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Tether ordered to produce documents showing backing of USDT [pdf]
- shrubble 4y agoThe good thing about Tether is that you can look at Tether, then look at the Federal Reserve's behavior. Tether throws into sharp relief the excess of the Fed.
- jazzyjackson 4y agothe fed never promised they were backed by cash
- onlyrealcuzzo 4y agoAlso, the Fed doesn't print money to buy coke in hookers. It prints money so the US government can use it (you can argue to what degree that is waste). But the Fed's balance sheet is solid and highly liquid.
- jc_811 4y agoThe Federal Reserve is a US government created organization, with specific public mandates, and has the full backing of the entire US and global financial & monetary systems. Tether is a private company, controlling $67B in assets, with less than 10 FT employees, a CEO who hasn't been seen in public for years, with no transparency into their backing, has been caught lying multiple times in court, and has been involved in multiple civil and criminal investigations. There's no comparison.
- SMVS 4y agoTether asked for proof reserve is backed with dollars, not just ketamine.
- ogogmad 4y agoIt's not backed. Once the Tether scam unravels, it's not clear how badly it will affect Bitcoin's price. But it's going to be bad. There's a chance that Tether has been pumping BTC.
- cypherpunks01 4y agoWouldn't Tether have unraveled during the huge amount of withdrawals during the Luna collapse? I thought it was going to, but surprised that it appears to have made it through processing everyone's withdrawals.
- ahnick 4y agoThey are likely not solvent (i.e. they have enough liquid funds to cover everyone withdrawing their money all at once), but they apparently can cover a high percentage of USDT withdrawals. It is still very fishy b/c if you look at the lending rates on Bitfinex there is currently an 18.825% APR for USD. If there was really zero risk with USDT I think you'd see a whole lot more volume pumping through that system.
- Canada 4y agoHow much of those are to cover the leverage of customers?
- htrp 4y agoVery few people converted to cash. It was mostly crypto to crypto iirc (Luna -> Terra -> Tether -> BTC/ETH) Also Terra was the algorithmically pegged stablecoin to Luna (not Tether in case that was the confusion)
- LawTalkingGuy 4y agoThere isn't a single dollar in a vault. They've been a scam since the beginning. They clearly did NOT have any assets when they were pretending to be audited or they would have completed the audit.
- yieldcrv 4y agoI think some of the most extreme criticism doesn't go that far. Bitcoin crowd doesn't like less than 100% backing. The argument isn’t that they have nothing. When Tether had disrupted fiat redemptions and lost banking, people would find the banks they likely moved to by looking at massive increases in the bank’s reported deposits.
- LawTalkingGuy 4y agoNobody likes 0% backing. Yes, the argument is that they have NOTHING, zero, $0. Never did.
- anm89 4y agoThis is just a cartoonishly naive take. This is like saying the Fed or JP Morgan is insolvent because they don't have the sum of their balance sheet located in some metal vault with dollar bills inside of it. It turns out having stacks of paper in a metal cage isn't how solvency is defined in 2022.
- LawTalkingGuy 4y agoTheir whole promise is having a dollar in a vault for every tether issued.
- anm89 4y agoWell, you are wrong. But ok.
- LawTalkingGuy 4y ago
- tiku 4y agoI highly doubt they have given out Tethers for free, exchanges paid dollars for them. And even banks don't have all their money in stock. That is why it is illegal to incite bankruns.
- ogogmad 4y agoThey can print Tether for free and use it to buy crypto. This pumps the price and then they can sell. Also, Tether is owned by Bitfinex, which enables them to print Tether to cover their own losses.
- Closi 4y ago> They can print Tether for free and use it to buy crypto. Ah yes, they can just operate a classic ponzi scheme! They can use new investors money to cover for the ficticious assets that previous investers were told that they hold!
- Tenoke 4y agoYou can do the same if you have a lot of USD in the first place or alternatively with reserves. Printing Tether isn't required and it is questionable if a pump and dump at quite this basic of a level is profitable on average.
- dsr_ 4y ago"There is this other scam you can commit with less work" is not an argument that the first scam isn't happening.
