[HN Gopher] Federal investigators probe Tether
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       Federal investigators probe Tether
        
       Author : dcgudeman
       Score  : 73 points
       Date   : 2024-10-25 18:08 UTC (4 hours ago)
        
 (HTM) web link (www.wsj.com)
 (TXT) w3m dump (www.wsj.com)
        
       | JumpCrisscross wrote:
       | Tether was launched in 2014 [1]. It has over $120bn in
       | outstanding liabilities against unknown assets [2]. When it
       | fails, it will rival the fourth-largest 'bank' failure in U.S.
       | history [3].
       | 
       | This has been a complete failure of U.S. regulatory bodies.
       | 
       | [1] https://www.investopedia.com/terms/t/tether-usdt.asp
       | 
       | [2] https://coinmarketcap.com/currencies/tether/
       | 
       | [3]
       | https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...
        
         | SheinhardtWigCo wrote:
         | It really is just a bank without any of the regulatory
         | safeguards. A disastrous outcome is inevitable.
        
           | JumpCrisscross wrote:
           | > _really is just a bank without any of the regulatory
           | safeguards_
           | 
           | A "bank is a financial institution that accepts deposits from
           | the public and creates a demand deposit while simultaneously
           | making loans" [1]. Tether doesn't offer demand deposits--
           | withdrawals are subject to a minimum and fee [2]. It's thus
           | not a bank, but a bank-like shadow bank [3].
           | 
           | [1] https://en.wikipedia.org/wiki/Bank
           | 
           | [2] https://tether.to/en/redeem-tethers-to-fiat-currency/
           | 
           | [3] https://en.wikipedia.org/wiki/Shadow_banking_system
        
         | TheAlchemist wrote:
         | Exactly - a massive failure of regulatory bodies. I wonder why.
         | It was similar with Madoff - there were people literally
         | sending documents showing it's a fraud, and they did nothing
         | for years.
         | 
         | I don't follow crypto lately, but it seems that Tether is
         | printing money in high interest rate period.
         | 
         | But back before that, it was a complete joke - it was so
         | apparent that they published only made up numbers that didn't
         | really add up, pretended to get legitimate transfers of
         | billions of $ on Sundays etc.
         | 
         | They were investigated once by a US A.G. and found out to have
         | lied on the reserves in the past, but nothing really serious
         | happened. They got a fine and were forced to published a pseudo
         | balance sheet, which was a joke (still a bit better than FTX's
         | Excel spreadsheet).
        
           | llamaimperative wrote:
           | > Exactly - a massive failure of regulatory bodies. I wonder
           | why. It was similar with Madoff - there were people literally
           | sending documents showing it's a fraud, and they did nothing
           | for years.
           | 
           | For this to mean much (unfortunately), we have to know how
           | many legitimate companies are being constantly reported as
           | fraudulent. Similar to the FBI's flawless "they were on our
           | radar" after every mass shooting event... if _everyone_ is on
           | the radar then it 's not that informative that this person
           | was too.
           | 
           | Madoff's returns were so egregious that they definitely
           | should've been looked into despite any of this^ though.
           | Arguably Tether should be looked into if only because of the
           | systemic risk it (allegedly?) produces for the crypto
           | universe more broadly. But then again... no one seems to
           | eager to spend a bunch of investigative resources to bail out
           | an economy of anti-government gamblers/degenerates.
        
           | fellowniusmonk wrote:
           | Free money and failure to regulate means scammers have never
           | been more flush and able to talk with money. It's not a great
           | space to be in, glad this administration placed Lina Kahn and
           | others, without competition free markets can't operate
           | efficiently. Both regulatory capture and natural monopolies
           | all jam up the works. People don't remember it but one of the
           | best things that ever happened to tech was the anti-trust
           | suit brought against M$, anti-competitive behavior is such a
           | drag on tech innovation, that combined with the incremental
           | win for right to repair is all great progress.
        
