https://www.singlelunch.com/2021/05/19/the-tether-ponzi-scheme/ Could be FUD. Could be real. Could be both and needs to play out. Either way everyone should read to avoid your own echo chamber. The tether stuff is very sketch. Imagine being an auditor or consultant or banker and coming across this for someone holding now $60B in assets and only 3% backed in cash for a supposed 1:1 backed stablecoin. And who posts their data on a Wordpress blog site
Rising Star
The fed reserve requirement for a traditional bank is 10%. Tether doesn’t purport to be a bank so they avoid a lot of disclosures, but they seem to be operating in a similar way. Instead of holding 10% and lending out 90% like a bank, they only hold 3.7% in liquid cash/equivalents. The rest leaves tether and its clients (whoever owns tether or crypto paired with tether) exposed to liquidity and credit risk.
It has been known a for while and I would consider it a tail risk. If you bank with the US banking system, you’d also be exposed to a bank run risk due to the bank’s lending out 90% and taking on credit/liquidity risks. The difference is less regulation for tether, but it’s just like there is less regulation for crypto in general.
What stops tether from printing some extra (without usd injection) and just using it to trade bitcoin? Seems like a very easy way to manipulate the price. For a space that talks a lot about trustless and decentralization there sure seems to be a lot of trust in some grey/unknown centralized groups.
Does anyone actually hold Tether? Why does it matter
USDC is fully audited by Grant Thornton the #5 accounting firm, and operates under public standards governed by Center. Totally unlike Tether.
Chief
For reference, I don't work in banking so some of this stuff is lost on me.
When someone says "only 3% cash reserves", what does that mean? They're backing it with something of value, right?
What level of cash reserves does a traditional bank have?
Chief
Could someone with experience in banking review the article and provide input on whether something nefarious is actually going on here?
I think the tether stuff is real. It’s very possible that much of the crypto value is inflated and manipulated by tether and other random coins.
Doesn’t mean that it will ever fully be uncovered or go anywhere.
Pro
Can someone tell me what the point of owning tether is? Is it just an alternative to holding scarce dollars if you live in a country with an unstable currency?
Conversation Starter
And you know what that 10% interest is funded by. More tether and stable coins. Sounds super similar to a ponzi
People have been saying Tether is vapor since like 2017. I’ve vine we gotten that deep into it, but there was enough smoke back then for me to never use it as a stand in for cash in a pair.
If someone says USDC is weak that’d be concerning as I’ve had up to $25K in USDC at one point.