# Tether/Stablecoins are the hot air inside the Bitcoin bubble...their regulation will burst it



## letitroll

Under $30k - watch out below

Stablecoin scam looks like its going to get busted very soon......yes the scam where only 3% of a stable coins value is actually held in USD (if you even believe that) the rest is a credit fund that wouldn't get a junk rating from S&P......this little 'trick' has allowed huge liquidity to bid up crypto assets.......as effectively the Tether folks.....'print' USDT adding liquidity into the cyrto closed loop world bidding everything up........so yes bitcoin supply remains stable....but the key exchange instrument for it gets printed like Jerome Powell on speed


----------



## Brendan Burgess

letitroll said:


> Stablecoin scam looks like its going to get busted very soon



Hi letitroll

I thought that there had been a big investigation and nothing was found? 

Is there some news? 

Brendan


----------



## letitroll

Brendan Burgess said:


> Hi letitroll
> 
> I thought that there had been a big investigation and nothing was found?
> 
> Is there some news?
> 
> Brendan


Hi Brendan - alot has been found and is still being found out about the shady structure of the various stablecoins. Tether the most dominant one has basically seen a drip drip of information come out about how its structured & what proportion of FIAT is held in trust and what portion is 'at risk'. 

New York attorney general took them to task a few months ago:








						Attorney General James Ends Virtual Currency Trading Platform Bitfinex’s Illegal Activities in New York
					

Click to read more.




					ag.ny.gov
				




The latest news is Yellen et al making moves to aggressively step into the space........this alone.......will see excess liquidity pulled out of the crypto closed loop deflating everthing inside it.....as tether et al cant help support the levering up of individuals in crypto world


----------



## tecate

Brendan Burgess said:


> Hi letitroll
> 
> I thought that there had been a big investigation and nothing was found?
> 
> Is there some news?
> 
> Brendan


@letitroll doesn't have news - just hearsay. There's an entire separate thread on this already.  The multi-year NYAG investigation reached a settlement with no admittance of wrong doing.
As I've always said, I have no desire or motivation to put Tether/Bitfinex on my christmas card list. They're a centralised entity so there can always be an element of risk on that basis. However, Tether Truthers have been going on with this (i.e. USDT is being issued to prop up btc price) for years without being able to produce a shred of evidence. Either produce the evidence or zip it.
The use of leverage in crypto is unfortunate - but that has little to do with tether. 100x leverage is available for the clowns that want to use it - via offshore exchanges. Normal market participants who take a longer term view in crypto don't care for this type of activity. However, it happens and will continue to happen and the inevitable happens every time (ultimately, those positions get liquidated).

@letitroll - you told us that bitcoin would be outlawed because of concerns about ransomware attacks. Are you now saying that you dont believe that anymore and you've switched to regulation of stablecoins as the gift that will take btc down for good?


----------



## letitroll

tecate said:


> @letitroll - you told us that bitcoin would be outlawed because of concerns about ransomware attacks. Are you now saying that you dont believe that anymore and you've switched to regulation of stablecoins as the gift that will take btc down for good?



@tecate we did this already for like 15 pages of this thread!

I thought I made it clear. I'll explain it one more time. I said that OECD countries will ramp up regulation and controls, up to and including outlawing certain institutions and/or activities (see Binance etc.). This ramping up of regulation will remove BTC's two main use cases - rampant unconstrained levered speculation & ilicit activity.

When these two cases are removed BTC will fall in value 80-90% from its peak I think is what I said......never to reach its all time high ever again. BTC will be choked to almost lifelessness......by bureaucrats and politicians doing what they do best.......layering on rules/regulations/AML/KYC/FATCA etc etc.

Since we started our little conversation I'm very happy with how my thesis is playing out.....everyday I see the US, UK, China & EU inching its way towards exactly what I layed out for you a couple of months ago. Step outside of your crypto news bubble and smell the roses......Uncle Joe, Auntie Angela & Brother Xi are tightening the noose every day that passes.


----------



## letitroll

letitroll said:


> Yep I'm calling it....and have called it......but lets be clear what exactly I'm calling before you put words in my mouth.......................Bitcoin down 80%-90% from its peak 2021 price (& never to return to that level $63k all time high again EVER!) This will happen in the next 12 months (some store of value  )......this will be chiefly caused by coordinated G7/20 action which will reverse and choke off bitcoin's, heretofore, ignored, slow progressing integration into the traditional financial system......on ramps / off ramps as the crypto world likes to call them will be severely harshly limited/regulated. Negating its usefulness as a vehicle for at best speculation at its worst crime/tax evasion, terriorsim and ransomware.....when these use cases are removed from the BTC market.....its true "value" as a trading sardine will be revealed. The BTC 2021 hangover is gonna be beauty - trust me.
> 
> There you go see you in a year @tecate and then in five year intervals after that.....I've set my calendar to come back and visit you & @WolfeTone


@tecate .......as I said 15 pages ago.....dont want to explain it a third time....I cant be any clearer in what I'm saying

Also worth noting that I'm well over 50% of the way to my prediction of 80% drop in BTC's value within 12 months of the above post.....I expect a fairly steady drip drip drip of regulatory & control news over the coming months in US/EU/UK & China. I'd say things are actually ahead of the schedule I had in my mind. It will be a thousand cuts for BTC's value.