         | HWR_14 wrote:
         | Aren't you comparing the wrong values. Those banks that failed
         | had more _assets_ than tether has _liabilities_.
         | 
         | However, the actual difference between assets and liabilities
         | was significantly less than 120bn for those banks. With Tether,
         | I imagine the collapse will go from 1:1 redemptions day 1 to
         | "oops all gone" day 2.
         | 
         | So I expect Tether to be the largest "bank" failure in US
         | history by terms of loss of value.
        
         | paulpauper wrote:
         | Just another reason why crypto is inferior. So much risk , no
         | upside. like investing in mortgage/ bank stocks in 2007.
        
           | BLKNSLVR wrote:
           | No upside?
           | 
           | Historically, or purely in the context of this article,
           | assuming it's true?
        
       | satvikpendem wrote:
       | Ah, finally, will Tether get its day in the litigious sun? It's
       | well known in cryptocurrency circles that their coin is not
       | backed 1:1 to USD, similar to FTX, only that FTX crashed and this
       | was found out the easy way. Cracking Tether will be much harder
       | as they resist audits.
        
         | JumpCrisscross wrote:
         | > _Cracking Tether will be much harder as they resist audits_
         | 
         | If Tether is sanctioned, they can't hold most dollar-
         | denominated assets. Certainly none of the safe or liquid ones.
         | Figuring out why it failed may take some digging. But causing
         | it to fail is trivial.
        
         | alchemist1e9 wrote:
         | > It's well known in cryptocurrency circles that their coin is
         | not backed 1:1 to USD, similar to FTX, only that FTX crashed
         | and this was found out the easy way.
         | 
         | Being speculated about is not the same as "known". In fact
         | every tether investigation seems to end up showing they are
         | even over capitalize and hold more than 1:1!
         | 
         | My understanding of the audit situation was that the big
         | accounting firms have refused to do it, presumably due to
         | pressure from someone to not get involved.
        
           | JumpCrisscross wrote:
           | > _every tether investigation seems to end up showing they
           | are even over capitalize and hold more than 1:1_
           | 
           | The one adversarial investigation I know of found the
           | opposite [1].
           | 
           | > _presumably due to pressure from someone to not get
           | involved_
           | 
           | Not how audit works.
           | 
           | [1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settle
           | men...
        
           | cool_dude85 wrote:
           | Can you link one of these investigations that show that
           | tether is backed more than 1:1 with the USD?
        
             | alchemist1e9 wrote:
             | I will try to find it. I would also point out they hold
             | excess reserves in Bitcoin.
             | 
             | My guess is nobody can get them on not being 1:1 but this
             | idea of AML violations as the attack vector makes a lot of
             | sense.
        
               | JumpCrisscross wrote:
               | > _they hold excess reserves in Bitcoin_
               | 
               | We had precisely the same amount of information about
               | FTX's Bitcoins as we do for Tether, for what it's worth.
        
               | alchemist1e9 wrote:
               | bc1qjasf9z3h7w3jspkhtgatgpyvvzgpa2wwd2lr0eh5tx44reyn2k7sf
               | c27a4
               | 
               | Isn't that the public Tether bitcoin address with over
               | 75K coins?
               | 
               | https://platform.arkhamintelligence.com/explorer/address/
               | bc1...
               | 
               | That's precisely A LOT more than anyone knew about FTX's
               | non-existent Bitcoin.
        
               | JumpCrisscross wrote:
               | That is a wallet with a lot of Bitcoins in it. We don't
               | know to what degree it's controlled by Tether. We don't
               | know the degree to which it's otherwise encumbered. If I
               | recall correctly, FTX also pointed to wallets with
               | Bitcoins in them from time to time.
               | 
               | To be clear, I am not saying Tether is committing fraud.
               | Just that to the extent there have been investigations,
               | they came up short, and that them being short is not even
               | among the main risks to their existence.
        
               | bombcar wrote:
               | Isn't the whole argument against Tether that they print
               | Tether out of nothing, buy Bitcoin with it, and now have
               | Bitcoin (and increased the price of Bitcoin)?
        
