$1M bounty for details on Tether’s backing
hindenburgresearch.com
hindenburgresearch.com
One challenge may be that, like the Mafia, Tether keeps its inner circle and employs family members. They have ~15 employees for a 70 billion dollar operation.
The CTO’s wife is a manager, and the CEO’s daughter works for an unnamed crypto family office, which may be related.
Their counterparties in Chinese commercial paper may not know they are counterparties due to proxies.
Still, the statements are out there. Zeke Faux from Bloomberg got a copy of their records somehow. They’ve had to give them to the New York Attorney General, and their accountants in the Cayman Islands, among others. And other counterparties may have bits and pieces.
Someone may be tempted by this.
Teth - Er
Teht: The Phoenician letter name ṭēth may mean "spinning wheel" https://en.wikipedia.org/wiki/Teth
ER: Abbreviation for Emergency Room
"Teth" + "ER" = Spinning dangerously out of control, putting one or more lives at risk.
How did I do?
Nein!
My cousin married a guy named "Chris Smith" and I was like, "yeah, that doesn't sound made-up or anything".
good lord, the world is a strange place. or, we make it a strange place...
https://www.bloomberg.com/news/articles/2010-04-13/ubs-order...
Guess it could be the long con.. his first article for Bloomberg was written shortly after Bitcoin was first created...
Nearly all of the smart contract loans are over collateralized, so collateral > borrow isn't too hard to achieve...but yes, probably only likely in crash if collateral is another stable that holds peg.
Just to be clear, I think shorting Tether is a bad idea lol
Hindenburg is not the real deal. If you think Hindenburg is the real deal you should pay closer attention to their activities. They (he) are one of a number of noisy short sellers who try to drive stock prices with their tweets/reports. SEC should be doing things to these people.
That said, he is probably right about Tether. Tether should make every crypto speculator or holder very nervous.
I’m a Hinden-believer I suppose
No one should be blindly believing them, just because they have a good past record.
True. And that is why they don't act on just 'suspicion', but willing to pay to dollars for information.
They did some minimal journalism on them and put it out. And nothing the showed outside of maybe that the truck was going down hill was in the least surprising.
He should be, but they basically gave him the same treatment they give a lot of people: a slap on the wrist.
2. SEC did something to Musk, maybe you forgot, maybe you don't think it was enough, but they did something.
They are 'manipulating the market' in an informal sense, but not in the sense that actually matters. There is nothing wrong with publicly stating that you think some stock is overvalued. Particularly not if you back up your claim with some evidence, which is what Hindenburg does.
If that's what you're arguing for, I might be able to get behind it. But I'm definitely opposed to "pumping the market is fine but countering hype should be illegal".
https://hindenburgresearch.com/about-us/
Which of the items listed there do you have an issue with? Hindenburg were the folks who gave us Nikola rolling their truck down a hill.
:)
Publicity helps move the market which is how they make money. Why do you think that make [him|them] illegitimate? You've not explained this part. It seems to me that you've got an axe to grind with short sellers in general. Hindenburg seems to clearly be "the real deal", whether or not you approve of what "the real deal" is.
There are so many bad companies that are public today, they really need somebody nipping at their heels.
I'm sorry, but no shit? You frame it like there's some insight or conspiracy theory in there.
Again: What is your issue with this? The market has rules, some companies skirt them or outright lie. The size of the market is too large to regulate with our current mechanisms and short sellers fill some of these gaps for a profit. It becomes an issue if the short seller is wrong and causes harm to a company undeservingly, but you haven't proven that case here.
As far as I know they were the ones who broke the NKLA scandal. We need short sellers to keep markets honest and stop fraudsters from taking advantage of the current exuberant markets.
So I do have this information, and want to make $$$$$$$ it's actually in my interest to also collect $1M from Hindenburg, to make this information plabic, *after I've established my positions
They also forced a CEO stepdown at Lordstown motors, got the SEC to investigate and forced the company to amend their accounting statements.
https://en.m.wikipedia.org/wiki/Hindenburg_Research
And their reports have been pretty accurate this year based on long term market reaction: https://breakoutpoint.com/blog/2021/10/activist-short-sellin...
