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But the claim about Tether problems is about solvency, not liquidity. If they are insolvent then 1. They defend the peg 2. Run out of money 3. Remaining teth

by ivalm 4y ago

But the claim about Tether problems is about solvency, not liquidity. If they are insolvent then 1. They defend the peg 2. Run out of money 3. Remaining tether is worth $0. Now, probably they will not defend until exactly 0, and maybe they will have some illiquid assets that will be worth something, but I think $0.5 on a dollar is extremely ambitious. Kind of like FTX isn’t a liquidity issue, it’s a solvency issue.

Galanwe 4y ago
> But the claim about Tether problems is about solvency, not liquidity. I don't think solvency is really at stake for Tether. They have so much capital at this point that they are filthy rich just with treasuries returns. Of course that's just my opinion, you're free to disregard it. The main risk IMHO is their greed in investing in illiquid assets. > If they are insolvent then > 1. They defend the peg > 2. Run out of money > 3. Remaining tether is worth $0. My (picky) point is that no, this does not happen, because a company becomes bankrupt and ceases operation before $0. Even now, there are people actively buying FTX accounts at a discount, expecting to cash in once the liquidation settlement is over.