               | alchemist1e9 wrote:
               | Actually, the NYAG settlement doesn't support that
               | conspiracy theory. The investigation found no evidence
               | that Tether printed USDT 'out of nothing' to manipulate
               | Bitcoin. The issues raised were about transparency in
               | Tether's reserves during specific periods when funds were
               | managed by third parties, not about unbacked issuance.
               | Tether has since updated its policies, making clear the
               | types of assets backing USDT.
        
               | roenxi wrote:
               | > I would also point out they hold excess reserves in
               | Bitcoin.
               | 
               | Regardless of whether that is true or not, seems like a
               | terrible idea. Tether doesn't need backing on the crypto
               | side of the ledger - they can create new tether there. If
               | there is a depeg, it'll be from a large amount of money
               | flowing from Bitcoin -> USD or the like. It is highly
               | likely that will correlate to the price of bitcoin
               | dropping (possibly substantially in the event of a Tether
               | depeg). So I'd expect the valuation of their reserves to
               | correlate in a bad way with the chance of them needing to
               | sell those reserves.
               | 
               | Presumably they're doing this for operational reasons but
               | I wouldn't put much weight to it in a discussion on
               | Tether's resilience.
               | 
               | Plus, being a cynic I'd treat that as evidence _against_
               | Tether being fully backed. Crypto that Tether owns
               | directly could easily have been purchased without any
               | fiat money entering the crypto ecosystem.
        
               | timssopomo wrote:
               | The issue is that "stablecoin" doesn't mean anything
               | legally. US regulators have collectively abdicated their
               | responsibility to create fair rules that encourage
               | innovation while protecting investors and creditors.
               | 
               | Tether publishes their reserves [1], only 4% are Bitcoin.
               | 84% is "cash & cash equivalents & other short-term
               | deposits", 3% is precious metals, 5.55% is "secured
               | loans". They report $5B in net equity, ~4.2%. So
               | basically, if their collection of assets declines in
               | value by 4.2%, they become unable to redeem every coin.
               | There are a _lot_ of ways for that to happen with 87% of
               | their assets in T-bills and money market funds. If the
               | shortest T-bill is 4 weeks to maturity, they have plenty
               | of time to incur interest rate risk (e.g.: Silicon Valley
               | Bank).
               | 
               | [1]: https://tether.to/en/transparency/?tab=reports
        
             | jdenning wrote:
             | This is the most recent one linked on their site[1]:
             | 
             | https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtY
             | g...
             | 
             | Edit: to save people a click, the report shows 125 Billion
             | in assets vs 113 Billion in liabilities. Approx 81 Bil in
             | T-bills
             | 
             | [1]https://tether.to/en/transparency/?tab=reports
        
               | JumpCrisscross wrote:
               | FFS, we're like three years out from FTX and we're taking
               | RAEs seriously again?
        
           | jujube3 wrote:
           | It would be very simple for Tether to just hold $1 for each 1
           | Tether coin. They could invest their cash in safe assets like
           | treasury bills that yield 4% or more. Meanwhile, they pay no
           | interest in Tethers. So they get a 4% return for doing
           | nothing at all.
           | 
           | As far as I know, there is no evidence that they are doing
           | anything else. (There is some evidence that they did
           | something else in the past, when interest rates were way
           | lower.) But this hasn't stopped tons of people from
           | speculating that they are.
        
             | from-nibly wrote:
             | If it was that easy then we'd probably see more banks that
             | do just that.
        
               | pavlov wrote:
               | That is what banks do.
               | 
               | But it's more complicated because the current trading
               | value of a bond is not the same as the expected return
               | you'd get if you hold it to maturity. Last year Silicon
               | Valley Bank and others got into trouble for this reason.
               | 
               | Let's say you invested $100M into a 10-year bond when
               | interest rates were at 2%. With interest, you'll be
               | getting back about $122M in ten years. Nice.
               | 
               | But what if you're a bank and suddenly every depositor
               | wants to withdraw that $100M? You can't wait ten years.
               | You need to sell the bond. Now you face the problem that
               | interest rates are at 4%. Somebody with $100M can invest
               | it in a 10-year bond that will return $148M instead of
               | your measly $122M. So nobody will pay full price for your
               | 2% bond because they can get a better return elsewhere.
        