- Tenoke 4y agoIt's not 'other scams'. It's that printing - the only thing Tether can do which others can't and seemingly the main reason why they suggest Tether is the one doing it - doesn't add much of anything to the scam.
- banannaise 4y ago
- LatteLazy 4y agoCrypto and Covid are 2 great examples of how the less information people have, the more sure they are. There are already 2 comments here that are 100% sure tether has zero dollars backing it. I am not saying it has a 100% backing, or any other value. I do not know. But that fact people are so sure they know and know exactly and at the very extreme of the possible range is very telling...
- cageface 4y agoOccam's Razor. If it was backed then they would have produced the evidence long ago instead of dancing around the issue for years and doing phony "audits".
- lend000 4y agoThat's different than saying they have zero dollars, like the sibling comment that the parent was probably alluding to. In fact, there have been ~$20 billion in withdrawals during the last few months as the market has turned bearish and the market is reacting to a likely collapse below market capitalization in Tether's non-dollar-backed assets [0]. Are they backed 100%? Probably not during bear markets because they seem to be doing discretionary trading with deposit money. But the options aren't limited to "they have $0" and being 100% backed. [0] https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/
- cageface 4y agoSerious skeptics of Tether are not claiming they have $0. Just much less than they claim to have.
- tsimionescu 4y agoSure, but the content that started this thread is explicitly complaining about people who do claim that Tether has $0 backing it - of which there are a few in this thread. The OP was not complaining that people think Tether is not well enough backed, they were complaining that some are "certain" that it is not backed at all - the least informed being the most certain.
- freemint 4y agoHow can i short Tether?
- awestroke 4y agoSell your tether, sell your other crypto, move out into the forest, build a log cabin, hunt wild game
- ProjectArcturis 4y agoHave several million to invest and ask an investment bank to write you a tether swap. It won't be cheap.
- lawn 4y agoI think you can do it on Kraken.
- djbusby 4y agoExit any position and then ignore it.
- almostkorean 4y agonot a defi expert, but I think the most common way to do this is to use Aave: 1. borrow Tether 2. swap it for USDC (or stablecoin of choice) 3. wait for Tether to crash 4. pay off your Tether loan at a fraction of its original value risk is that your tether loan will be accruing interest (currently 1.4%) so if it doesn't crash or takes too long to crash you could be liquidated.
- mook 4y agoThere's also the risk that USDC (or alternate) will lower in value due to Tether crashing, even if they were merely also crypto. It may be necessary to convert to non-crypto assets instead. Of course, then there's the risk that non-crypto assets will be affected by the same…
- hmate9 4y agoOn FTX you can short the USDT-PERP future. You pay about 4% a year in funding fees while the position is open.
- jandrese 4y agoI'm sure they will be able to produce those documents, just so long as there are no followup questions or inquires into their actual account status. I don't know why they would stop lying now.
- cuteboy19 4y agoThey literally invented their own non-GAAP system of accounting!
- wmf 4y agoDoesn't GAAP have some obviously stupid rules about crypto? I don't mean to excuse scam accounting but I don't consider GAAP automatically optimal either. (Putting aside that Tether shouldn't be backed by crypto.)
- rhodorhoades 4y agoYeah - GAAP definitely doesn’t work with crypto. Is eth an asset, currency, or inventory? If I’m a big crypto firm and I regularly use eth for chain fees, do I calculate that as a sale of an asset? If my eth has appreciated since it’s purchase, did I just make a sale? When I’m adding liquidity to a common pair that I utilize a lot and get a divergent loss between the two assets, should that be impairment at the time of the transaction or only when all the coins are converted to USD? I can go on and on and on about the impossibility to comply with tax regulations and crypto. I’m an avid crypto user, I like making bots for all the games, I think NFTs are cool and always like meeting the programmers turned artists, I participate in 10+ exchanges and 50+ liquidity pools across the map. When it came time to do my taxes this last year, I had to hire a crypto specific tax person. His advice was that every time I transfer crypto off an exchange, it is ‘sold’ for that price and I have to pay taxes on the minuscule difference between my purchase price and the 10 seconds it take me to transfer into the meta verse. It’s literally impossible to do it otherwise.