----------



## tecate

letitroll said:


> I thought I made it clear. I'll explain it one more time.



Your focus was on ransomware for the most part. You'd never mentioned tether ever before, much less the allegation that tether is printed in order to boost btc price.
As regards the suggestion that leverage will be driven out, I'm encouraged to think that this can be achieved. I mean, I'm unsure to what extent it can -  but for any normal stakeholder in crypto, crazy leverage going away is good for everyone. However, please note that if you think that somehow nails btc price to the floor, that's not the case.
And what of leverage in the conventional market? You think there isn't any? That's not what I'm being led to believe. In fact, speculation is that its about to become an issue - which will probably bring crypto down with it - but we've been here before - I'm not going to judge it on short term events.



letitroll said:


> Since we started our little conversation I'm very happy with how my thesis is playing out.....everyday I see the US, UK, China & EU inching its way towards exactly what I layed out for you a couple of months ago. Step outside of your crypto news bubble and smell the roses......Uncle Joe, Auntie Angela & Brother Xi are tightening the noose every day that passes.


If its all the same to your good self, I'll retain the humility to accept that I could be entirely wrong and that you could be entirely right. However, I have not seen anything that suggests there's a show stopper over the longer run where btc/crypto is concerned. The good chairman has done the industry a solid. The US is now the largest geographic hub for bitcoin mining. With this redistribution, mining has become greener - much greener than the energy mix that went into your last post. Over the course of our 'little conversation', I pointed out to you that there would be many twists and turns where regulation is concerned to come - and that's what we're seeing.
What happens in the US is probably of greatest interest in all of this and I really can't see them banning it. Both houses contain enlightened people and dinasaurs but the latest installment on the subject I found encouraging on the whole. Uncle Joe will be printing more $$ - that is a given - and that will manifest itself where btc is concerned. All in good time.


----------



## letitroll

"Show stopper" @tecate....your not reading or understanding my posts.........I'm trying to help you understand that there will be no showstopper moment that the BTC crowd can rally against.......no Joe Biden in the Rose Garden saying Bitcoin is banned because of ransomware attacks....no link I can point you too....get that idea out of your head and certainly dont assign it to me or my posts.........the way 'the system' works is by slowly constricting and starving its target of oxygen using the various apparatuses of the state......DOJ, FTC, SWIFT, FED, FINRA, SEC, ECB, ESMA, FCA..........your comment on the ebbs & flows of regulation is interesting.......you havent spotted the change in the mood music since Colonial/JBS & HSE attacks.....see BTC/crypto has been a sideshow & the ebb and flow you mention is because frankly, up until this point,  regulators / leaders had better things to do than take a philosophical position on BTC. The change I've detected is because national security has been threatened, more importantly US national security...........& the USA's return to multilaterlism & global institutions has brought global coordinated action back in fashion (see global minimum tax rate). I can assure you that regulators/political leaders have now been forced to take a view on BTC/cypto and that view is being led by US leadership and it isnt positive ..............Operation Constriction has begun.................I can assure you.

The only way I'm wrong on BTC's price is if indeed it really is being used mainly by people as a store of value and a medium of exchange & I've totally miscalculated how the level of speculation/illicit activity is supporting BTC's price at $63,000 and at whatever it is today $29,000.


----------



## tecate

letitroll said:


> "Show stopper" @tecate....your not reading or understanding my posts.........I'm trying to help you understand that there will be no showstopper moment that the BTC crowd can rally against.......no Joe Biden in the Rose Garden saying Bitcoin is banned because of ransomware attacks....no link I can point you too....get that idea out of your head and certainly dont assign it to me or my posts.........the way 'the system' works is by slowly constricting and starving its target of oxygen using the various apparatuses of the state......DOJ, FTC, SWIFT, FED, FINRA, SEC, ECB, ESMA, FCA.


I never necessarily referred to one event, one agency or one jurisdiction exclusively over the course of our discussion. So if you'd like to take a view with regard to action being taken relative to one jurisdiction/agency or multiples, that's fine. However, you had very much led with the whole ransomware deal. If you're saying that there will be a reaction on that basis but it won't be explained away directly, I guess we'll see.




letitroll said:


> .your comment on the ebbs & flows of regulation is interesting.


I'm not sure why you're only taking notice of that now. I said that there would be every type of regulation on the way - the good (progressive), the bad & the ugly (backward). We had that with the last US administration - positives and negatives. We have that again now with the current administration.  That's the game that will play out over the coming years.




letitroll said:


> you havent spotted the change in the mood music since Colonial/JBS & HSE attacks..


