Why Tether has not been collapsing during this bear market ?
This is functionally similar to selling the stocks in your brokerage account but keeping the cash in your brokerage firm, with the addition of brokerage firm’s total cash being publicly reported in real time. It is unlikely that number goes down because people dont really withdraw from their brokerage accounts, they continue to add more cash and wait for opportunities.
Not because Tether is fully solvent, there are just a lot of straight up ponzi schemes and various other scams and frauds that have collapsed first. Tether having any % of actual dollars makes them more resilient to market pressure than schemes with zero real backing.
And, yes, it is virtually certain that they have taken massive losses (seen the state of the crypto markets and ecosystem lately?). The big unknown, as ever, remains how much actual assets they have and how liquid they are.
What they don't know, as someone involved in this space, is that Tether is insanely profitable. Putting the legality of their business aside, Tether generates mad yields on their assets; which made them able to absorb lots of losses. It's profitable business and that's why they keep doing it.
Also Tether is not completely the wild west as some people here assumes. They have lots of scrutiny from different US government institutions. The US could have shut them down overnight but they didn't. The US probably had its reasons for that.
There were over $10b in redemptions over a couple days in may.
“They’re definitely insolvent”.
Source on the “definitely”?
“but that only causes immediate failure when enough people try to withdraw at once”
You mean illiquid, not insolvent.
This demonstrated they had at least $10B of the claimed $80ish at the time.
Bernie Madoff was able to fulfill fairly hefty redemptions, too, until he ran out and the whole thing collapsed. Tether has yet to hit that point, but it's not evidence they've got all the money they claim to possess.
We don't know how close to collapsing that $10B took them.
The number of Tethers outstanding went down by $10bn. That says nothing about redemptions. They could have just cancelled Tether held in affiliated or random peoples’ wallets, we don’t know.
> You mean illiquid, not insolvent
If I have a $10bn debt due and $10bn of real estate, I’m illiquid. If I have a $10bn debt due and my real estate is worth $8bn, I’m insolvent. All evidence to date points to Tether being insolvent.