A number of stories were already floating around from former employees.
The company was the most obvious scam I have seen in my life. With minimal intelligence and just 10 min of listening to the CEO made clear that it was a scam company.
Sure they went threw the effort and and gathered that stuff up and did some research, but it was hardly some master-journalism that was required.
This is a thread about Tether, another company that is an obvious scam, that even once admitted in court a few years back that they were only 74% backed.
If Hindenburg makes a report formalizing everything and getting some new research, that might well have a similar effect.
Are sell-side "analysts" who cheerlead their long recommendations not doing the same?
I am inclined to apply, but what would be the the best company? Bitfinex or tether?
But I think it's worth considering what happens if the collapse never comes. If government investigation, findings of wrongdoing, admission of lies, and punishment aren't enough to shake Tether users out of their trees, then what would, exactly?
Ethereum allowed a claw-back of funds lost fair and square to a defective contract. Where is Ethereum now? Oh yeah, near an all-time high and a market cap approaching half a trillion dollars.
What non-users don't get is the fanatical level of devotion by users. It waxes and wanes with the Bitcoin halving cycle, but always comes back stronger than before.
If Tether did somehow implode and users left in droves, something else would come along to take its place and within a year or two and the entire Bitcoin ecosystem would come roaring back stronger than ever.
I share your opinion, and especially true if you have a ~5 year horizon on BTCUSD.
Pick any of the already existing stable coins. We don't even need new technology to replace Tether. We just need international exchanges to support existing stables.
USDC recently received a Wells notice from SEC and had to amend their reserves. Still weird behaviour from them overall: they don’t disclose what their short term commercial paper is, its rating or how much of their cash equivalents it us.
Just today in the financial times Tether claimed USDC also issues USDCs backed by crypto.
And they have funny printing patterns: whenever Tether stops printing, USDC starts.
I noticed that, specially recently. What's going on?
It’s been around years before USDC and maintained its peg through the 2017 collapse, if I recall.
I know it has changed over time (multi-collateral Dai).
BTC had a similar early-phase bug that minted tons of coins by the way, that they also had to “claw back”.
At least pretend to be unbiased.
https://en.bitcoin.it/wiki/Value_overflow_incident
The DAO hack resulted from a poorly-written contract. Concerns about the quality of the contract were ignored by the team. The DAO itself wasn't even part of the Ethereum protocol, just an application running on it.
The DAO was like a Bitcoin transaction that spent all output value to miner fees, which has happened a lot. But at no time did that ever result in a rollback of history.
The response to the DAO was the Ethereum community slapping a giant asterisk on the motto "Code is Law." And the community is quite all right with that.
Short term if USDT collapses, BTC would probably skyrocket due to everybody looking for an exit out how USDT. But long term? What if the BTC demand is simply mostly all fake?
Especially on short notice, with Tethers sitting on an exchange that may not have access to fiat, they will likely sell to BTC or ETH at least at first.
So the price in USDT terms skyrockets and the price in USD terms craters.
In this event we describe though, they may prefer selling for BTC or other cryptocurrency.
They may not have the option of selling for fiat currency, as well, at least not right away.
The assumption that an exit from Tether would lead to an exit from BTC is not necessarily well founded.
People flock to stables/fiat when uncertainty/risk increases, yes? So you have a bunch of people ($70b worth) who are currently in USDT. Then you have to account for all the people currently in crypto who would sell into stables/fiat in a black swan event.
What's the argument against this? You say that the argument is not well founded. Ok, fine. I've outlined my argument. What's the counter? What's the line of thinking where USDT holders en masse flock back into crypto when the safe haven that they already wanted to be in implodes?
Fanatic and devoted fans there maybe, however they don't have limitless fiat money to play with. In the recent past, new found mainstream popularity has fueled inflows into all kinds of crypto products sustaining the strong bull runs despite significant and clear risks.
This popularity has little to do with widespread belief in distributed / unregulated financial systems, and more because these assets have outperformed traditional instruments spectacularly, the allure of making ton of money fast. Eventually it will fade either because there is not enough new people who can/will put more money or an unsustainable growth tapers off.