             | JumpCrisscross wrote:
             | > _there is no evidence that they are doing anything else_
             | 
             | There is a _lot_ of evidence they aren 't just buying
             | Treasuries. The only times people looked, the money was
             | being held in weird stuff, including frozen deposits at
             | non-FDIC insured banks and private loans [1].
             | 
             | [1] https://ag.ny.gov/sites/default/files/2021.02.17_-_sett
             | lemen...
        
             | treyd wrote:
             | > It would be very simple for Tether to just hold $1 for
             | each 1 Tether coin.
             | 
             | It would _not_ be  "very simple" for them to do this. _No_
             | commercial bank lets you walk up to the teller with $1B and
             | ask to deposit it, much less $93B. The financial system
             | doesn 't work that way. They _have_ to cycle it through
             | bonds on the repo market, which is what most huge firms do.
        
         | yieldcrv wrote:
         | > It's well known in cryptocurrency circles that their coin is
         | not backed 1:1 to USD
         | 
         | Its well known in the legal space and has already been
         | addressed by multiple US courts. They're not looking for that
         | and this isn't controversial.
         | 
         | Those court cases already happened in 2018-2020. Tether just
         | needed to update its language. A financial institution not
         | backed 1:1 to USD isn't a problem in any part of the banking
         | sector, they just need a disclaimer that says that, and Tether
         | updated their's and moved on. Those court cases were also about
         | specific periods of time and were very intelligent and more
         | nuanced than the Tether discourse in crypto spaces. Tether has
         | periodically had more assets available, and its only
         | controversy was about whether those were USD and US Treasuries
         | amongst other things.
         | 
         | This is a probe about violating AML laws and sanctions. Which
         | would likely only involve specific addresses in crypto and some
         | onramps. But otherwise crypto-crypto trading won't be a part of
         | this.
        
           | JumpCrisscross wrote:
           | > _a probe about violating AML laws and sanctions. Which
           | would likely only involve specific addresses in crypto and
           | some onramps. But otherwise crypto-crypto trading won 't be a
           | part of this._
           | 
           | You think a dollar stablecoin won't be affected by being
           | prohibited from touching dollars or the dollar financial
           | system?
        
             | yieldcrv wrote:
             | I didn't say that, that statement doesn't imply that or
             | suggest that.
             | 
             | The result of this probe likely won't be that as the DOJ is
             | just emboldened by their Binance and CZ conviction, where
             | the founder spent a couple months at a Southern California
             | Federalbsummer camp and the DOJ got a few billion dollars,
             | and Binance continues to operate as before and no further
             | regulatory overhang is above them and all the money coming
             | in and out is magically seen as clean.
        
               | JumpCrisscross wrote:
               | Fair enough. That said, Binance can co-operate with
               | authorities in a way Tether may be technically limited in
               | being able to.
        
         | fallinditch wrote:
         | Here's a fascinating piece of history that sheds light on the
         | Bitfinex/FTX/Tether shenanigans. Originally a Medium post that
         | was removed at some point, here's an archived copy. It details
         | how Bitfinex/Tether manipulated BTC to make serious $$.
         | 
         | I think the article also points to the origins of the FTX
         | fraud: was Sam Bankman Fried involved in these BTC
         | manipulations? Or inspired by it to create his own exchange?
         | 
         | https://web.archive.org/web/20180620111632/https://medium.co...
        
       | daft_pink wrote:
       | deleted. I have to figure out the exact agency and repost sorry.
       | I thought it was the sec, but I am wrong.
        
         | JumpCrisscross wrote:
         | > _Tether effectively evaded future SEC oversight by
         | withdrawing from the U.S. market and operating outside U.S.
         | jurisdiction_
         | 
         | U.S. "jurisdiction is triggered when a payment in U.S. dollars
         | [takes] place and the U.S. financial system [is] used" [1].
         | 
         | EDIT: Tether withdrew from New York State's jurisdiction as
         | part of its settlement with the New York AG [2], not to be
         | confused with the U.S. attorney based in Manhattan.
         | 
         | [1]
         | https://www.ziv.unibe.ch/unibe/portal/fak_rechtwis/c_dep_pri...
         | 
         | [2]
         | https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
        
       | neonate wrote:
       | https://www.msn.com/en-us/money/markets/federal-investigator...
       | has the article
        
       | alchemist1e9 wrote:
       | https://x.com/paoloardoino/status/1849876338573799912
       | 
       | CEO of Tether - "As we told to WSJ there is no indication that
       | Tether is under investigation. WSJ is regurgitating old noise.
       | Full stop."
        