- jandrese 4y agoI think the rules are "stupid" only in that it would expose too much fraud if the companies followed them. Crypto currencies are no different than any other speculative asset for tax purposes. Treat them like stocks.
- deleted 4y ago[deleted]
- WFHRenaissance 4y agoAs of 2021, their reserves consist of: Cash & Cash Equivalents & Other Short-Term Deposits & Commercial Paper (75.85%): - Commercial Paper (65.39%) - Fiduciary Deposits (24.20%) - Cash (3.87%) - Reverse Repo Notes (3.60%) - Treasury Bills (2.94%) Secured Loans (none to affiliated entities) (12.55%) Corporate Bonds, Funds & Precious Metals (9.96%) Other Investments (including digital tokens) (1.64%) Anyone saying Tether is not backed in any way is illiterate or a conspiracy theorist.
- lawn 4y agoAllegedly. And I'm sure it's partially backed by something, the issue how much is it really backed and by what.
- advisedwang 4y agoI would guess that the lawsuit alleges either: a) These percentages are true, but they don't actually add up to the amount of tether issued. b) This was true in 2021 but is no longer true c) This numbers were not an accurate representation.
- ohgodplsno 4y agoI'll borrow 100 bucks from you, they'll be backed too: - $25 in my gas tank (50.0%) - $10 in a crumpled bill in my pocket (20%) - $15 of groceries that are in my fridge (40%) don't worry about how much it adds up to or if it's liquid, it's backed
- WFHRenaissance 4y agoBut the numbers do add up?
- pwinnski 4y agoThe percentages add up. Are you certain that for every $100 in USDT they issue, they acquire another $2.94 in T-bills, $3.87 in cash, take out a secured loan for $12.55, and so on? They could indeed have all of those percentages, in exactly that relationship, all combined worth... a million dollars. That would be far, far, far, far short of what it should be.
- bell-cot 4y agoWith some financial engineering, an "absolutely 100% dollar-backed" asset can be backed by a "more than 99% for-sure" mix of assets, which are in turn backed by a "96% good in even the worse case" mish-mash, which are in turn backed by a "I'd bet my left arm that more than 91% are okay" heap of stuff, which are in turn backed by a "we have checked on 84% of 'em" pile of smelly things, which are in turn...
- zen_1 4y agoAll AAA mortgages, I'm sure.
- onlyrealcuzzo 4y agoAAA NFT mortgages in the metaverse.
- londons_explore 4y agoIt's all zuckerberg's one meta-house remortgaged a million times...
- GaveDrohl 4y agoS&P & Moody's would not lie!/s
- andrepd 4y agoIs AAA even meaningful? Shit ratings were a major part of the 2008 meltdown, but we've all collectively decided to ignore that and keep relying on the big three's Divinely Inspired Appraisal. Sounds odd.
- lazide 4y agoIt is only meaningful in a relative sense - AAA is less likely to be allowed to fail (or maybe actually fail?) than BBb or whatever. Usually.
- metacritic12 4y ago
- ISL 4y agoCrypto is growing up. The little tyke we got to know in 2014 is getting its first meaningful encounters with the consequence of young adulthood. Growing up is hard, but the outcome can be positive.
- cowtools 4y agoHow is tether considered a cryptocurrency here? It's centrally minted and controlled.
- charcircuit 4y agoBecause the control and ownership uses cryptography and USDT is a currency. Hence it is a cryptocurrency.
- purpleblue 4y agoIf you own Tether right now, and you don't liquidate immediately, you 100% deserve to lose all your money. This thing is going to collapse. There's no reason why Tether would keep its holdings secret unless it's hiding a secret. So be warned, if you don't want to suffer the same fate as Terra you need to liquidate right now.