When ( not if) the second set of players leave inevitably after enough scams, the hardcore fans that will remain and prop up the market and keep it going yes. However without non fanatic users there is not enough money to come roaring back like in the past.
To be clear, it may take a few years or more and few cycles of what you say, markets can stay irrational for a very long time, it is unstable equilibrium nonetheless, and eventually will correct permanently
Also, in terms of siphoning of "real money" from the ecosystem each time, if some of the money going in is fake, i.e. Tether printing without having 1:1 USD backed up, and that is going back into crypto, then how do we quantify that exactly, in terms of "real money" lost? Is it because "real money" is also buying at the inflated prices, or is it because some of the Tether that is buying other crypto is backed up by "real money"? I'm trying to understand the argument here.
Issuing more tokens than the money they have is basically inflation and devalues all holdings.
Yes non profitable without a clear path to profit, or pre-revenue companies is a lot of smoke for risky value, however in most revenue generating companies there is underlying asset which generates some cash every year and that is always worth something.
With currency everything is abstract and depends only on trust in the system for its intrinsic value.
This is why U.S. is able to use the reserve currency status of dollar and issue a lot of new currency without equivalent inflationary pressures other currencies would face, they are basically leveraging trust in to generate seigniorage.
Indeed. 80-90% pullbacks, multi-year bear markets, the seasoned crypto trader has seen multiple apocalyptic financial disasters, where this simply is a potential next one. It fails to impress.
The really clever ones thrive from these crashes, that's when they buy. Volatility is the feature.
Tether drove the 2017 bubble (this is when Bitfinex'd got their start) and has driven the 2021 bubble to the tune of $70b.
This resilience wouldn't exist without Tether.
In the end, it doesn't matter. You can make money in crypto whether it goes down, up or is scalping.
Diminishing returns to pumping.
You assume you know why it bounces back every time after reaching whatever bottom it does, so, I'm also wondering, what do you think triggers it to start going down after reaching its tops?
[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066
[2] https://www.microstrategy.com/en/investor-relations/press/mi...
[3] https://www.bloomberg.com/news/articles/2021-06-03/novogratz...
[4] https://news.bitcoin.com/kevin-oleary-crypto-exposure-greate...
[5] https://www.cnn.com/2021/04/28/investing/tesla-bitcoin/index...
[1] https://www.gemini.com/cryptopedia/the-dao-hack-makerdao
The code had a bug, and someone drained the $50M or so contract.
Since everyone lost a bunch of money, the majority agreed to fork Ethereum and roll back the hack, leading to "Ethereum" (with the roll back), and "Ethereum Classic" (without the rollback).
Another interpretation is that courts customarily invalidate “defective” contracts, and therefore the “claw-back” actually inspires confidence by demonstrating consistency with contract law norms.
Already forgot about 2008? Go check all theses banks values! Morgan Stanley is on an all time high right now!
https://www.bloomberg.com/opinion/articles/2021-10-07/matt-l...
Key quote:
1. You get a bunch of Bitcoins.
2. You slice them into junior and senior claims.
3. You sell the junior claims to people who want levered Bitcoin: people who want margin loans against their Bitcoins, etc., who want to gamble on Bitcoin without putting up too much cash.
4. You sell the senior claims as stablecoins: “Even if Bitcoin drops by 50%,” you say, “these coins will still be worth $1, because they are backed by $2 worth of Bitcoin.”
If tranching were all Tether were doing, it would just be fraud. You can't sell a senior tranche on a pool of assets as a fully-backed security and call it a day. But whatever, Tether did that and more, nobody cared, we're on the next tier of the Narcissist's Prayer [1].
The new problem is we have circumstantial evidence that at least some of Tether's assets are Chinese developers' commercial paper. That's a risky asset. Even before Evergrande and Sinic defaulted, it was a speculative asset. (Now it's a distressed one.) If that's what we know they're in, how bad is the rest of their balance sheet? Tether claims to be over-collateralising their crypto-backed loans by 30%. An LTV of 77% will start losing money in a 25% crash. Bitcoin...does that a lot? For an asset they understand, they've set their risk limits woefully low. If that's what we know they're doing, how thin is the rest of their capital?
