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Comment by TacticalCoder | Hacker News Reader

> Why makes Tether a fraud?

They've been convicted of fraud. They had hundreds of millions seized from bank account of criminals which they helped launder money for. They cannot operate in NY anymore and the NYAG fined them. I think Canada banned these fraudsters too?

They also sold Moonstone bank to SBF/FTX which illegally siphoned money out of the US to the Bahamas.

Nothing smells of fraud as much as tether/Bitfinex. Not even Madoff.

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However, today, USDT is looking pretty good in comparison.

I don't know. Centre is publishing the individual short term US treasuries numbers of every single short term US treasury they own. They've got $9.8 bn at various US banks, minus potentially the loss on $3.3bn they may have to take now but even a $1bn loss and that'd still make USDC backed 0.975:1 or something. Not taking into account the insane yeld they're making on the $30 bn of short term US treasuries they have (for their clients, but I think the yields are for them).

That compared to a bunch of shady people in the Bahamas, deeply tied to the SBF/FTX fraud...

But yup, today, tether looks unaffected.

Coinbase pays 4% on holding USDC on their site... so at least some portion of that yield is going to their customers.

based pretty much on the fact that since they are completely free to do whatever they want, they are actually free of risks like this

i mean, circle at least shows their reserves, usdt has never done so...

it resumes to: since you wont ever see how bad their finances are, you just assume they are good.

the perfect crime

It doesn't help that they stored some of those reserves in a bank.

That's the thing about frauds. They look really good until all of a sudden, they don't.

I'd suggest that is not unique to frauds. One could say the same thing about any corporation, or currency, or government, or celebrity.

Frauds always go bad

I would add one exception - religion. Having the big pay day come after death means that the fraud can never be uncovered.

Madoff looked good for decades.

Right, but in moments like this, people sitting in USDC have nowhere else to go.

Looking at the stablecoin markets right now, there are two choices... USDT or BUSD.

Or, BTC/ETH, which explains why those are currently up and everything else is down.

Okay, but how are they a fraud? You've said they helped launder money, which if true is certainly criminal, but how are they fraudulent specifically?

Is there some evidence that they are not fully backed?

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