- phphphphp 4y agoVery few people hold Tether so it’s not a very helpful warning: most ”USDT” exists within exchanges and is used to transact. The Luna fiasco was a consequence of Luna specifically encouraging people to hold UST, encouraged with unsustainable incentives. That dynamic doesn’t exist in the context of USDT, there’s no benefit to holding USDT. The problem with USDT is that so much of the current cryptocurrency market has been propped up by USDT that probably isn’t backed by any real assets. Tether print $1bn of USDT -> buy $1bn worth of BTC on an exchange that uses USDT (e.g: their own…) -> price goes up and increases the market cap by orders-of-magnitude more than $1bn. If you have exposure to the cryptocurrency market (whether you hold USDT, or BTC or own $COIN stock) and tether blows up, you will very probably be hurt in the fallout. Buying BTC with any USDT held is a false sense of security. If you don’t want to be exposed to the tether blowup contagion, sell everything now into cash-in-your-bank-account (not “cash” on an exchange) and wait.
- renewiltord 4y agoWant to buy a USDT put? I'll send someone to meet you in SF. $10k min, if you're okay with in-person. Premium discussed when you suggest expiry date. If you want the smart contract, I'll do a $25k min. Once you give me the money, I'll do this: 1. Load a smart wallet with 1.2x equivalent value of ETH (which I'm long) 2. Tie it to a smart contract using a price oracle that will liquidate the ETH if the ETH/USDC price (using some combination of high-volume exchanges) drops to 1.01x of the amount of USD you should get 3. At any point of time, you can transfer in your strike USDT to exercise the option and receive USDC in return This way I get to be long ETH and you get to be short USDT so long as you trust USDC (which is audited)
- jimmydorry 4y ago
- hiq 4y agoHow much time do they have to produce these documents? Can they legally avoid doing so for now, via an appeal of some sort?
- deleted 4y ago[deleted]
- Snarwin 4y agoIANAL but it looks like the default is 30 days: https://www.law.cornell.edu/rules/frcp/rule_34 https://www.law.cornell.edu/rules/frcp/rule_34
- dang 4y agoUrl changed from https://finance.yahoo.com/news/stablecoin-issuer-tether-ordered-produce-041706661.html https://finance.yahoo.com/news/stablecoin-issuer-tether-orde..., which points to this.
- deleted 4y ago[deleted]
- dang 4y agoWe changed the URL from https://finance.yahoo.com/news/stablecoin-issuer-tether-ordered-produce-041706661.html https://finance.yahoo.com/news/stablecoin-issuer-tether-orde... to the ruling it points to, since the latter is readable enough and the former doesn't really add anything.
- iudqnolq 4y agoHere's the docket that links to this order and the other filings in the case if anyone wants context. https://www.courtlistener.com/docket/16298999/in-re-tether-and-bitfinex-crypto-asset-litigation/?filed_after=&filed_before=&entry_gte=&entry_lte=&order_by=desc https://www.courtlistener.com/docket/16298999/in-re-tether-a... (I'm posting this because it's slightly unintuitive to go from the PDF download back to the page it came from if you're not familiar with the site)
- therealmarv 4y agoI'm sure it's 100% backed by a lot of magic fairy dust and somehow I also imagine rainbows and unicorns in the asset list.
- DonHopkins 4y agoLine up for free ice cream, kids!!! https://www.youtube.com/watch?v=YbYWhdLO43Q https://www.youtube.com/watch?v=YbYWhdLO43Q
- cm42 4y agoCorrect me if I'm wrong, but didn't the JPM/NYAG report essentially say USDT isn't [sufficiently?] backed, but doing something about it might collapse the financial system because of, among other reasons, This One Weird Trick To Print Free Bitcoin in China That Satoshi Really Hates?
- rossdavidh 4y agoYou are not wrong.