We're going to see a run on Tether. Not might. Statistically, the assets Tether holds will sometimes go down. Sometimes a lot. Most of the time, that will be fine. Some times, however, Tether will get a redemption at the same time. (Assets going down and investors redeeming things are correlated.) Most of the time, that will work out. Some times, however, Tether will need time to avoid their own selling driving down the asset's price. Most of the time, that will be fine. Some of the time, however, the person making the redemption request won't have that time. They'll blow up, and they'll blame Tether. This will prompt additional redemptions, which will force the aforementioned fire sale until, in all likelihood, Tether kills its domain and steals the money. (The last part is a novelty really only afforded by their setup.)
[1] https://news.ycombinator.com/item?id=28880280
[2] https://www.bloomberg.com/news/articles/2021-10-07/can-you-t...
Tether is 50% of crypto trading. Tether stopping would case quite interesting escape into either Bitcoin or some other liquid widely available pair (ETH). Prices would shoot up until real dollar offramps can pick it up. Long term USDC, USDP snd other more robust stablecoins can pick up the slack. Tether is not too big råto,fail, though is massive.
This is my understanding. The U.S. regulatory apparatus appears to have deterred Tether from getting too involved here. China, too, seems to have taken the hint.
Won't be surprised to see the scam finally unveiled and to cause a seismic crash in the crypto markets.
I would start packing my crypto holdings out of the market real soon™... Things are getting quite, unstable and euphoric once again.
Tether is one head of the snake. As scrutiny increases on USDT, volume will simply shift to USDC and other similarly unaudited stablecoins. These can be issued and adopted faster than regulators can file cases against them.
From their site they provide an answer (and even a "track record") [1]:
> We look for (...) man-made disasters floating around in the market and aim to shed light on them before they lure in more unsuspecting victims.
Hence it seems they're doing it for the bennefit of the public. So much for the expression "there's no such thing as a free lunch".
[1] https://news.ycombinator.com/item?id=28794377
(not investment advice, educational purposes only)
Hidenburg is a short seller who takes positions in their research. See for instance their short of Nikola. While I'm sure they enjoy being helpful and that there's a reason they choose to engage in a very difficult way to earn a living, when there are easier opportunities available, their motives are hardly a mystery.
You can discount all their talk of helpfulness or assume they're just talking their book, and it doesn't really change anything.
If the news is actually true, this might even be considered a public service (as well as obviously a way to make money).
They probably wouldn’t do until they actually got a tip. Also, they might short crypto-related stocks if that’s easier.
If I do some analysis and reveal some MNPI for myself, it's perfectly legal to trade on that since I do not have a fiduciary duty to any publicly traded firms.
(Contrary to some of the other commenters, you don't have to be an insider yourself to run afoul of the law. If the information is not public and you got someone to leak it to you, for example. https://www.investor.gov/introduction-investing/investing-ba...)
I don't see how that's a valid conclusion to draw. I would say in this case the "market" is completely codependent on Tether, and therefore are willing to overlook red flags until forced to via damage to pricing or legalities.
The market was very confident about Enron, WorldCom, Madoff, WireCard, Greensill, Theranos, WeWork, etc as well.
https://www.reuters.com/world/china/hong-kong-audit-watchdog...
If Tether unravels and brings down the whole cryptocurrency bubble, there are probably more indirect positions that are safer bets?
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages” -Adam Smith
https://www.goodreads.com/quotes/68664-it-is-not-from-the-be...
When Hindenburg publishes equity research, the disclosure is "you should assume that as of the publication date of any short-biased report or letter, Hindenburg Research...has a short position in all stocks (and/or options of the stock) covered herein, and therefore stands to realize significant gains in the event that the price of any stock covered herein declines."
But if they contribute to the unwind of a fraud of this scale, they will go down as heroes.
If Tether tanks -- there are definitely decent proxies out there.
Tether's terms and conditions state that they:
(1) do not ever have to honor redemptions for US persons
(2) do not have to honor redemptions except to authorized customers
(3) only they decide who authorized customers are
(4) even for them they can delay withdrawals indefinitely, arbitrarily
(5) and even then they can offer whatever they happen to have in reserves in lieu
So there's bigger issues than their composition, like the fact they can just sail off and keep the backing, and they don't have to honor withdrawals for anyone ever.
