6 ms·

Well the argument completely hinges on the assumption, that this Paxos outfit is not the same kind of shit show practically all the other crypto exchanges/issue

Well the argument completely hinges on the assumption, that this Paxos outfit is not the same kind of shit show practically all the other crypto exchanges/issuers/brokers/funds are. Since the majority of major crypto companies have to be shown to be either incompetent or fraudulent, I for one would not bet on that. Since there is almost no money to be made with the "stablecoin" business model (at least compared to the profits/illicit gains of other crypto business models), the probability that something shady is going on is unfortunately quite high.

pavlov 3y ago
Stablecoins seem like the stereotypical ZIRP (zero interest rate phenomenon). When you couldn’t get a return on deposits (or safe government debt) anyway, it didn’t seem completely crazy to park your dollars with a company that doesn’t pay interest either, but at least lets you do highly leveraged trading against hapless crypto retail investors around the world. Now that the crypto retail boom is over and money has a price again, the notion of sending your dollars to a one-horse-show outfit like Tether or Paxos is much less appealing. They can vanish overnight and you don’t even have the $250k federal insurance like on US bank accounts.
- delabay 3y ago
  Stablecoin operators are making money hand over fist in the post-ZIRP era. Real, actual revenue. If crypto has demonstrated clear PMF for anything, it's that the world loves stablecoins denominated in dollars.
  - pavlov 3y ago
    You have to ask, who are the people who love this product? Sure, if you make moving dollars easy, there are people who will use it. But is it an investment product at all? Here’s an example of how Tether gets used in the real world: “I’d been hearing rumors about illicit uses of Tether—I’d seen court documents containing intercepted messages from a Russian money launderer promoting it to his clients, for one thing—but pig butchering was the most concrete example I found. People around the world really were losing huge sums of money to the con. A project finance lawyer in Boston with terminal cancer handed over $2.5 million. A divorced mother of three in St. Louis was defrauded of $5 million. And the victims I spoke to all told me they’d been told to use Tether, the same coin Vicky suggested to me. Rich Sanders, the lead investigator at CipherBlade, a crypto-tracing firm, said that at least $10 billion had been lost to crypto romance scams.” https://www.bloomberg.com/news/features/2023-08-17/my-crypto-hell-journey-started-with-a-wrong-number-scam-text https://www.bloomberg.com/news/features/2023-08-17/my-crypto...
monooso 3y ago
I'm far from being a crypto apologist, but your comment is based solely on your opinion of other crypto companies. The article is quite clear that Paxos is a regulated Trust Charter, and "...100% backed by the safest sorts of short-term collateral".
- a2800276 3y ago
  [flagged]
  - legutierr 3y ago
    Are you asserting somehow that blockchain tech violates the fundamental physical laws of the universe?
- gryfft 3y ago
  [flagged]
- deleted 3y ago
  [deleted]
- jorams 3y ago
  > Paxos is a regulated Trust Charter Developments in the crypto world have made clear that this doesn't necessarily mean much in this space, so that's why people remain skeptical. Two examples: Prime Trust filed for chapter 11 bankruptcy last month and turned out to have mishandled many millions in customer assets. Fortress Trust was hacked and then bought by Ripple, presumably to cover the losses, just days ago. Now neither of these are Paxos, and it's possible that Paxos is well managed, but if all the other trees keep falling at some point people are going to judge the forest as a whole.
  - jedimind 3y ago
    You could make the exact same argument about the traditional banking system.
    - 3y ago
throwaway28775 3y ago
I used to do some contract work here and there for Paxos, all opinions are subjective and my own etc. The whole thing is a tour de force of the senior heads in the legal department frantically trying to work over, under and around the management crypto bros without them finding out. The churn in some of the departments is over a hundred percent per year. When all is said and done, I find it incredibly impressive that it hasn't gone tits up yet.
somethingsidont 3y ago
Fiat-backed stablecoins have one of the most reliable business models out there: collect money from depositors, buy short-term treasuries with rate X, and distribute interest to holders at rate Y < X (usually Y=0). Excess interest is pure profit. For depositors, this is safer than a typical bank subject to bank runs - AS LONG AS the issuer actually holds the backing treasuries. EDIT: Caveat here is the non-treasury part of the stablecoin backing reserve, e.g. reserves put in a bank. If the underlying bank has a bank run, the stablecoin has a bank run too (effectively without any FDIC insurance, since all stablecoin holders are lumped together, easily exceeding the $250k limit).
- RandomLensman 3y ago
  Holding the treasuries is not enough in a run, need to able to sell them at the required price, too.
  - rcme 3y ago
    The GP mentioned “short term” treasuries which, assuming something like an 7 day maturity, are very stable in price. Reverse repo is also an option.
    - RandomLensman 3y ago
      If everyone in the street knows you are under pressure, watch what happens - even getting $0.9999 back on the $ of your "deposit" would probably have people being upset. And 7 days to get your money is probably longer that what people expect.
      - rcme 3y ago
        You wouldn’t need to wait 7 days. The price of a short-term treasuries is purely based off of the current interest rates. Given that expectations for rates are generally priced in over a 7 day period, there is very little risk.
        3y ago
cantSpellSober 3y ago
Do you have any reason to believe this about Paxos? > the majority of major crypto companies have to be shown to be either incompetent or fraudulent Now we're just broadening the net from "third parties that back coins with short-term collateral" to "crypto companies"?!
janandonly 3y ago
> Since there is almost no money to be made with the "stablecoin" business model Currently, holding USD and giving out crypto USD makes a lot of money for the holders. Just look at Tether making $850 million last quarter alone. Source: https://www.bloomberg.com/news/articles/2023-07-31/tether-attestation-says-second-quarter-profit-was-850-million https://www.bloomberg.com/news/articles/2023-07-31/tether-at...