We've been over that - and you've been joining dots based on your own assumptions here - not on the reality. The whole ransomware deal is  how superpowers kick each other in the nuts these days. As regards the HSE, its shameful that given umpteen opportunities to acknowledge HSE admin had to take responsibility for its failings, you failed to recognise that.




letitroll said:


> .see BTC/crypto has been a sideshow & the ebb and flow you mention is because frankly, up until this point,  regulators / leaders had better things to do than take a philosophical position on BTC.



Don't you worry - I agree. It still only has a piddly market cap. However, the good thing is that the industry is a hell of a lot farther on these days. You've chimed back in on Yellen/Stablecoin pressures. Have a look at the work visa are doing with stablecoins. Stablecoins are not going away - they're here to stay and whilst she can cause problems in the short term, over the longer run, there is nothing that Yellen can do to stop that. USDC attestations came out yesterday. USDT attestations are due - and they all need to become increasingly more transparent in this regard. This isn't a bad thing if there are going to be centralised stablecoins in the picture. Of course, if undue pressure is placed on centralised stablecoins or centralised exchanges, then over the medium term, that may manifest itself in greater efforts re. algorithmic decentralised stablecoins and decentralised exchanges. How does one of your list of agencies take action against a protocol that runs on a decentralised and autonomous basis?




letitroll said:


> The change I've detected is because national security has been threatened, more importantly US national security...........& the USA's return to multilaterlism & global institutions has brought global coordinated action back in fashion (see global minimum tax rate). I can assure you that regulators/political leaders have now been forced to take a view on BTC/cypto and that view is being led by US leadership and it isnt positive ..............Operation Constriction has begun.................I can assure you.




If you're referring to ransomware once again, then I disagree. These are the games that superpowers play - but the cause is not bitcoin in any way, shape or form. However, if you'd like to think about national interest, think about this...
The good Chairman is a long way ahead in terms of getting his centralised crypto out into the world - and they will try and push trading partners into using it. Here's the irony - bitcoin and usd stablecoins could be front and center in representing US interests over the longer run. Their only concern re. stablecoins should be to ensure that there's no systemic risk. Beyond that, facilitating further use of the usd internationally represents US interests just fine.



letitroll said:


> The only way I'm wrong on BTC's price is if indeed it really is being used mainly by people as a store of value and a medium of exchange & I've totally miscalculated how the level of speculation/illicit activity is supporting BTC's price at $63,000 and at whatever it is today $29,000.


Not quite. You're dismissive of speculative interest as if its pure evil - presumably on the basis that you've checked this whole crypto thing out and sher, what earthly use is it to me and my buddies - these people are morons! Your scenario is not representative of everyone on the planet - and there's your mistake. Furthermore, we've discussed btc/crypto here on the basis of decentralised money and store of value. We haven't even gotten in to decentralised finance (albeit it was touched on briefly in another thread recently). Even if bitcoin doesn't play the most active of parts in this disruption, it will still be implicated.
Anything that has resembled success for the yanks in more recent times has been as a consequence of them letting innovators innovate. You think a regulator is going to put their neck out and take the blame for standing in the way of progress and handing the win to some other jurisdiction overseas? I expect plenty of wayward crap from regulators as we go along but by and large, they're not going to turn the cart upside down.


----------



## letitroll

Let’s chat again @tecate at BTC $19k….when the pieces of the regulatory jigsaw are on the table more clearly…….soon after the writing will be on the wall and the move from $63k to $29k will feel almost glacial compared to the speed of the unravelling that will happen then


----------



## tecate

letitroll said:


> Let’s chat again @tecate at BTC $19k….when the pieces of the regulatory jigsaw are on the table more clearly…….soon after the writing will be on the wall and the move from $63k to $29k will feel almost glacial compared to the speed of the unravelling that will happen then


I so hope you're right because I want to buy some more.


----------



## tecate

I notice that the thread has been split off - so it's now defined by the claim that tether is being issued simply to pump bitcoin price. There are people who claim this and have claimed this for years. However, can you link to one single piece of evidence that demonstrates such wrongdoing? USDC is the next largest stablecoin by market cap - same question re. them.
Neither of the entities behind these stablecoins are on my christmas card list. If they're complete crooks, I'd like to know as much as the next guy - it would be foolish to ignore that information. Whilst USDT was incredibly significant in making the btc market workable for a number of years, I don't think it would be the end of btc if it got taken out of the equation tomorrow....but it would cause some significant short term disruption. 

The problem with the Tether Truthers is they tend to belong to that 'Bitcoin must DiE' community I mentioned a couple of posts ago...which doesn't do a lot for credibility ...unless they present with evidence.


----------



## DublinHead54

Tethers and other stablecoins are vitally important to the cryptocurrency ecosystem currently. Tether is the dominant stablecoin and roughly half of all bitcoin trades are transacted using tether. Tethers dominance is reducing as competitors take market share (USD Coin for example).