         | JumpCrisscross wrote:
         | U.S. attorneys are under no obligation to tell people they are
         | investigating that they are under investigation. That doesn't
         | prove the _Journal_ 's assertion. But it's nonsense to the
         | point of suspicion to conclude from not having been noticed
         | that there is no investigation.
        
         | dogmayor wrote:
         | Yeah that's not how investigations work. USAOs don't publicize
         | ongoing investigations for obvious reasons. Once they wrap up
         | an investigation but before convening a grand jury to indict,
         | they may send a target letter, but they typically don't. Most
         | often, people don't find out until they're indicted.
        
         | Bluescreenbuddy wrote:
         | Going to screenshot that incase it ages like milk.
        
           | paulpauper wrote:
           | yup. his words mean little
        
         | paulpauper wrote:
         | "trust me bro"
         | 
         | Someone tipped off the WSJ, and more will probably be
         | developing
        
       | qqqult wrote:
       | Yearly Tether obituary thread
        
         | JumpCrisscross wrote:
         | > _Tether obituary thread_
         | 
         | Timing its collapse is foolhardy. Concluding it must collapse
         | isn't. It's a shadow bank run without deposit insurance nor
         | AML.
        
           | qqqult wrote:
           | Why must it collapse?
        
             | JumpCrisscross wrote:
             | > _Why must it collapse?_
             | 
             | One, because the consequences of an AML failure are
             | immediately catastrophic: a dollar stablecoin can't
             | reasonably survive without access to the dollar financial
             | system. Tether's unregulated status means enforcement
             | options are zero or ban. (Banks can be fined and put under
             | compliance regimes.) Running a perfect AML programme
             | indefinitely is impossible. There is no indication Tether
             | runs much of an AML programme at all.
             | 
             | Two, because bank-like structures are inherently unstable.
             | Asset values fluctuate. The banks they hold cash or assets
             | at will fail, sometimes beyond deposit insurance limits.
             | Unlike banks, Tether has the benefit of being able to block
             | redemptions. But they can only do that so many times before
             | a regulator takes notice.
             | 
             | In summary, Tether exists at the pleasure of American
             | regulators and the consequences of losing favour are
             | collapse. They're compliance-wise and financially unstable.
             | The consequences of a single failure won't be catastrophic.
             | But eventually they will fail for the same reason every
             | bank without deposit insurance will, eventually, fail.
        
             | alchemist1e9 wrote:
             | Governments don't like stable coins so even if it is
             | perfectly 1:1 they will still try to find a way to go after
             | them.
             | 
             | Other commenters have hinted the path is "sanctions" for
             | not enforcing some controls..
             | 
             | Personally I can't wait for governments to go after stable
             | coins, then Bitcoin will really "moon"!
        
               | JumpCrisscross wrote:
               | > _Governments don't like stable coins so even if it is
               | perfectly 1:1 they will still try to find a way to go
               | after them_
               | 
               | There are plenty of regulated stablecoins [1]. Hell, my
               | state is launching one [2].
               | 
               | Governments usually have to subpoeana banks to get
               | transaction records. With a stablecoin, those records are
               | centralised.
               | 
               | [1] https://home.treasury.gov/system/files/136/StableCoin
               | Report_...
               | 
               | [2] https://www.ledgerinsights.com/state-of-wyoming-
               | plans-stable...
        
         | BLKNSLVR wrote:
         | It's more "every four years" at about this time isn't it?
        
