oldgradstudent 4y ago
Madoff was able to handle withdrawals until one day he wasn't. Only then the Ponzi collapsed. This is not a very good way to distinguish a fraud from an honest business, especially if you're not the one who already withdrew.
kranke155 4y ago
“FUD” is what all the coiners say it all is until the blog post happens and it’s all over. It was the same with LUNA. Any intelligent and comprehensive assessment of the information on tether will tell you that it’s likely to be outright fraud.
jcranmer 4y ago
The have had to unwind a double-digit percentage of their portfolio, in a down market, in a very short amount of time. The total net effect of doing so has been to collect something like 0.00001% net profit. That is simply not credible.
qeternity 4y ago
You do understand that Charles Ponzi’s ability to meet early redemptions is exactly what gave him credibility?
driverdan 4y ago
Nonsense. All they'd have to do is have $20 billion in cash to satisfy $20 billion withdrawals. It doesn't mean anything about the rest of the money. The next $1 withdrawn could bankrupt them for all we know.
nunez 4y ago
why?

Animats 4y ago

"The valuation of the assets of the Group have been based upon normal trading conditions and do not reflect an unexpected large-scale sale of assets, or the case of any key custodians or counterparties defaulting or experiencing substantial illiquidity, which may result in materially different or delayed realisable values. No provision for expected credit losses was identified by management at the financial reporting date." Yesterday, Voyager could have said that.

adrr 4y ago

Whats the limit on withdraws before they have liquidity issues? Easiest way to make investors confident is due a full audit with a top 4 auditing firm.

marcell 4y ago
https://tether.to/en/transparency/#reports https://tether.to/en/transparency/#reports They claim 85% cash/cash equivalents, 15% less liquid assets. Cash equivalents is broken down also, 55% is Treasury bonds.
- adrr 4y ago
  Thats meaningless unless it's an audited by a top 4 firm.
  - TedDoesntTalk 4y ago
    You mean like Earnst & Young who was just fined $100 million for overlooking cheating by their employees on the ETHICS portion of the CPA exam? I agree something is severely broken about Tether, but it’s also clear that auditing firms can be crooked, too. I would not trust an audit to expose Tethers shortcomings. After all, the auditors can only report on the documentation provided to them … they specifically do not determine the legitimacy or validity of the documents provided (iow, false documents are not vetted in any way). Remember WireCard’s fraud? If not: https://en.m.wikipedia.org/wiki/Wirecard_scandal https://en.m.wikipedia.org/wiki/Wirecard_scandal E&Y: https://www.msn.com/en-us/money/markets/ernst-26-young-cheating-scandal-the-e2-80-98largest-fine-ever-imposed-e2-80-99-against-audit-company/ar-AAZ05UM https://www.msn.com/en-us/money/markets/ernst-26-young-cheat...
    - jjfoooo4 4y ago
      If you’re arguing the auditing firms can be games and Tether can’t seem to pass an audit by them, that seems worse
  - propogandist 4y ago
    they have committed to being audited by a Top 12 accounting firm, which is laughable https://twitter.com/WatcherGuru/status/1538815060298063873 https://twitter.com/WatcherGuru/status/1538815060298063873
    - jcranmer 4y ago
      Their audit has been forthcoming for over 5 years at this point. I wouldn't hold my breath. (Also note that attestation ≠ audit.)
      - aenis 4y ago
        One only needs to look at the "signature" under the attestation doc to know its fraud.

roywiggins 4y ago

It seems like it would be pretty binary. That is, withdrawals would be orderly... until they are suddenly not. It's not very good evidence for the state of their backing now. Maybe they've chewed through all their liquid assets and will explode tomorrow, maybe not. That is, withdrawals wouldn't shake the Tether price at all until someone is told "no you can't withdraw today" and decides to sell their Tethers on the market at a discount instead of withdrawing at par.

marcell 4y ago
That’s an often stated truism that is false. You could have a situation where Tether is 80% capitalized, in which case one USDT is worth $0.80. Or a situation where they have money locked in Treasury bonds for 1 year. In that case, the value of USDT depends on your discount rate and is around $0.95.
atwood22 4y ago
Yes, it’s possible that Tether is suddenly unable to be exchanged for dollars, but it’s pretty impressive they’ve been able to handle a sudden outflow of 20B. They’ve certainly proven their most harsh critics wrong, but there is still risk of course.
- roywiggins 4y ago
  I dunno, if I put $80 of cash into a black box and pull out $20, that doesn't tell you that much about the remaining $60, just that the box wasn't secretly a paper shredder the whole time. Which is great news for the lucky early redeemer. Not much use to later redeemers though, if it turns out that the remainder was eaten by hungry rodents.
  - manquer 4y ago
    Depends on how you see it, I am impressed there was even $20 in the box given how poorly and non transparently they are governed. The current global market climate makes it tough to keep the $80Billion in investments both liquid and on par even if they invested in traditional portfolio baskets, a traditional bank would likely struggle if quarter of their deposits liquidated in a month and may not be able to easily meet cash reserve ration requirements to support future withdrawals.

EwanToo 4y ago

I think this FT article suggests the blog isn't entirely comprehensive Tether’s mystery commercial paper exposure - https://on.ft.com/3yzXTua https://on.ft.com/3yzXTua via @FT

oldgradstudent 4y ago

Madoff was able to handle withdrawals until one day he wasn't. Only then the Ponzi collapsed. This is not a very good way to distinguish a fraud from an honest business, especially if you're not the one who already withdrew.

kranke155 4y ago

“FUD” is what all the coiners say it all is until the blog post happens and it’s all over. It was the same with LUNA. Any intelligent and comprehensive assessment of the information on tether will tell you that it’s likely to be outright fraud.

jcranmer 4y ago

The have had to unwind a double-digit percentage of their portfolio, in a down market, in a very short amount of time. The total net effect of doing so has been to collect something like 0.00001% net profit. That is simply not credible.

qeternity 4y ago

You do understand that Charles Ponzi’s ability to meet early redemptions is exactly what gave him credibility?

driverdan 4y ago

Nonsense. All they'd have to do is have $20 billion in cash to satisfy $20 billion withdrawals. It doesn't mean anything about the rest of the money. The next $1 withdrawn could bankrupt them for all we know.

nunez 4y ago

why?