Thus as Bitcoins usage increases the liquidity of tether needs to increase as well, hence more Tether is printed to support the increase in trading volume. In fact Tether increased from ~$20bln to $60bln from Jan to July 2021, $40bln of new coins were minted.

Only 3% of Tethers reserve are cash, around $30bln is commercial paper (short term corporate debt) based on statements released by Tether in May. Originally up until 2019 Tether said it held all reserves in cash, subsequently changing that to 'dollar assets'.

So there is a risk with using Tether, as it operates more like a money market fund than a pure cash reserve, and the value can deviate from 1. If people remember in 2008 these money market funds suffered liquidity events requiring the Federal reserve to step in.

Another financial crisis would therefore impact BTC as the value of Tether could dramatically reduce given it is dependent on corporate debt to maintain its value.

Ironically Tether holds some of its reserves in US Government issued Treasury Bills......


----------



## Duke of Marmalade

Tether has been a big disappointment to me.  My hero (introduced to me by @tecate), Professor Roubini, had promised that the New York investigation would be its denouement and following that bitcoin itself would collapse.  NY did find against Tether and fined it $18m (petty cash) and banished it from its sight.  But it and bitcoin survived.
As I understand Roubini's accusation, it was that Tether and Bitfinex were operating as their own central bank.  Tether could print as many dollars as it liked backed by Bitfinex paper (just like the Fed and the US Treasury).  And indeed with only 3% of its balance sheet in actual cash this looks very much like what it was doing  (it had earlier lied to having 100% cash backing, you couldn't make it up).
I still live in hope that Roubini will be proven right in the end, that Tether will come as useless as the Lebanese pound and I think that would be even a bigger blow to bitcoin than El Musk having a change of mind.


----------



## DublinHead54

Duke of Marmalade said:


> As I understand Roubini's accusation, it was that Tether and Bitfinex were operating as their own central bank.  Tether could print as many dollars as it liked backed by Bitfinex paper (just like the Fed and the US Treasury).  And indeed with only 3% of its balance sheet in actual cash this looks very much like what it was doing  (it had earlier lied to having



Whilst they are minting new coins, they are doing it with the equivalent dollars. The nuance is that instead of holding $1 for $1 tether, they are investing the majority into commercial paper. They are essentially financing short term liabilities for corporations, and this is unsecured debt therefore there is a risk involved. As pointed out during the financial crisis the CP market fell over and investors could not get their money out. So Tether should never be confused as they equivalent of holding US dollars. 

There is a conspicuous relationship between Bitfinex and Tether, I believe the founder of Tether is the CFO of Bitfinex and there have been a few loans and misrepresentation of assets and links between the two entities which led to the NY fine. 

I understand that the founder of Tether is a former plastic surgeon, so I would be cautious of his experience to run a billion dollar stable coin company.


----------



## DublinHead54

tecate said:


> Whilst USDT was incredibly significant in making the btc market workable for a number of years, I don't think it would be the end of btc if it got taken out of the equation tomorrow....but it would cause some significant short term disruption.


 
USDT remains incredibly significant in making the BTC market workable. Your statement infers that it was historically important but not currently, or am I misreading?

Tether and Other Stablecoins remain vitally important, just look at the last 6 months and the amount of Stable coins minted (300% supply increase of Tether) and the fact that Tether usage accounts for half of BTC transactions.


----------



## Brendan Burgess

Folks

This thread is about a very specific issue - read the thread title.

I have moved the posts on other issues to the main thread 






						Bitcoin in a hyperbolic bubble
					

Thanks to @tecate I have a new Twitter hero, Nouriel Roubini.  Here he is on the latest bitcoin madness.  https://www.youtube.com/watch?v=6Re-PzNEMvc    Famed economist Nouriel Roubini says that Bitcoin and other cryptocurrencies, which he’s dubbed as “sh-tcoins,” have no place in retail or...



					www.askaboutmoney.com
				




From now on, any posts containing off topic material will be deleted.

We don't want every thread to be the same. 

Brendan


----------



## DublinHead54

I've just finished refreshing myself on the current situation with 'stablecoins'.

I don't like that Tether has the majority of its dollar assets not held in cash but in unsecured short term debt. This is a risk in itself but given that a large portion of BTC transactions are via Tether the risk is heightened.

In my opinion this ties BTC closer to established financial markets and therefore weakens the case for bitcoin as an alternative separate currency / store of value to fiat currencies and financial markets.

In summary Tethers assets are funding short term corporate debt and thus is at risk of loss. The risk of loss is generally considered small but this entire market was put on its knees with the collapse of Lehman brothers.

This is another risk to consider when looking at BTC and can be minimised either by stablecoins only holding cash or a reduction in the need to use Stablecoins. I can't predict or fully assess how this would impact the Bitcoin price but should a default event happen the value of tether could drop below 1 and a major liquidity provider for the market would be gone. 

As of today nonetheless there is a risk.