       | charliebwrites wrote:
       | My unsubstantiated conspiracy theory on this is that not only is
       | Tether not backed 1:1 USD > USDT but that they are so
       | disproportionately not backed that they basically printed money
       | during the peak of the pandemic, causing real measurable
       | inflation in the crypto markets
        
       | ldjkfkdsjnv wrote:
       | How bitcoin got huge was basically tether money printing. since
       | it wasnt backed by anything, they just printed tether and bought
       | bitcoin. a group did it behind the scenes, got massively wealthy.
        
         | FireBeyond wrote:
         | And at stupid numbers that cryptofans just ate up like it was
         | perfectly logical.
         | 
         | "Oh, you're banking $700M PER DAY in deposits for Tether?
         | Sounds legit to me!"
        
       | wmf wrote:
       | I don't know why, but the one thing cryptobros fear is OFAC. They
       | shrug off fraud, securities violations, and money laundering but
       | when sanctions are mentioned people start running away. We saw
       | this with Tornado Cash and hopefully Tether will get OFACed next.
       | 
       | BTW, Tether probably is backed 1:1 or better because they bought
       | $XXB of US treasury bonds at >4% which return billions in profit
       | per year. BTC is also (currently) near all time highs. Whatever
       | hole they had was probably filled in.
        
       | pessimizer wrote:
       | Both presidential candidates have signaled that they are pro-
       | crypto scams (and one thinks that has something to do with the
       | welfare of black men.) It's too late. Bitcoin has entered the
       | house price zone, where people are elected to office on promises
       | to make housing _as expensive as possible._ We 'll have to wait
       | until crypto brings down the entire economy. And after it does,
       | the people who hold it will be bailed out:
       | 
       | "Do you know how many disadvantaged minorities are invested in
       | crypto? Especially after we allowed them to invest their social
       | security into it, with matching contributions from the state if
       | they agree to hodl? Are you a racist monster?"
       | 
       | Meanwhile 90% of black people will have 90% of their savings in
       | crypto, accounting for less than 2% of all crypto holdings.
       | 
       | FTX so far was barely a speedbump. All it taught politicians is
       | that there's a lot of money in doing what crypto whales say, and
       | absolutely no consequences even if it goes belly up in the worst
       | way.
        
         | paulpauper wrote:
         | It's just pandering. Neither candidate will do anything.
         | Existing regulation will stay in place or tighten.
        
       | BLKNSLVR wrote:
       | Good timing, along with the election. Going by history there's
       | the likelihood of a ~20% dip in the BTC price before it takes a
       | couple of big steps up in the last few months of the bull run
       | part of the 4-year cycle.
       | 
       | If it happens, accumulate.
        
         | gosub100 wrote:
         | Don't buy a pizza with it, or help Aunt Mildred with an
         | expense, or loan your brother $4k though, because it's useless
         | for any practical purposes.
        
           | BLKNSLVR wrote:
           | I'm aware of these things, but good points to know for the
           | uninitiated.
        
         | paulpauper wrote:
         | Why would I accumulate something which has so much risk and so
         | much downside when I can just buy tech stocks like TSLA or NVDA
         | which actually go up, with less risk and less volatility? Meta,
         | Nvidia, QQQ have beaten bitcoin for years now. The time to have
         | bought bitcoin was pre-2017 or so. those days over for good.
         | Bitcoin is weak and bloated, never goes up anymore, too many
         | old wallets and whales dumping. Too much regulation.
        
           | BLKNSLVR wrote:
           | Depends on your timescale and when to buy and sell.
           | 
           | Depending on the reason, I'd also say it would be worth
           | buying Meta, NVDA, TSLA, etc. on a 20% dip, especially if
           | they were going into a season where, historically, they makes
           | their largest gains.
        
       | 100k wrote:
       | Zeke Faux's Number Go Up (https://www.amazon.com/Number-Go-Up-
       | Cryptos-Staggering/dp/05...) started as an investigation into
       | Tether. He found some extremely suspect clues, but he wasn't able
       | to crack it. Hopefully the feds are able to shed some light on
       | it.
        