- cliftonk 4y agoVirtually every take I read on this forum is uninformed. To hear it straight from the horses mouth, here's Matt Levine + SBF getting into the realities of tether (skip to 48 minutes): https://open.spotify.com/show/1te7oSFyRVekxMBJUSethH?si=05bd2a91f4754945 https://open.spotify.com/show/1te7oSFyRVekxMBJUSethH?si=05bd... I agree with the general sentiment around tether acting very opaque / shady. That said: 1. creation/redemption of tether (read: actual USD wire transfers) has been done on the magnitude of billions of dollars a time by major players in the space 2. during UST collapse, something like $15b of tether was redeemed in less than 2 weeks. so they obviously had that much cash on hand at the time. 3. the academic paper that attempted to show that tether was being created to pump up bitcoin has an extremely simple alternative explanation: as bitcoin went up, holders of bitcoin sold it for tether on centralized exchanges on the way up. so, IMO they could very likely have some bad commercial paper on their books, but i think its much more likely than tether is worth 90 cents on the dollar and not 0, and in the case that it is worth 90 cents on the dollar, it would be extremely likely to continue to trade at par as there's very unlikely to be a scenario which forces any kind of large-scale redemptions.
- VHRanger 4y agoHaving looked into tether really deeply I think they're between 50% and 90% backed as you stated. https://www.singlelunch.com/2022/06/14/the-state-of-stablecoin-risks-june-2022/ https://www.singlelunch.com/2022/06/14/the-state-of-stableco... Tether depegging would be an apocalypse nonetheless
- cliftonk 4y agodefinitely agree that if there were a ~50% depeg in tether things would get very, very ugly in crypto
- AlexandrB 4y agoIf Tether was 50% backed and there was a depeg it would probably be much worse than 50%. Presumably USDT would be redeemed at $1 until Tether's reserves were almost gone at which point Tether would have to stop accepting redemptions and the price of USDT could fall arbitrarily close to $0 in a short time.
- setgree 4y agoFor context, Bloomberg's "Anyone Seen Tether's Billions?" is a fun read, and was discussed here: https://news.ycombinator.com/item?id=28784745 https://news.ycombinator.com/item?id=28784745
- mihaic 4y agoHow the hell do governments sleep for years on this sort of stuff?
- SilasX 4y agoA month ago someone here suggested the hilarious theory that Tether is being used for crime in a way easily traceable by the government, so certain agencies are propping it up so they can keep the operations going. Meaning that the criticisms a) "Tether is insolvent" and b) "Tether is used for crime" effectively cancel each other out... https://news.ycombinator.com/item?id=32588210 https://news.ycombinator.com/item?id=32588210
- jjtheblunt 4y agomy guess is they let novel ideas play out for a while, since most every innovation that endures starts as a crazy idea?
- mihaic 4y agoThat sounds about right, but when it gathers about a billion dollars in it I'm a bit shocked it's still "just a start-up".
- can16358p 4y agoWhy is the letters and words garbled to an unreadable level especially on the first page?
- can16358p 4y agoWhile I find Tether super-shady, it's also one of the longest-going stablecoins which has stayed strong while many others failed catastrophically. Not to defend them or anything for sure, I find them and their Bitfinex/price manipulation schemes super shady too, but it's also a success that they came this far when many people expected them to collapse for years.
- anm89 4y agoI think this is the correct sentiment. I would be shocked if there's nothing shady going on at Tether, but given the 5 years of apocalyptic tether predictions while Tether plugs on through things like the Terra collapse with zero issues, it seems very likely to me that the sentiment is overly negative, not that the risk is understated.
- cowtools 4y ago> Tether plugs on through things like the Terra collapse with zero issues Being more stable than Terra is not a very high bar.
- anm89 4y agoIt's a binary event. It's either stable or it isn't stable. It isn't "more stable than Terra". It's stable (so far).
- Jweb_Guru 4y agoNot really, unless you're being overly reductive. For example, I think I would call a 10% backed stablecoin less stable than a 100% backed stablecoin, but more stable than a 1% backed stablecoin (or 0% in the case of something like UST, at least initially).
- DonHopkins 4y agoOops. [Tether web site turns into nginx install page.]
