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Comment by PeterisP | Hacker News Reader

Well, FTX, as a stable business, should be a money printing machine - but that definitely wasn't an obstacle for its leaders to risk the business and jail time to speculate with customers' funds.

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If Tether put all its money into low-yield short term US treasuries, the founders could pay every employee $10MM USD a year and still be paying themselves $1 billion USD a year.

That is a phenomenal amount of risk free income. That's putting the founders somewhere high, probably first 50 names high, on the Forbes 400 list.

That seems foolish to risk to commit crimes.

Tether wasn’t always that big though.

That's even better. Let's say it was a scam for the first 5 years. Total scam, they spent all the money on drugs. It would only take a year for the short-term low-yield US treasury interest on the rest of the assets to completely pay Tether back. That's only possible because Tether has been growing. It would take more than a decade of interest if it had merely doubled in size.

The strong and risky assumption here is that tether actually received money and put it in some paper.

But what many believe is that tether received crypto from the big exchanges and put it in crypto stuff that yields more crypto, so the billions of circulating tether is not backed by billions of Treasury bills or Chinese real estate: they are for a significant part backed by various tokens which have probably gone to zero since.

Ah, that is an entirely different kettle of fish.

So why would people use Tether as opposed to Coinbase's stablecoin?

well, cause they allowed the aforementioned crypto-as-if-it-was-USD scheme.

FTX might have been a money-printing machine, but the situation with Alameda is a lot less clear. Being a market maker is hard. If you make a mistake, you can lose a lot of money. It's probably easier to be a crook.

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