You give them $1 (maybe, someone does, probably, honestly its not clear) and you get 1 USDT. That's it. Hope its worth $1 to you because you're not entitled to ever see that dollar again. All this hand wringing over backing doesn't mean much if you're not entitled to it you know?
[edit] You don't really need a $1M bounty this is all in their T&Cs, it's just that it is difficult to get a man to understand something when his salary depends upon his not understanding it.
[1] tether.to/legal
Seems like a fairly small fine in grand scheme of things no? If the critics are right and $70B+ supply is just made up paper money, then it'll be huge losses for all Tether holders. I'd conjecture it would tank the entire crypto market - and possibly the equity market too.
Laymen who bought the hype stand to lose a lot though.
It's not verified by third parties at all, and they're printing non-stop, which is why many people can spot it for the scam it is.
1. Tether prints $1 billion with no backing.
2. Tether buys $1 billion of Bitcoin with the the fraudulent tokens.
3. Bitcoin triples in price.
4. Tether sells 1/3 of their position in exchange for hard currency, and holds that money in their reserves.
5. Tether now has 100% reserves backing the tokens they created, and is also holding $2 billion in Bitcoin. Maybe they sell the extra Bitcoin to diversify.
6. Rinse and repeat.
Under this scenario, what these guys did was to take a massive uncollateralized loan from ordinary consumers, use it to buy buy Bitcoin, and sell off the Bitcoin in order to pay back the loan. Basically an uncollateralized version of what most DeFi borrowers are doing right now, but at a massive scale.
As long as the price of Bitcoin is going up, the scheme a surefire way to make a lot of money. If the price of Bitcoin starts going down before they can cash out, then it can easily bankrupt them and crash the market—which is also a big risk with DeFi.
It could be that we are passed that point with Tether, though. With as much scrutiny as they are under right now, if Tether ever defaults, the people who run Tether are going to be wanted for criminal prosecution in dozens of countries. They will be running and hiding for the rest of their lives. I can't believe that a few more billion dollars in the bank is worth the risk—especially if they won't be able to access those billions.
If you look at the rate of issuance of Tether since June 1 of this year, it has flattened out dramatically.[0] Could it be that the people at Tether have realized that the jig is up, and are now just trying to get things in order so they can walk away clean? Maybe.
Or, it could be that they printed so much funny money last year that the amount of Bitcoin they need to sell is more than the market can accept without tanking the price of Bitcoin, given current market liquidity. Maybe they aren't generating more Tether for themselves because they figured out that whenever they try to sell the Bitcoin they need to sell in order to replenish their reserves, they crash the Bitcoin market. Maybe they're stuck.
Or it could be that Tether is fully backed, that they have never minted any Tether that didn't correspond to $$ in their bank account, and the reason that Tether's growth has slowed is only because people are now buying USDC and other stablecoins instead. (Not likely, in my opinion.)
$1b could also triple bitcoins price without the liquidity problems you're talking about because the initial purchase, done intelligently, can increase the price enough to kick-start another buying cycle (bitcoin goes up 100%, ends up on MSM news channels, people download coinbase and buy bitcoin, loop continues).
- Go look at the wayback machine on their transparency page
- Look at the difference in their attestations
This implies they loot the interest rate yield on their reserves
Still exists and functions today. Lot of people don’t like it, but it’s there regardless.
Even if the origin, operation of Tether is highly suspicious: if it functions, is widely adopted and does what is expected … may last longer than people think.
Best response is more open stable coin equivalents.
I think you're right about this point, and I've been trying to imagine what might cause Tether to collapse - you really need a run on the bank situation triggered by something causing them to become insolvent.
I thought that insolvency was when they don't have the assets to cover their liabilities.
My understanding of a bank run is it happens when a bank is solvent, but doesn't have enough in reserves - liquid, short term assets.
But if they simply don't have at least 100% of their liabilities in assets, then they are bust because they can never pay people back barring a miracle.
Only when we find out!
