5 ms·

That's not exactly how it works. You can't make 4.75% of $67B if you never had $67B in real dollars. They could have as well never received any USD / fiat.

drexlspivey 4y ago
> They could have as well never received any USD / fiat What do you mean by that? What do they do with the tether they issue then?
- riffraff 4y ago
  They mean there is no proof they issued tether for real money, and instead they could have issued it for collateral in crypto or IOU by other crypto entities. Which would explain why nobody in the financial industry knows them even if they supposedly manage 60B$.
  - drexlspivey 4y ago
    Why would you exchange tether for crypto or IOUs that are super risky and have no cash flow instead of risk free dollars that you get to keep the interest? First one sounds like suicide while the second is a very lucrative business.
    - JumpCrisscross 4y ago
      > Why would you exchange tether for crypto or IOUs They’re your own IOUs [1]. Imagine if SBF had Tether. [1] https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal https://ag.ny.gov/press-release/2021/attorney-general-james-...
    - oneoff786 4y ago
      Because there’s someone dumber willing to give you money for it
    - lazide 4y ago
      Because no banks will work with them and the US gov’t is constantly trying to track them down - and has a stranglehold on USD banking in the world. Read the NYAG report, it’s pretty crazy.
      - evdubs 4y ago
        They work with Deltec Bank. https://tether.to/en/tether-banking-relationship-announced/ https://tether.to/en/tether-banking-relationship-announced/ From https://www.deltecbank.com/2022/09/01/the-history-of-stablecoins/ https://www.deltecbank.com/2022/09/01/the-history-of-stablec... > Tether > Launched in 2014, Tether (USDT) came to extraordinary success with a current market capitalization exceeding 67 billion USD. > This stablecoin fixes the issues inherent in the previous three. It relies not upon volatile reserves or the idea of persistent arbitrage trading, but on hard reserves of fiat currency. For every Tether coin in existence, there is one US dollar in a vault backing its existence. > In this way, the stablecoin handles a complete theoretical rout with ease. Tether continues to serve the burgeoning digital asset space while garnering the implicit affection of regulators.
        lazide 4y ago
        Glad they finally found someone - well maybe. Interesting relationships with FTX - apparently SBF gave them a $50 million loan to keep operating, and they’re neck deep in that mess. https://www.forbes.com/sites/davidjeans/2023/01/15/ftx-deltec-bank-jean-chalopin-moonstone/?sh=7a576b6011e4 https://www.forbes.com/sites/davidjeans/2023/01/15/ftx-delte... Might want to give them a year or two before figuring that isn’t another smokescreen.
        evdubs 4y ago
        That's not as concerning as a bank that lent money to FTX, though, right? If you take a loan from someone that goes bankrupt, you pay them back through whatever process is established by the bankruptcy court. If you loan money to someone that goes bankrupt, you're most likely sitting on a loss. Deltec's response is that they're awaiting instructions on how to repay the loan: https://www.deltecbank.com/2023/01/16/deltec-bank-trust-limited-statement-on-recent-events/ https://www.deltecbank.com/2023/01/16/deltec-bank-trust-limi...
    - tsimionescu 4y ago
      Because it costs them nothing to "create" 1M USDT and exchange it for nothing. So, they create 1M USDT out of thin air, and "sell" it to some crypto exchange that wants to claim it can redeem 1M$, in exchange for some other crypto or IOUs or whatever. The exchange is happy because it can now sell 1M more USDT. Tether is happy because they got something that is nominally worth 1M$ at no cost to them. Of course, someone somewhere in the future will be left holding the bag. But if they can keep it going, and if they do manage to sell some USDT for real money (which they certainly did), then they can still make a load of profit.

drexlspivey 4y ago

> They could have as well never received any USD / fiat What do you mean by that? What do they do with the tether they issue then?

riffraff 4y ago
They mean there is no proof they issued tether for real money, and instead they could have issued it for collateral in crypto or IOU by other crypto entities. Which would explain why nobody in the financial industry knows them even if they supposedly manage 60B$.
- drexlspivey 4y ago
  Why would you exchange tether for crypto or IOUs that are super risky and have no cash flow instead of risk free dollars that you get to keep the interest? First one sounds like suicide while the second is a very lucrative business.
  - JumpCrisscross 4y ago
    > Why would you exchange tether for crypto or IOUs They’re your own IOUs [1]. Imagine if SBF had Tether. [1] https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal https://ag.ny.gov/press-release/2021/attorney-general-james-...
  - oneoff786 4y ago
    Because there’s someone dumber willing to give you money for it
  - lazide 4y ago
    Because no banks will work with them and the US gov’t is constantly trying to track them down - and has a stranglehold on USD banking in the world. Read the NYAG report, it’s pretty crazy.
    - evdubs 4y ago
      They work with Deltec Bank. https://tether.to/en/tether-banking-relationship-announced/ https://tether.to/en/tether-banking-relationship-announced/ From https://www.deltecbank.com/2022/09/01/the-history-of-stablecoins/ https://www.deltecbank.com/2022/09/01/the-history-of-stablec... > Tether > Launched in 2014, Tether (USDT) came to extraordinary success with a current market capitalization exceeding 67 billion USD. > This stablecoin fixes the issues inherent in the previous three. It relies not upon volatile reserves or the idea of persistent arbitrage trading, but on hard reserves of fiat currency. For every Tether coin in existence, there is one US dollar in a vault backing its existence. > In this way, the stablecoin handles a complete theoretical rout with ease. Tether continues to serve the burgeoning digital asset space while garnering the implicit affection of regulators.
      - lazide 4y ago
        Glad they finally found someone - well maybe. Interesting relationships with FTX - apparently SBF gave them a $50 million loan to keep operating, and they’re neck deep in that mess. https://www.forbes.com/sites/davidjeans/2023/01/15/ftx-deltec-bank-jean-chalopin-moonstone/?sh=7a576b6011e4 https://www.forbes.com/sites/davidjeans/2023/01/15/ftx-delte... Might want to give them a year or two before figuring that isn’t another smokescreen.
        evdubs 4y ago
        That's not as concerning as a bank that lent money to FTX, though, right? If you take a loan from someone that goes bankrupt, you pay them back through whatever process is established by the bankruptcy court. If you loan money to someone that goes bankrupt, you're most likely sitting on a loss. Deltec's response is that they're awaiting instructions on how to repay the loan: https://www.deltecbank.com/2023/01/16/deltec-bank-trust-limited-statement-on-recent-events/ https://www.deltecbank.com/2023/01/16/deltec-bank-trust-limi...
  - tsimionescu 4y ago
    Because it costs them nothing to "create" 1M USDT and exchange it for nothing. So, they create 1M USDT out of thin air, and "sell" it to some crypto exchange that wants to claim it can redeem 1M$, in exchange for some other crypto or IOUs or whatever. The exchange is happy because it can now sell 1M more USDT. Tether is happy because they got something that is nominally worth 1M$ at no cost to them. Of course, someone somewhere in the future will be left holding the bag. But if they can keep it going, and if they do manage to sell some USDT for real money (which they certainly did), then they can still make a load of profit.