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We had that recent-ish case in the New York courts that uncovered that USDT is mostly not backed by fiat currency, and that they had been lying about this since

We had that recent-ish case in the New York courts that uncovered that USDT is mostly not backed by fiat currency, and that they had been lying about this since at least 2017.

olalonde 4y ago
I understand that they deviate from theory (e.g. with commercial paper, treasury bills, etc.) but backing USDT with BTC/ETH would be next-level stupid. Did the case you mentioned uncover that USDT was backed by BTC or ETH?
- bunderbunder 4y ago
  It found that they are seemingly desperate to prevent the public from finding out what’s actually on their balance sheet. I guess folks need to make their own decisions about whether being shy of sunlight suggests a need, or a lack of need, for disinfectant. (Also, the original claim I was responding to was not that USDT is not backed by BTC or ETH, it was that USDT is backed by currency reserves. I don’t really know enough about these things to know if the goalpost needed to be in its original position, but I do feel obligated to point out that I see it moving.)
- georgeecollins 4y ago
  They have said they are backed by commercial paper, but as many financial journalists have pointed out they would have to be one of the largest traders of commercial paper and none of the people who deal with commercial paper in the US have them as a counter-part. That would leave Chinese commercial paper which is the sketchiest thing in the world. You would only buy that to skim money in kickbacks, it would be a terrible reserve. Also: We just saw a supposedly reputable exchange blow up. These are the people who have lied enough to actually prompt US regulators to act: a hard bar to clear. It's not "next level stupid" -- they will make billions. You could say (particularly with hindsight) that they could have made a fortune with a legitimate stable coin. But I don't think the economics would have worked for a legitimate stable coin to scale up fast enough to keep up with the scam ones.
  - olalonde 4y ago
    I wasn't claiming that USDT was fully backed by US dollars. I was disputing the claim that their reserves are certainly exposed to BTC/ETH. I just don't see why that would be the case. Even if they were running a proper scam with basically no USD reserves, it does not follow that they are exposed to BTC/ETH.

We had that recent-ish case in the New York courts that uncovered that USDT is mostly not backed by fiat currency, and that they had been lying about this since at least 2017.

olalonde 4y ago

I understand that they deviate from theory (e.g. with commercial paper, treasury bills, etc.) but backing USDT with BTC/ETH would be next-level stupid. Did the case you mentioned uncover that USDT was backed by BTC or ETH?

bunderbunder 4y ago
It found that they are seemingly desperate to prevent the public from finding out what’s actually on their balance sheet. I guess folks need to make their own decisions about whether being shy of sunlight suggests a need, or a lack of need, for disinfectant. (Also, the original claim I was responding to was not that USDT is not backed by BTC or ETH, it was that USDT is backed by currency reserves. I don’t really know enough about these things to know if the goalpost needed to be in its original position, but I do feel obligated to point out that I see it moving.)
georgeecollins 4y ago
They have said they are backed by commercial paper, but as many financial journalists have pointed out they would have to be one of the largest traders of commercial paper and none of the people who deal with commercial paper in the US have them as a counter-part. That would leave Chinese commercial paper which is the sketchiest thing in the world. You would only buy that to skim money in kickbacks, it would be a terrible reserve. Also: We just saw a supposedly reputable exchange blow up. These are the people who have lied enough to actually prompt US regulators to act: a hard bar to clear. It's not "next level stupid" -- they will make billions. You could say (particularly with hindsight) that they could have made a fortune with a legitimate stable coin. But I don't think the economics would have worked for a legitimate stable coin to scale up fast enough to keep up with the scam ones.
- olalonde 4y ago
  I wasn't claiming that USDT was fully backed by US dollars. I was disputing the claim that their reserves are certainly exposed to BTC/ETH. I just don't see why that would be the case. Even if they were running a proper scam with basically no USD reserves, it does not follow that they are exposed to BTC/ETH.