People always bring this up as though they've ever actually proven to hold reserves as they say. Even though it's been repeatedly proven that they DON'T.
Just because that's the primary factoid I know about banking.
Not in the same way. FDIC insurance goes back more than 90 years. Its value has been proven through major financial crises. It is pretty transparent about what it does, and it's accountable to the public. There is also arms-length regulatory verification between banks and their various regulators to make sure that they aren't taking on too much risk.
Tether, on the other hand is intentionally opaque, run by a small number of people, has mysterious relationships with other players, and has been caught lying about their backing. It has never been tested by a serious crisis. And of course there's no real regulation, so you basically have to take the word of people who have demonstrated they're not trustworthy.
Now, not all loans are repaid, and when that happens, the bank will take a write-off of that asset, reducing its assets. In a bad financial crisis, this might hit something 5, 6, 7% of their total assets--but remember that they started with 110% assets over liabilities, so they're still left with more assets over liabilities.
The thing with Tether is that if you look at Tether's claimed accounts, their assets-to-liabilities ratio is 100.2%. When that ratio dips below 100%, you are insolvent. If I recall my math correctly, a 5% drop in the price of Bitcoin would make Tether literally insolvent.
You might argue that all the financial shenanigans are ultimately illusory, but the fact remains that the person crowing about the unreality of finance is the one that is tapdancing on an oil-soaked rope while juggling flamethrowers. And huffing ClF₃ at the same time, perhaps--they're unwilling to tell us.
Didnt BTC go down to 30K from 60K just recently?
There are many, many ways for businesses to hide their insolvency, for years[1], or even decades[2].
[1] https://en.wikipedia.org/wiki/Wirecard#Scandal_and_insolvenc...
You are claiming something that there is literally NO EVIDENCE of, while vast piles of available evidence points to the very opposite. Tether is, has been, and will continue to be insolvent. The only question is when people will notice.
I mean, that's basically it. Everything points to insolvency, but if it was, it would be history. Therefore, it must not be.
Anyone who "notices" should make it all fall apart instantly.
And loud mouth short sellers have certainly been wrong before.
But it doesn't. And it shouldn't.
Businesses can and do survive insolvency (sometimes without the public ever knowing!). Insolvency just means that either liabilities are greater than assets, or cash flow does not meet expenditures. Either one can be a temporary situation which can be solved with things like bridge loans. (Or bankruptcy proceedings!)
More nefariously, in the case of Tether, so long as they don't see redemptions exceeding their assets, they can continue to hide the fact that they are insolvent indefinitely.
People don't seem to want to admit insolvency is inherently worse than illiquidity.
It may be empirically true that entities can hide insolvency.
But it doesn't seem logical for anyone who knows they are insolvent to ignore it.
If they are solvent, sure, ignore the possibility of a bank run. Why should it start?
But if they are insolvent, then someone will lose their money, and you and everyone else who finds out should want to not be last in line, which should make it collapse almost instantly, provided that the information leaks to any number of people.
It seems sometimes like a lot of things are sort of like Wile E Coyote not falling until he looks down. Something can be widely known, but not believed until some catalyst makes it impossible to deny or rationalize or BS.
Still, learning that something is insolvent ought not to follow that pattern too much, because again, it doesn't matter if everyone else in the world is ignoring the problem, if you are certain it exists, you need to act.
This is the flaw in your logic. How would you make it all fall apart? You have to force Tether to make good on more of its liabilities than it can make good on, but very probably, most of the people to whom Tether is liable are themselves drinking from Tether's money-printing trough, and it's not in their self-interests to pull the rug out.
To make Tether fall apart, you probably need to force an outflow of most of not only its hard currency reserves, but that of everyone else feeding at its trough. That is not an insignificant amount of money, and exactly how much is literally the $1M question.
If they are insolvent, then not everybody can get their money back, which means that you should take your money out immediately no matter what you expect other people to do. It follows that you can expect everyone rational to do the same. It's not that anyone chooses to "make" it fall apart, it's that everyone who finds out their secret should independently participate in making it do so and that reinforces itself.
This contrasts with a bank run on a solvent institution, where you only need to rush to get your money if you think other people will too and they will fail due to lack of short term liquidity.
