It amazes me every time I look at $USDT and see it hasn't collapsed to zero yet. The flow of Tether inbound is the only thing keeping Bitcoin from its natural price of about $5. (3 BTC for a Pizza was the price back in the day at PS:1 in Chicago)
But now I’m wondering, that was because the collateral you post against your short was assumed to be posted with the entity you borrowed the Tether from.
But can’t people make deals where they post collateral with a proper bank, and then if the counterparty goes bankrupt you just pay the estate back worthless Tether and keep the dollars posted with the reputable bank?
I’m not involved in these types of dealings so perhaps this is a silly question but I would have thought this was how things were done.
That's also a problem. No self-respecting bank is willing to touch this toxic pile of bs and bring down extra regulatory hassle on themselves.
So, by all means, find a venue to short USDT. Build one if it doesn't exist. If lucrative enough, you will likely find parties willing to take the other side of that bet.
Redemption is when Tether the entity is the buyer - aka someone takes USDT and goes to Tether the entity and gets dollars for it, 1-1. That’s what seems to never happen, except perhaps for specific Tether insiders. Though the ones I’ve seen claiming they’ve done so (SBF being the prominent one), are far from credible sources now.
If some random person wants to give me $1 for my nominal $1 of USDT, that’s cool - and that happens on exchanges regularly right now.
That depends on market perception, etc. though and has only the potential connection to perceived ability to redeem. Which has been kept sustained, as you can see by this thread.
By comparison, Verifying someone can deposit and withdraw cash from Wells Fargo is pretty easy. Just stand in any of their branches for an hour or two, and you’ll have tons of evidence. Something no one has of Tether still, after all this time.
By the way, the flow of Tether inbound is the flow of market participants purchasing USDT with cash equivalents. So sure, "the flow of dollars into the stock market is the only thing keeping META from its natural price of $5" is a statement anyone can make.
What, in crypto? I thought no one in their right mind dares short this stuff due to counterparty risks.
https://www.marketwatch.com/amp/story/bitcoin-pizza-day-lasz...
Letitia James says:
> The OAG’s investigation found that, starting no later than mid-2017, Tether had no access to banking, anywhere in the world, and so for periods of time held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations.
The CFTC says:
> As found in the order, Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period from 2016 through 2018.
How exactly am I wrong? And please be specific. It's something they paid significant quantities of penalties over.
The shit I've been saying is literally in government PDF form now.
I suspect I'm not the one who needs to let it go.
There were fundamental flaws with how Terra worked. A reductive way to describe it is, Terra was backed by Luna. Luna's price was determined by the market. Luna's supply was infinite. The price would go down if market demand didn't keep up with supply increases. Doomed from the beginning.