- eutropia 4y ago(IANAL) Tether was trying to claim that requesting essentially a complete financial report for Tether and Bitfinex was overbroad, but has so far refused to produce any example of a more specific and limited set of information, so the court said "open your books": ...In the absence of agreement between the parties (id., Ex. 1 at 5 ("Plaintiffs remain open to considering an alternate proposal ... but cannot do without some indications of what the B/T Defendants intend to produce[.]")), the Court finds that Plaintiffs' financial records RFPs are not overly broad, particularly given that Defendants have had opportunities to make sample productions of the financial records RFPs, but have failed to do so despite Plaintiffs' agreement to such proposal (id., Ex. 1 at 5). Plaintiffs plainly explain why they need this information: to assess the backing of USDT with US dollars, and to allow a forensic accountant to assess the USDT reserve... The documents sought in the transactions RFPs appear to go to one of Plaintiffs' core allegations: that the B/T Defendants engaged in cyptocommodities transactions using unbacked USDT, and that those transactions "were strategically timed to inflate the market."... Accordingly, the Court ORDERS the B/T Defendants to produce documents in line with the revised RFPs 22-25, 29, 31, and 72
- jsmith45 4y agoI found this format of a court order to be rather unique. I've never before seen a court order that reproduces a document from the docket (#245), and appends the actual order (with no header or anything) to the end.
- iudqnolq 4y agoIt's normal[1] to give a judge a proposed order they just have to sign. Judges don't have to care about formatting and headers. Each judge generally gets to write their own rules for how they want lawyers to format filings in their cases. [1] Or at least I often see them when browsing through cases as an interested layperson and I've heard lawyers discussing doing it in a tone that suggests it's the norm.
- jsmith45 4y ago
- davidgerard 4y agoIt's important to note that a lot of the demanded records don't exist. e.g., we know from the CFTC settlement that for a while, Tether didn't keep anything so tawdry as "accounts" - the only documentation of the reserve was a single shared spreadsheet.
- spookthesunset 4y ago> Tether didn't keep anything so tawdry as "accounts" - the only documentation of the reserve was a single shared spreadsheet. There are soooo many red flags with crypto. So many shady people at the top of its pyramid. It is amazing how people can be so blinded by greed so as to not see how big of a scam crypto is. It is truly impressive.
- milin 4y agoTether does not have USDT backing. Some people are going to end up in prison for life.
- gwicks56 4y agoTether should be making money though right? You give Tether $1b USD, they issue some tethers you can redeem later, and in the meantime, they invest those tethers, in say treasuries, and earn 4% or something? You earn no return, so don't they basically have an interest free loan of 60B or whatever? So unless they are incredibly greedy, they can just sit around making bank, without actually having any good reason to take on too much risk?
- wmf 4y agoTether is run by incompetent people so I wouldn't be surprised if they have lost money on their investments. At least they're not gamblers like Mashinsky.
- grogers 4y ago> unless they are incredibly greedy That's the crux of it, isn't it? A lot of people think that they are greedy. Also, most tethers were created in 2020, when short term treasuries we're yielding nothing. Which made the incentive to "cheat" much higher than with the present rates.
- ajhurliman 4y agoThat's the idea. It's not unreasonable that such an organization that simply takes deposits and provides some service _could_ exist without losing money (after all, that's the fundamental premise of banks), it's whether they followed through on their promise or managed it poorly and no longer have 100% backing.
- devoutsalsa 4y agoEveryone is going to be surprised when it’s revealed that Tether is backed by the remains of a massive pirate ship full of Spanish gold.
- reidjs 4y agoI don’t understand why people get so up in arms about Tether. They are obviously doing illegal/scammy things (fractional reserve, etc), so why don’t people just stop buying Tether because it’s obviously a terrible investment. They’re not exactly killing puppies here, they are just lying about funny internet money. There are plenty of other more reputable stablecoins out there if you insist on holding onto stablecoins for whatever reason instead of US dollars themselves. Usually when you ignore liars they eventually stop talking. Why can’t we just ignore Tether until it goes away?
- d--b 4y agoThe question is not whether Tether is backed by USD, everyone knows it’s not. The question is whether Tether is too big to fail. At this stage it’s unclear how many decision-making people have skin in Tether staying afloat.
- bee_rider 4y agoI don't think it is that hard to believe that some people have been tricked into believing that "USDT" has some relationship with the US Government.