----------



## tecate

Dublinbay12 said:


> USDT remains incredibly significant in making the BTC market workable. Your statement infers that it was historically important but not currently, or am I misreading?


Where once there was just USDT, now there are a plethora of stablecoins - and within that, CeFi and DeFi stablecoins. There is also much more strength and depth in terms of onboarding and offboarding options where crypto is concerned since back then. All of that to say that USDT going missing for whatever reason would certainly cause disruption within the industry.  However, in no way would it be detrimental to bitcoin over the longer run.


----------



## DublinHead54

tecate said:


> Where once there was just USDT, now there are a plethora of stablecoins - and within that, CeFi and DeFi stablecoins. There is also much more strength and depth in terms of onboarding and offboarding options where crypto is concerned since back then. All of that to say that USDT going missing for whatever reason would certainly cause disruption within the industry.  However, in no way would it be detrimental to bitcoin over the longer run.



DeFi Stablecoins are the way forward but are still relatively immature in adoption and development and have suffered from their own liqudity events and price fluctuations. 

Regarding the other stablecoins, USDT remains the dominant by market cap with USDC the next up. However, USDC follows a similar practice to USDT for allocation of its reserve assets. Thus the risk that exists with USDT also exists with USDC, the risk I defined is not mitigated by the fact of there being more stablecoins in circulation. 

Stablecoins (USDT, USD, BUSD) etc remain an important part of the Bitcoin Network,  for example as of today the top traded pair is BTC/USDT showing that it remains a significant component of the BTC market. Do you disagree?


----------



## tecate

Dublinbay12 said:


> DeFi Stablecoins are the way forward but are still relatively immature in adoption and development and have suffered from their own liqudity events and price fluctuations.


Indeed they have. However, the fact remains that they exist and development is ongoing. If somehow, circumstances were to be forced, then I have no doubt but the industry would find a way forward.




Dublinbay12 said:


> Regarding the other stablecoins, USDT remains the dominant by market cap with USDC the next up. However, USDC follows a similar practice to USDT for allocation of its reserve assets. Thus the risk that exists with USDT also exists with USDC, the risk I defined is not mitigated by the fact of there being more stablecoins in circulation.



There may well be similar risks. However, the availability of USDC and other stablecoins means that there are other options if the crap hits the fan where USDT is concerned. Previously - with only USDT around, that would have been a disaster for bitcoin. Now, the odds of both USDT and USDC mismanaging themselves at precisely the same time - theoretically its possible but its far less likely. Furthermore, USDT remains dominant but USDC has been growing at a much faster pace more recently.





Dublinbay12 said:


> Stablecoins (USDT, USD, BUSD) etc remain an important part of the Bitcoin Network,  for example as of today the top traded pair is BTC/USDT showing that it remains a significant component of the BTC market. Do you disagree?


See above - there's no reason why someone who uses USDT today couldn't use USDC tomorrow should the former go missing for some reason. Comentators such as Nouriel Roubini and others have talked in terms of btc being finished should USDT be shut down. To my mind, that's unlikely to be the outcome.


----------



## DublinHead54

tecate said:


> Indeed they have. However, the fact remains that they exist and development is ongoing. If somehow, circumstances were to be forced, then I have no doubt but the industry would find a way forward.
> 
> 
> 
> 
> There may well be similar risks. However, the availability of USDC and other stablecoins means that there are other options if the crap hits the fan where USDT is concerned. Previously - with only USDT around, that would have been a disaster for bitcoin. Now, the odds of both USDT and USDC mismanaging themselves at precisely the same time - theoretically its possible but its far less likely. Furthermore, USDT remains dominant but USDC has been growing at a much faster pace more recently.
> 
> 
> 
> 
> See above - there's no reason why someone who uses USDT today couldn't use USDC tomorrow should the former go missing for some reason. Comentators such as Nouriel Roubini and others have talked in terms of btc being finished should USDT be shut down. To my mind, that's unlikely to be the outcome.



I don't want to be accused of sounding arrogant again, some of this is second nature given my experience in risk management. Firstly, I agree that the likelihood of two firms mismanaging their assets is reduced. However, this is not the risk I highlighted in my original post.  I will assume that I was not clear enough in my original statement rather than an intentional misinterpretation on your point. 

The risk I am highlighting is with the Money Market and Commercial Paper markets rather than the individual use of these markets by USDT or USDC to maintain treasury assets. Commercial Paper is unsecured debt, so in the simplest form you lend money to a corporate and receive it back + interest, they default your money is lost with no recourse. When Lehman Brothers collapsed the commercial paper market essentially shut down and institutions lost money etc. There are two risks, the first is that an individual company you've lent money to defaults and you lose $x. I consider this relatively low risk and low impact. The second risk which I can't quantify is the impact of a significant liquidity effect the likes of the financial crisis, its hard to quantify given the market is regulated differently today vs then. 