That's how I imagine the difference anyway.
It does not work like that, you are making the claim not me. You have to show the evidence.
(BTW, actually, you made the claim: https://news.ycombinator.com/item?id=28924975 )
Where is the evidence that Tether is insolvent?
And, as the other reply to my comment pointed out, there's a decent likelihood that Tether is actually already insolvent and is doing creative accounting to get the numbers to appear to come out to solvency. 100.2%--especially when a significant amount is in as volatile an asset as cryptocurrencies during an upswing--seems too precisely close to 100% to me to not involve some amount of shenanigans.
I don't believe that's correct. Insolvency seems strictly worse than being solvent.
As a depositor, if I don't see anyone else participating in a bank run, assuming the institution is solvent, then I have no reason to.
But if I know they are insolvent, even if nobody else in the world does yet, I have an incentive to immediately start a bank run, unless, say, there are bankruptcy proceedings right away that freeze everything.
It's the difference between musical chairs with one chair removed vs not.
This meme bugs me though, even if the USD is in fact more secure.
I don't think the US military or having to pay US taxes is a requirement for the dollar to be sound and useful.
It's a cliche that people use cigarettes or whatever in prison, with no army backing it up.
Noncitizens use US dollars outside the US, where they are neither subject to its jurisdiction nor owe taxes.
And I think people use or have used Swiss Francs all over the world, without any particular empire or force projection of that state.
What is necessary is that the money supply is kept under control.
What matters, I believe, is that they have the assets to back the liabilities. 100% plus a safety margin. As far as I know, a regular bank or credit union meets that criteria and Tether does not.
Haven't you ever watched "It's a Wonderful Life"? Where the guy in an effort to stop a bank run, explains that the deposits are tied up in the homes and businesses of the people of the community?
That stuff isn't imaginary, it's just that people are panicking and forgot that it's all connected.
US banks haven't had reserve requirements since March 2020.
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
I mean, yeah, fuck those guys, but how is any kind of enforcement to be done on how this information was obtained?
Sysadmin at Microsoft or google with access to their emails may be mighty tempted by this eh?
Note that Tether looks shady at first blush, with a link to "Proof of Transparency"[2] that is content-free. I also find it sus that their job listings only list "Business Development Specialist" [3].
Is it illegal for a private person to offer to pay someone to illegally snitch on an illegal operation? Do two illegal things cancel out?
1 - https://www.investopedia.com/terms/c/commercialpaper.asp
2 - https://tether.to/latest-assurance-opinion-confirms-tether-f...
I doubt anyone beyond the inner circle (I guess maybe the exec assistant of the aforementioned rando might know something interesting) would know anything interesting.
It's not illegal to pay someone for information. If you induce them to violate an NDA, yes, it could be. But given the question "under what jurisdiction does Tether really operate" is a debatable question, I'd say it's probably risky but fine. (If you trade on that information, it could be a different story.)
Is violating an NDA illegal? I'm not a lawyer and I don't play one on TV, but I don't think violating an NDA is illegal as in you could go to prison for violating a law. Yes, it could open you up to legal jeopardy as in a lawsuit which could be expensive, but I don't think any laws are violated.
And if you're violating an NDA to expose some corrupt practices it seems like the NDA shouldn't hold any power.
But now that I think about it, why doesn't every successful private contract enforcement action end in a public prosecution for fraud?
Of course I have no idea if offering someone a large sum of money to violate any kind of contract is in any way illegal or even actionable in civil law since the person can always refuse the money and uphold their contract. If it made you criminally liable, wouldn’t every job offer to someone under contract with a competitor lend you in jail?
IANAL so offer money to break NDAs at your own risk.
Hindenburg isn't expressly offering the money for someone to break some contract or NDA. They're just offering money for information. Yes, the person with the information may have to break an NDA to share the information, but that doesn't seem like Hindenburg's problem. It's also possible that some insider with knowledge isn't under an NDA and would be willing to share information for $1M.
I don't think so. Fraud would require an element of deception. Corporate espionage seems like a more probable avenue. IANAL, so I'm not sure who bears the liability here: the buyer, the seller, or both.