pavlov 3y ago

Stablecoins seem like the stereotypical ZIRP (zero interest rate phenomenon). When you couldn’t get a return on deposits (or safe government debt) anyway, it didn’t seem completely crazy to park your dollars with a company that doesn’t pay interest either, but at least lets you do highly leveraged trading against hapless crypto retail investors around the world. Now that the crypto retail boom is over and money has a price again, the notion of sending your dollars to a one-horse-show outfit like Tether or Paxos is much less appealing. They can vanish overnight and you don’t even have the $250k federal insurance like on US bank accounts.

delabay 3y ago
Stablecoin operators are making money hand over fist in the post-ZIRP era. Real, actual revenue. If crypto has demonstrated clear PMF for anything, it's that the world loves stablecoins denominated in dollars.
- pavlov 3y ago
  You have to ask, who are the people who love this product? Sure, if you make moving dollars easy, there are people who will use it. But is it an investment product at all? Here’s an example of how Tether gets used in the real world: “I’d been hearing rumors about illicit uses of Tether—I’d seen court documents containing intercepted messages from a Russian money launderer promoting it to his clients, for one thing—but pig butchering was the most concrete example I found. People around the world really were losing huge sums of money to the con. A project finance lawyer in Boston with terminal cancer handed over $2.5 million. A divorced mother of three in St. Louis was defrauded of $5 million. And the victims I spoke to all told me they’d been told to use Tether, the same coin Vicky suggested to me. Rich Sanders, the lead investigator at CipherBlade, a crypto-tracing firm, said that at least $10 billion had been lost to crypto romance scams.” https://www.bloomberg.com/news/features/2023-08-17/my-crypto-hell-journey-started-with-a-wrong-number-scam-text https://www.bloomberg.com/news/features/2023-08-17/my-crypto...

monooso 3y ago

I'm far from being a crypto apologist, but your comment is based solely on your opinion of other crypto companies. The article is quite clear that Paxos is a regulated Trust Charter, and "...100% backed by the safest sorts of short-term collateral".

a2800276 3y ago
[flagged]
- legutierr 3y ago
  Are you asserting somehow that blockchain tech violates the fundamental physical laws of the universe?
gryfft 3y ago
[flagged]
deleted 3y ago
[deleted]
jorams 3y ago
> Paxos is a regulated Trust Charter Developments in the crypto world have made clear that this doesn't necessarily mean much in this space, so that's why people remain skeptical. Two examples: Prime Trust filed for chapter 11 bankruptcy last month and turned out to have mishandled many millions in customer assets. Fortress Trust was hacked and then bought by Ripple, presumably to cover the losses, just days ago. Now neither of these are Paxos, and it's possible that Paxos is well managed, but if all the other trees keep falling at some point people are going to judge the forest as a whole.
- jedimind 3y ago
  You could make the exact same argument about the traditional banking system.
  - 3y ago

throwaway28775 3y ago

I used to do some contract work here and there for Paxos, all opinions are subjective and my own etc. The whole thing is a tour de force of the senior heads in the legal department frantically trying to work over, under and around the management crypto bros without them finding out. The churn in some of the departments is over a hundred percent per year. When all is said and done, I find it incredibly impressive that it hasn't gone tits up yet.

somethingsidont 3y ago

Fiat-backed stablecoins have one of the most reliable business models out there: collect money from depositors, buy short-term treasuries with rate X, and distribute interest to holders at rate Y < X (usually Y=0). Excess interest is pure profit. For depositors, this is safer than a typical bank subject to bank runs - AS LONG AS the issuer actually holds the backing treasuries. EDIT: Caveat here is the non-treasury part of the stablecoin backing reserve, e.g. reserves put in a bank. If the underlying bank has a bank run, the stablecoin has a bank run too (effectively without any FDIC insurance, since all stablecoin holders are lumped together, easily exceeding the $250k limit).

RandomLensman 3y ago
Holding the treasuries is not enough in a run, need to able to sell them at the required price, too.
- rcme 3y ago
  The GP mentioned “short term” treasuries which, assuming something like an 7 day maturity, are very stable in price. Reverse repo is also an option.
  - RandomLensman 3y ago
    If everyone in the street knows you are under pressure, watch what happens - even getting $0.9999 back on the $ of your "deposit" would probably have people being upset. And 7 days to get your money is probably longer that what people expect.
    - rcme 3y ago
      You wouldn’t need to wait 7 days. The price of a short-term treasuries is purely based off of the current interest rates. Given that expectations for rates are generally priced in over a 7 day period, there is very little risk.
      - 3y ago

cantSpellSober 3y ago

Do you have any reason to believe this about Paxos? > the majority of major crypto companies have to be shown to be either incompetent or fraudulent Now we're just broadening the net from "third parties that back coins with short-term collateral" to "crypto companies"?!

janandonly 3y ago

> Since there is almost no money to be made with the "stablecoin" business model Currently, holding USD and giving out crypto USD makes a lot of money for the holders. Just look at Tether making $850 million last quarter alone. Source: https://www.bloomberg.com/news/articles/2023-07-31/tether-attestation-says-second-quarter-profit-was-850-million https://www.bloomberg.com/news/articles/2023-07-31/tether-at...