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Great point. I see your point but I'm having a hard time figuring out how Tether is anyway different from FTX? Both require trusting someone else and both hav

Great point. I see your point but I'm having a hard time figuring out how Tether is anyway different from FTX? Both require trusting someone else and both have off chain components to how they work, it seems like a distinction without a difference here. Can you add more colour as to how those are different because I can easily see how they are very similar? I think the difference between traditional finance and FTX is the oversite piece and the separation of duties piece. Traditional finance places a large roll on oversite and compliance to the point where people complain about all the rules and regulations that have been built up to protect people, and to be fair to allow government oversite. FTX had no oversite and therefor its hard to lump it into traditional finance as compliance and oversite are bedrock must have pieces of traditional finance. Also as was my main point, traditional finance requires separation of duties, given that FTX had none of these, its very hard to call it traditional finance without destroying the meaning of the term or watering it down so much that its meaningless.

dzdt 4y ago
> how Tether is anyway different from FTX So far there is only evidence that Tether has mis-appropriated SOME of the money it claims to be holding, whereas FTX lost basically ALL of the money. As long as you are optimistic on the "SOME" fraction being small in comparison to the gigantic size of Tether, you can hope that Tether is still a low risk for losing your value.
- CPLX 4y ago
  In the event that whoever runs Tether has committed financial fraud on a large enough scale to lose, say, 5% if the total value, which is billions of dollars, and they are now felons and fugitives facing certain lifetime confinement, what possible incentive could they have to return the other 95% to you? How, exactly, do you think the story here is going to end?
  - charleslmunger 4y ago
    >In the event that whoever runs Tether has committed financial fraud on a large enough scale to lose, say, 5% if the total value, Why is this phrased like a hypothetical? >In fact Tether reserves were not “fully-backed” the majority of the time. https://www.cftc.gov/PressRoom/PressReleases/8450-21 https://www.cftc.gov/PressRoom/PressReleases/8450-21
- vba616 4y ago
  >As long as you are optimistic on the "SOME" fraction being small in comparison to the gigantic size of Tether, you can hope that Tether is still a low risk for losing your value. What is the "size of Tether"? Do you mean the total customer deposits, or do you mean the assets of Tether Limited Inc? The percentage of customer deposits lost and whether any customer deposits are lost are distinct things. Once the owners' net equity is negative, who will be holding the bag if not customers?
matthewdgreen 4y ago
What if there was an organization that served the same purpose as Tether, but was overseen by a well-regarded US regulator that also regulates depository banks? Would that make any difference to the analysis here?

dzdt 4y ago

> how Tether is anyway different from FTX So far there is only evidence that Tether has mis-appropriated SOME of the money it claims to be holding, whereas FTX lost basically ALL of the money. As long as you are optimistic on the "SOME" fraction being small in comparison to the gigantic size of Tether, you can hope that Tether is still a low risk for losing your value.

CPLX 4y ago
In the event that whoever runs Tether has committed financial fraud on a large enough scale to lose, say, 5% if the total value, which is billions of dollars, and they are now felons and fugitives facing certain lifetime confinement, what possible incentive could they have to return the other 95% to you? How, exactly, do you think the story here is going to end?
- charleslmunger 4y ago
  >In the event that whoever runs Tether has committed financial fraud on a large enough scale to lose, say, 5% if the total value, Why is this phrased like a hypothetical? >In fact Tether reserves were not “fully-backed” the majority of the time. https://www.cftc.gov/PressRoom/PressReleases/8450-21 https://www.cftc.gov/PressRoom/PressReleases/8450-21
vba616 4y ago
>As long as you are optimistic on the "SOME" fraction being small in comparison to the gigantic size of Tether, you can hope that Tether is still a low risk for losing your value. What is the "size of Tether"? Do you mean the total customer deposits, or do you mean the assets of Tether Limited Inc? The percentage of customer deposits lost and whether any customer deposits are lost are distinct things. Once the owners' net equity is negative, who will be holding the bag if not customers?

matthewdgreen 4y ago

What if there was an organization that served the same purpose as Tether, but was overseen by a well-regarded US regulator that also regulates depository banks? Would that make any difference to the analysis here?