I am not trying to debate that BTC will be able to survive, and I am sure it will, maybe after it loses a lot of value or maybe not, both of us could only speculate on the outcome without certainty. Whilst somebody using USDT today could use USDC tomorrow, not everyone using USDT today could use USDC tomorrow without additional minting of USDC. Again I am sure that could be facilitated, unless there was a fundamental issue with something like the CP market. 

The point I was seeking recognition / acceptance is that there is a risk for BTC associated with how Stablecoins maintain their treasury assets. This in my view ties BTC closer to established financial markets and will only be mitigated either by holding cash only or as you pointed out Defi Stablecoins.


----------



## tecate

I don't disagree with any of that. My understanding is that although USDT and USDC access the commercial paper markets, there are differences in how they're doing that. Beyond all that, my understanding of the thread from the outset was/is that stablecoin risk is being scrutinised relative to its ability / potential to upend bitcoin. I think a worse case scenario would see a temporary market crash to some extent but that it wouldn't be detrimental to the ongoing development of bitcoin over the longer run.


----------



## DublinHead54

tecate said:


> I don't disagree with any of that. My understanding is that although USDT and USDC access the commercial paper markets, there are differences in how they're doing that. Beyond all that, my understanding of the thread from the outset was/is that stablecoin risk is being scrutinised relative to its ability / potential to upend bitcoin. I think a worse case scenario would see a temporary market crash to some extent but that it wouldn't be detrimental to the ongoing development of bitcoin over the longer run.



What are the differences? I am much more comfortable with USDC rather than USDT. What I am not entirely sure of is where Tether got the extra $40bln to lend out to the CP market in the last 6 months. Any insights on how they raise funds? 

There was an interesting piece regarding Facebooks Libra (or whatever it is called now) last year from the ECB, it had the potential to become the largest money market fund in the world (i.e. holding trillions of assets in reserve to support the stablecoin), this would have a negative impact on financial markets liquidity. This is why I assume regulators are paying close attention to stablecoins. In my view the growth in BTC in the last 6 months has been supported by an increase in stablecoins market cap, and the regulators will only let them get so big.


----------



## tecate

Dublinbay12 said:


> What are the differences? I am much more comfortable with USDC rather than USDT. What I am not entirely sure of is where Tether got the extra $40bln to lend out to the CP market in the last 6 months. Any insights on how they raise funds?


It's not something I know an awful lot about but my understanding is that there are differences in terms of the levels of CP between the two. Then there's speculation as to what markets tether are sourcing CP in (suggestions that it may be China) - and speculation as to real valuation as opposed to a potentially contrived valuation. 


Dublinbay12 said:


> There was an interesting piece regarding Facebooks Libra (or whatever it is called now) last year from the ECB, it had the potential to become the largest money market fund in the world (i.e. holding trillions of assets in reserve to support the stablecoin), this would have a negative impact on financial markets liquidity. This is why I assume regulators are paying close attention to stablecoins. In my view the growth in BTC in the last 6 months has been supported by an increase in stablecoins market cap, and the regulators will only let them get so big.


I find it hard to get my head round this stuff but there's also speculation that the likes of USDC could negate the need for the yanks to develop their own FED coin and represent US interests just fine.


----------



## letitroll

Tether Executives Said to Face Criminal Probe Into Bank Fraud
					

A U.S. probe into Tether is homing in on whether executives behind the digital token committed bank fraud, a potential criminal case that would have broad implications for the cryptocurrency market.




					www.bloomberg.com


----------



## Brendan Burgess

Letitroll

This is asking me for a subscription. Could you summarise it please. 

Brendan


----------



## letitroll

A U.S. probe into Tether is homing in on whether executives behind the digital token committed bank fraud, a potential criminal case that would have broad implications for the cryptocurrency market.

Tether’s pivotal role in the crypto ecosystem is now well known because the token is widely used to trade Bitcoin. But the Justice Department investigation is focused on conduct that occurred years ago, when Tether was in its more nascent stages. Specifically, federal prosecutors are scrutinizing whether Tether concealed from banks that transactions were linked to crypto, said three people with direct knowledge of the matter who asked not to be named because the probe is confidential.

Criminal charges would mark one of the most significant developments in the U.S. government’s crackdown on virtual currencies. That’s because Tether is by far the most popular stablecoin -- tokens designed to be immune to wild price swings, making them ideal for buying and selling more volatile coins. The token’s importance to the market is clear: Tethers in circulation are worth about $62 billion and they underpin more than half of all Bitcoin trades.

“Tether routinely has open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency,” the company said in a statement. Its corporate structure consists of a tangled web of entities based in the British Virgin Islands and Hong Kong.

The Justice Department declined to comment.

Federal prosecutors have been circling Tether since at least 2018. In recent months, they sent letters to individuals alerting them that they’re targets of the investigation, one of the people said. The notices signal that a decision on whether to bring a case could be made soon, with senior Justice Department officials ultimately determining whether charges are warranted.

