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Yes. The title article literally is all about how Tether was making collateralized loans of Tether to Celsius where the collateral was crypto: > How do we kno

Yes. The title article literally is all about how Tether was making collateralized loans of Tether to Celsius where the collateral was crypto: > How do we know this? Because we can see Celsius borrowing from Tether. And we now know those loans were collateralized. > We do not know the precise collateral arrangements except that Alex Mashinsky told the FT: > If you give them enough collateral, liquid collateral, bitcoin, ethereum and so on . . . they will mint tether against it It isn't USD, it isn't treasuries, it isn't commercial paper (Chinese or otherwise). At the end of the day it is going to be 90% crypto collaterialized loans that makes up Tether. It is so weird to clearly read an article about the funding mechanism behind Tether and people literally refuse to read it correctly and start yapping about commercial paper.

onlyrealcuzzo 4y ago
How does it work? 1. Celsius calls up Tether and asks for $30Bn to buy Bitcoins. 2. Tether says, sure, prints 30 Bn USDT out of thin air, gives it to Celsius, and Celsius uses that to buy Bitcoins. 3. Celsius collects a bunch of money from retail investors. 4. Celsius steals all the Bitcoins and files for bankruptcy - and, oopsie, the retail investors lose everything. The Celsius insiders obviously get something out of this. They got Bitcoins for nothing. They can and did sell those Bitcoins for the miniscule fiat liquidity that exists for Bitcoin. What does Tether get? They're printing funny money out of thin air. Sure, it doesn't cost them anything. But they have to know that none of that funny money is going to get paid back with real money. So why lend Tethers to someone else, so they can sell Bitcoins for real money - instead of just printing Tethers for themselves to capture all fiat inflows?
- JumpCrisscross 4y ago
  > What does Tether get? Celsius has Bitcoins. They borrow $30bn against those Bitcoins from Tether. Tether charges interest.
- lamontcg 4y ago
  1. Celsius has closer to $500M in BTC in a cold wallet that for security reasons they do not want to touch and trade with on a daily basis. 2. They call up Tether who loans them $500M worth of USDT which they can use as a more liquid security to loan out or trade crypto with. 3. They pay interest to Tether on the loan in crypto. 4. Eventually they have to pay back the USDT loan with USDT, although if their BTC value hasn't declined they probably extend the loan period instead -- although sending the USDT back is probably how Tether gets burned. 5. If the loans are denominated in $USD and Tether accepts USDT at the market rate for paying back the loans that would be a mechanism that would naturally pin Tether to the $USD via arbitrage by people who want to buy a cheaper USDT token to pay back their loans with whenever Tether falls, and don't want to be actively paying back Tether with their USDT when the price has fallen. > But they have to know that none of that funny money is going to get paid back with real money. To first order, none of it is about $USD so literally nobody cares, and its all just funny money collateralized by other funny money. It is very much like someone sitting on a vault full of Gold (the BTC cold wallet) that wants to borrow money (the USDT in the crypto space) in order to have liquidity (buy crypto shit with it).

onlyrealcuzzo 4y ago

How does it work? 1. Celsius calls up Tether and asks for $30Bn to buy Bitcoins. 2. Tether says, sure, prints 30 Bn USDT out of thin air, gives it to Celsius, and Celsius uses that to buy Bitcoins. 3. Celsius collects a bunch of money from retail investors. 4. Celsius steals all the Bitcoins and files for bankruptcy - and, oopsie, the retail investors lose everything. The Celsius insiders obviously get something out of this. They got Bitcoins for nothing. They can and did sell those Bitcoins for the miniscule fiat liquidity that exists for Bitcoin. What does Tether get? They're printing funny money out of thin air. Sure, it doesn't cost them anything. But they have to know that none of that funny money is going to get paid back with real money. So why lend Tethers to someone else, so they can sell Bitcoins for real money - instead of just printing Tethers for themselves to capture all fiat inflows?

JumpCrisscross 4y ago
> What does Tether get? Celsius has Bitcoins. They borrow $30bn against those Bitcoins from Tether. Tether charges interest.
lamontcg 4y ago
1. Celsius has closer to $500M in BTC in a cold wallet that for security reasons they do not want to touch and trade with on a daily basis. 2. They call up Tether who loans them $500M worth of USDT which they can use as a more liquid security to loan out or trade crypto with. 3. They pay interest to Tether on the loan in crypto. 4. Eventually they have to pay back the USDT loan with USDT, although if their BTC value hasn't declined they probably extend the loan period instead -- although sending the USDT back is probably how Tether gets burned. 5. If the loans are denominated in $USD and Tether accepts USDT at the market rate for paying back the loans that would be a mechanism that would naturally pin Tether to the $USD via arbitrage by people who want to buy a cheaper USDT token to pay back their loans with whenever Tether falls, and don't want to be actively paying back Tether with their USDT when the price has fallen. > But they have to know that none of that funny money is going to get paid back with real money. To first order, none of it is about $USD so literally nobody cares, and its all just funny money collateralized by other funny money. It is very much like someone sitting on a vault full of Gold (the BTC cold wallet) that wants to borrow money (the USDT in the crypto space) in order to have liquidity (buy crypto shit with it).