> What if Hindenberg offered $1M for access to a private list of donors to a [prominent abortion rights organization]?
This isn't equivalent. They're buying information, not selling it. Specifically, they're buying evidence of illegal acts.
Also, personally, I think there's a wide gap between the reasonable expectations of privacy for a business and an individual.
> But now that I think about it, why doesn't every successful private contract enforcement action end in a public prosecution for fraud?
There's usually not an intent to deceive, so it's not a crime. Also, the contract should specify the damages for violating it. The victim agreed to those penalties at the time of signing, so it wouldn't generally be in the interest of justice to add further penalties unless the behavior was so egregious as to override the victim's choice of penalty.
The accused can also often afford their own lawyers, which makes securing convictions a lot harder.
And there's a self-reinforcing penalty. If you have enough proof to get a conviction, you have enough proof to leak the leaker's name and make them unemployable.
And the criminal justice system is already stressed. These would likely end up getting plead down to something insignificant, because our justice system depends on most cases not going to trial.
There just isn't much to add from a criminal prosecution, and it would cost a lot.
It is different for the person breaking the NDA. In some jurisdictions it only civil crime, it could be criminal as well especially if other acts like insider trading are related etc.
Whistle-blowing protections are a patchwork today, A lot depends on whether you are blowing to a regulatory authority or a established media publications etc. Also how/what you share and how you got it(breaking CFAA is illegal) makes a big difference as well, also being illegal does not mean you will necessarily get prosecuted, it could be bad optics for either the DA/AG (in case criminal) or the company(for civil) to sue - Facebook as yet has not sued Haugen although they clearly have a strong case for example.
This one depends on financial hacks done by a single private company. It seems like beenz.com, only with a different tech stack.
Do you think there is a great chance that Tether is a massive scam and will find its doom within the next 25 years?
My answer to that is yes.
Why do you think there will be a functioning market to pay you out if and when it collapses?
That's one theory. Another is that the only way out of Tether will be BTC and the pressure will likely push BTC up, at least for a while.
If the peg breaks, it breaks.
Also, if you have margin, the broker will lend you collateral and in that case you wouldn't have put up anything from your side (apart from interest payments).
In what? By whom? If they go bust, you’re just another claim on a bankrupt estate.
The person who lent me the tether can be left holding the bag - I can't. That's because I, the short seller, am not owed anything but the counterparty.
It's like taking out a loan - if the bank goes bankrupt, you don't lose anything since you _still_ have the cash.
https://www.newsbtc.com/news/reason-behind-billions-ftx-teth...
That's what people shorting the Russian ruble said in 2014. Then funding spiked to 17% a year and a lot of speculators got burned.
However, I'm not sure how likely Kraken is to take the money and run in the event that tether collapses and I have a short position. It also looks like you can do [mumble mumble borrow tether on Aave collateralized by other crypto somehow] which currently costs about a 12% / year, but if I'm understanding correctly that cost is not fixed and would likely go up significantly if tether looked likely to crash.
Can someone who knows more about the topic confirm whether the cost is actually between 12 and 20% per year and the counterparty risk is minimal, and whether or not there are non-obvious footguns with either of the above approaches to shorting tether?
https://twitter.com/HindenburgRes/status/1450562266919841798
https://twitter.com/HindenburgRes/status/1450562260993298433
I think the skeptics are probably right, but we're at the point where real information needs to be uncovered.
Article: https://www.coindesk.com/markets/2019/04/30/tether-lawyer-ad...
BRB, buying puts on everything
The $94b crypto mystery
https://www.afr.com/wealth/investing/the-94b-crypto-mystery-...
12ft.io gets around the paywall.
My favourite quote..
"seemed to be practically quilted out of red flags.."
New crypto ETF is also right around the corner. There will definitely be futures on that.
WTH? Why does a company with a $7b market cap need over $2b of "treasury reserve assets"?
The value of sh*tcoins is just a function of their future resale value.
They provide a more detailed breakdown here: https://tether.to/wp-content/uploads/2021/08/tether_assuranc...
About half in commercial paper and CODs. A quarter in t-bills. 2B in unspecified "digital tokens".
Please stop defending them.