The probe is reaching a tipping point as stablecoins attract intense scrutiny from regulators. The U.S. Treasury Department and Federal Reserve are among agencies concerned that the tokens could threaten financial stability, and are obscuring transactions tied to money laundering and other misconduct because they allow criminals to make payments without going through the regulated banking system. Treasury Secretary Janet Yellen said last week that watchdogs must “act quickly” in considering new rules for stablecoins.

Tether's Dominance​The token is by far the most popular stablecoin

A hallmark of Tether is that its creators have said each token is backed by one U.S. dollar, either through actual money or holdings that include commercial paper, corporate bonds and precious metals. That has triggered concerns that if lots of traders sold stable coins all at once, there could be a run on assets backstopping the tokens. Fitch Ratings has warned that such a scenario could destabilize short-term credit markets.

Tether was first issued in 2014 as a solution to a problem plaguing the crypto market: banks didn’t want to open accounts for virtual-currency exchanges because they feared touching funds tied to drug trafficking, cyberattacks and terrorism. By accepting Tether, exchanges could give traders a way to park their balances without being exposed to Bitcoin’s price gyrations. And funds could be transferred instantaneously from exchange to exchange.

But Tether’s corporate side still needed banks to hold its money and process customer transactions. One early relationship that soured was with Wells Fargo & Co. In 2017, the Tether Ltd. affiliate and Bitfinex -- a crypto exchange with common owners and executives -- sued Wells Fargo for blocking wire transfers that had been sought through Taiwanese banks.

In the lawsuit, Tether Ltd. and Bitfinex said Wells Fargo knew, or should have known, that the transactions were being used to obtain U.S. dollars so clients could purchase digital tokens. The companies dropped the case shortly after filing it.

Wells Fargo declined to comment.

In the course of its years-long investigation, the Justice Department has examined whether traders used Tether tokens to illegally drive up Bitcoin during an epic rally for cryptocurrencies in 2017. While it’s unclear whether Tether the company was a target of that earlier review, the current focus on bank fraud suggests prosecutors may have moved on from pursuing a case tied to market manipulation.

Tether has already drawn the ire of regulators. In February, Bitfinex and several Tether affiliates agreed to pay $18.5 million to settle claims from New York Attorney General Letitia James that the firms hid losses and lied that each token was supported by one U.S. dollar. The companies had no access to banking in 2017, making it impossible that they had reserves backing the tokens, James said. The firms settled without admitting or denying the allegations.


----------



## letitroll

DOJ investigating possible bank fraud by Tether executives: Report
					

CNBC's "Squawk on the Street" team discusses criminal probe into Tether executives. Subscribe to CNBC PRO for access to investor and analyst insights: https:...




					www.youtube.com
				




Jim Cramer makes reference to the Big Q hanging over Tether and by extension the BTC/ crypto market......Tether which holds a tiny fraction of every 'stable' dollar in actual dollars claims the rest is in commercial paper......short term high credit rating paper used by corporates etc. for cash flow bridging etc...........Tether should be doing literally billions upon billions in this space with all the counter-parties that facilitate this market (ratings agencies/brokers etc.) ............given their self reported commercial paper holdings (which they refuse to break out by coutnerparty). Tether Inc. should be one of the largest commercial paper market participants operating today.

Yet after extensive investigative reporting by Bloomberg/CNBC/WSJ no journalist has been able to identify any reputable commercial paper participant/counter-party that has done business with them.

Why does this matter?

Given that only 3% of Tether's digital dollars are backed by actual dollars....the Joe Biden, US Military backed, Nuclear bomb types that i prefer myself.....it means that 97% of USDT's that are chasing bitcoins, sh!tcoins & everything in between may be backed by thin air i.e. nothing...................and just given human nature......my guesses are two fold right now. My first (1) guess tries to be kind to the laser beam eyed Tether people, the other (2) is not so kind.

(1) They are true crypto evangelists.....but somewhere along the line the Tether amateurs who are effectively running a credit hedge fund got into trouble with their reserving and messed up with defaults/lent to Greensil or who knows what. They had a choice then and there whether to be honest and fess up and admit they messed up publicly BUT they decided to cover it up by putting their foot to floor & 'printing' more Tethers. In a Bearings Bank/Nick Lesson type of way their problems have only got worse over time and they are sitting on a massive reserving problem to the tune of billions of dollars of loses.....they can make riskier and risker loans to try and get back some reserves but it aint gonna work........like all good pyrmaid schemes it works till it doesnt work and one day they dont have enough real money to pay back people & in the meantime do a dance when asked whats backing their 'reserves'

(2) Not being so kind............the tether guys have been corrupted by system.....not that surpsiing in crypto scum land.......and once they had the power to print tehter and get away with it have decided to make themselves and friends outrageously rich..........and have effectively printed billions & billions of fake tethers made out of thin air......quite ironic.......that at the heart of crypto land there is effectively a Zimbawe-esque Digital Central Bank printing bullshit currency which is inflating the nominal value of its main trading pair (BTC)........but Tether is like the Hotel California you can check in but you can never leave i.e. everybody wont be able to walk out the door with their BTC converted to USDT converted to USD. The rally today, given its violence, feels like a precursor to a bunch of insiders getting ready to head for the fire exits. The final pump and dump to lure in some liquidity so people can get out with the last few tethers that can be paid 100c on the dollar.