       | stogot wrote:
       | From what I've seen, they waited a couple years longer than they
       | should have. I expect tether deleted evidence by now
        
       | gws wrote:
       | For those doubting that Tether is fully backed, note that Howard
       | Lutnick, CEO of Cantor Fitzgeral, one of the largest investment
       | banks and a public company, has stated that Cantor Fitzgeral
       | manages Tether's money and indeed the money is all there and
       | invested in US treasury bonds
        
         | JumpCrisscross wrote:
         | > _Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest
         | investment bank and a public company, has stated that Cantor
         | Fitzgeral manages Tether's money and indeed the money is all
         | there and invested in US treasury bonds_
         | 
         | Source? I'm seeing Fitzgerald say "Cantor Fitzgerald manages
         | 'many many' of" Tether's assets (not all) and that he can vouch
         | for their balance sheet [1]. But _not_ that Cantor manages all
         | of its assets nor that it 's all in Treasuries.
         | 
         | [1]
         | https://www.bloomberg.com/news/articles/2024-01-16/tether-s-...
        
           | gws wrote:
           | The most comprehensive and forceful statements are in this
           | video: https://youtu.be/IjR3Hj0aRW4?si=s2D0wjQOIS5uiFKh
        
         | pfisherman wrote:
         | What are the incentives at work here? What is their risk
         | exposure to a collapse of tether? What would be the reputation
         | al risk to their firm if tether was a scam?
         | 
         | I personally would take this with a grain of salt as they have
         | a direct financial interest in Tether looking solid and
         | prestigious and continuing its present operations.
         | 
         | I am old enough to remember when investment banks touting their
         | mortgage backed securities business before the collapse in
         | 2008.
        
       | jerry1979 wrote:
       | I'm very curious to see how this investigation plays out,
       | especially considering the debt situation here in the US. It
       | appears (according to tether's audit reports) that tether went
       | from about 64 billion in treasuries mid-2023 to about 92 billion
       | mid-2024. That's 27 billion in demand for treasuries over that
       | one year period which (if my math and research is correct) is
       | about 3% of all treasury demand for roughly that time period.
       | 
       | It does appear that tether holds short-term maturity treasuries,
       | and I don't know how that fits into the larger demand picture.
       | 
       | https://assets.ctfassets.net/vyse88cgwfbl/63oJePOHqIvrcnXWMP...
       | 
       | https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtYg...
       | 
       | https://ticdata.treasury.gov/resource-center/data-chart-cent...
        
       | paulpauper wrote:
       | This is just another example of how shorting Bitcoin during
       | market hours is such an effective strategy, which is as
       | profitable now at $60k as it was at $20k. This takes advantage of
       | the tendency of bad news to drop when the stock market is open.
       | Federal government offices are closed on weekends, so if bad news
       | is dropped or a rumor of bad news, it will be on a weekday and
       | when the market is open, as has been the case.
       | 
       | Good news can also drop, but there is a major asymmetry favoring
       | bad news and liquidations, and consequently sudden drops of the
       | Bitcoin price. You don't have to work at a hedge fund to find
       | great methods like this.
       | 
       | It also shows why Bitcoin is an inferior investment compared to
       | tech stocks, in which investors do not have to worry about these
       | regulatory risks (except for antitrust, which is a slow, drawn-
       | out process and this can be mitigated with diversification). QQQ
       | has far outperformed Bitcoin even as far back as 2020.
        
       | domoregood wrote:
       | https://archive.is/bCRd3
        
       | ironyman wrote:
       | Tether's press release: https://tether.io/news/tether-slams-wsjs-
       | irresponsible-repor...
        
         | lolinder wrote:
         | Is it actually just those two paragraphs, or is something not
         | rendering correctly?
         | 
         | If that's all there is, it's not a great defense. Maybe they
         | felt like the WSJ article was just so unfair it didn't deserve
         | a response, but then... just don't respond. This kind of
         | righteous indignation with no actual rebuttal isn't persuasive.
        
       | cryptica wrote:
       | If Tether is a fraud then the entire financial system is clearly
       | a fraud as well. What kind of financial system allows a fraud of
       | this size to continue for over a decade? Let me guess, nobody
       | knew anything. Yet the government knows about every transaction
       | over $600 on all our accounts. It's clown world.
        
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