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Comment by RustyRussell | Hacker News Reader

Except we know of occasions they printed tether in return for collateral promises, rather than actually for cash. Not to mention filling a hole with Bitfinex stock when one of their processors got raided.

Now, it's just a question of degree: they're so profitable they can recover from being fractional rapidly. OTOH, why mess with a working formula?

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Do we “know” that? We have evidence for it, but there’s more uncertainty than you’re letting on.

To be clear, I have zero financial interest in any crypto, I just think it’s premature to assume the worst just because of the industry.

Yes, the NY investigation was all about this: they patched up the loss and quietly changed their terms to being backed by cash or equivalents.

And they later detailed the $1bn Tether printed for Celcius in return for collateral (once Celcius collapsed and they claimed it was fully repaid).

Understand: for modern banks this kind of fractional behaviour is considered normal. It's only from the weird Bitcoin perspective that full reserve would be a requirement.

So in other words, an investigation took place, changes were made, and Tether was allowed to continue to operate?

Yes. The history of authorities protecting users before failure in the cryptocurrency world is fairly empty, however.

TBH I'm not sure if they're allowed to operate in NY though.

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