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FTX is younger than Tether and it was actually subject to scrutiny. Tether has also been subject to scrutiny and was found, at the time, to be lying about thei

FTX is younger than Tether and it was actually subject to scrutiny. Tether has also been subject to scrutiny and was found, at the time, to be lying about their reserves and backing. And this was before they printed a lot more! It doesn’t make sense to write them off as having withstood the test of time when they literally failed to stand up to the first legal scrutiny that got access to their books.

camjohnson26 4y ago
The lesson learned is that frauds can go on for a long time. It took decades and a once in a generation market crash to expose Bernie Madoff. Enron spent years running their sketchy accounting. Wirecard was only finally exposed after the German government essentially lobbied on their behalf against the journalists trying to expose the fraud.
- jandrese 4y ago
  These frauds can continue so long as they can continue to grow or at least maintain a steady state. Since they promise higher returns than can be achieved through honest means the liabilities grow faster than assets over time, but so long as nobody tries to realize their gains it's fine. FTX only came down because they pissed off the Binance guy who dumped his position all at once and exposed the fraud. I'm dubious Tether could survive a similar attack. I also think that at least some people investing in these are completely aware of the situation and are ok with it because it means they can beat the market so long as they get out before the whole thing suddenly collapses. Basically playing financial chicken.
  - anonymoushn 4y ago
    > These frauds can continue so long as they can continue to grow or at least maintain a steady state. Since they promise higher returns than can be achieved through honest means the liabilities grow faster than assets over time, but so long as nobody tries to realize their gains it's fine. Honestly this sort of comment makes me want to stop reading hacker news comments sections altogether. Could you explain what returns are promised for depositors of USD at FTX international and holders of USDT?
    - jandrese 4y ago
      It didn't matter if those holdings weren't making returns, because they were all connected to a Ponzi scheme that was siphoning off the money from the rest of the company. https://www.theblock.co/post/186187/alameda-promised-high-returns-with-no-risk-in-2018-pitch https://www.theblock.co/post/186187/alameda-promised-high-re... 15% returns, guaranteed, no risk.
      - anonymoushn 4y ago
        It didn't matter that my comment was completely wrong and irrelevant because some other facts I omitted from my comment!
spaceman_2020 4y ago
> FTX is younger than Tether and it was actually subject to scrutiny. What due diligence did Blackrock and SoftBank did before investing in FTX? Half the people I know trusted FTX just because "Blackrock and SoftBank must have done their homework".

camjohnson26 4y ago

The lesson learned is that frauds can go on for a long time. It took decades and a once in a generation market crash to expose Bernie Madoff. Enron spent years running their sketchy accounting. Wirecard was only finally exposed after the German government essentially lobbied on their behalf against the journalists trying to expose the fraud.

jandrese 4y ago
These frauds can continue so long as they can continue to grow or at least maintain a steady state. Since they promise higher returns than can be achieved through honest means the liabilities grow faster than assets over time, but so long as nobody tries to realize their gains it's fine. FTX only came down because they pissed off the Binance guy who dumped his position all at once and exposed the fraud. I'm dubious Tether could survive a similar attack. I also think that at least some people investing in these are completely aware of the situation and are ok with it because it means they can beat the market so long as they get out before the whole thing suddenly collapses. Basically playing financial chicken.
- anonymoushn 4y ago
  > These frauds can continue so long as they can continue to grow or at least maintain a steady state. Since they promise higher returns than can be achieved through honest means the liabilities grow faster than assets over time, but so long as nobody tries to realize their gains it's fine. Honestly this sort of comment makes me want to stop reading hacker news comments sections altogether. Could you explain what returns are promised for depositors of USD at FTX international and holders of USDT?
  - jandrese 4y ago
    It didn't matter if those holdings weren't making returns, because they were all connected to a Ponzi scheme that was siphoning off the money from the rest of the company. https://www.theblock.co/post/186187/alameda-promised-high-returns-with-no-risk-in-2018-pitch https://www.theblock.co/post/186187/alameda-promised-high-re... 15% returns, guaranteed, no risk.
    - anonymoushn 4y ago
      It didn't matter that my comment was completely wrong and irrelevant because some other facts I omitted from my comment!

spaceman_2020 4y ago

> FTX is younger than Tether and it was actually subject to scrutiny. What due diligence did Blackrock and SoftBank did before investing in FTX? Half the people I know trusted FTX just because "Blackrock and SoftBank must have done their homework".