Possibly it wont happen that quick........but its pretty clear that one of the many many scams running inside crypto land but by far its biggest in nominal terms and systemic importance is having a minski moment. When an entity who's very existance is based on the belief in its trustworthiness and robustness cant and wont come out and state what it holds in it reserves and with what counter-parties it does business you know there is big trouble brewing.

Especially when your business model is effectively producing the casino chips that are the accepted legal tender at the illustrious Casino Crypto where you dont even get a few free drinks for your troubles.


----------



## tecate

I'll try to keep this brief as the whole thing is pointless and in the longer run (whether tether exists or not), it will make no difference - bitcoin continues in its development either way.

- Tether were given every reason to be opaque in the information they have provided historically. The first few years of their existence involved moving from one banking old guard crisis to another. They were being locked out of the banking system - that was the strategy that was being pursued by the incumbent system to snuff crypto out. In the very article that's quoted above, there's an acknowledgment that tether reserves were below what they should have been because they'd been frozen out of their own funds in the legacy banking system.
- In the same vein, these fresh claims are not fresh claims at all - and refer to tether not providing full disclosure to banking partners. This is not from today - this is from years ago - and its for the very same reason. They were being snuffed out by the legacy system  - and so they were forced to be opaque in terms of disclosures.
- I've long since said that I don't necessarily trust tether as a centralised entity. But in this perennial FUD, I most certainly don't trust those that are driving the counter narrative. There's talk above of 'proof' of this and that - and yet thats exactly what there isn't. It's alleged that Tether have an agenda. Fine. Well, to my mind, they're far from the only ones with an agenda.
- Lets assume the worst. Someone above mentions the potential horror as there won't be enough US dollars to go around. Sorry - but that's not how the ship goes down. The race will be into BTC - not US dollars.  BTC price will go up. When the dust settles, maybe the market suffers some shock - and temporarily, it tanks. In the grander scheme of things it will mean nothing. USDC and other stablecoins will fill the void - and life (and bitcoin development) will go onwards.


----------



## DublinHead54

Tether and other stable coins remain a critical component of Bitcoin at this point of adoption. 

The case for Bitcoin is that it is 'algorithmic authority' free from centralized control, Tether and other Stable coins are not algorithmic authority. They are private entities operating in established financial markets. Based on Tethers disclosures it puts it in the Top 10 of Commercial Paper participants, rubbing shoulders with some of the biggest wall street banks. 

The debate here on whether Tether is a fraud or not, well maybe it is and maybe it isn't, but what remains is that it *could be *as it is open to the same fraudulent activities as any entity operating in the Fiat-based system. 

In the example of Bitcoin that debate could not be entertained due to algorithmic authority. 

Love them or hate them, Wall Street banks operating in the Commercial Paper markets are regulated, have controls, compliance team and provide full disclosures. For maximum comfort, I would prefer if Tether and other Stable coins did the same given their size and importance to Bitcoin right now.


----------



## letitroll

I'm seeing alot of *centralization*....which is hilarious....for an invention whose main calling card has been the claim its decentralized with no central authority & not under the influence of any one entity/person/government. To name four right now:

Elon Musk
Tether (which is what 3 or 4 guys in the Virgin Islands with laptops?)
Jack Dorsey
Michael Saylor

Are just four that spring to mind who could probably crash BTC's price 50% with a tweet....or in the case of Tether just 'pulling the rug' as they say.

Say what you will about the monetary system in the EU/USA.......but these are OUR institutions & democratically controlled and ultimately if you started a party who's flag pole policy was to fix the supply of money.....and you got enough votes.....well thats what would happen.


----------



## DazedInPontoon

There was a time when the Mt Gox exchange was something like 90% of all bitcoin trading. They said if it failed 90% of the market would be gone, can you see where they went wrong with that logic?


----------



## tecate

letitroll said:


> I'm seeing alot of *centralization*....which is hilarious....for an invention whose main calling card has been the claim its decentralized with no central authority & not under the influence of any one entity/person/government. To name four right now:
> 
> Elon Musk
> Tether (which is what 3 or 4 guys in the Virgin Islands with laptops?)
> Jack Dorsey
> Michael Saylor


Your claim is disingenuous. You've set out to suggest that bitcoin isn't decentralised and backed that up with allegations of individuals that may influence that market. Those are two very distinct things. At the end of the day, If I want to transact 0.0005 BTC to anyone on the planet today, I can and there isn't anyone that can prevent or reverse the transaction. None of the people on your list included.



letitroll said:


> Are just four that spring to mind who could probably crash BTC's price 50% with a tweet....or in the case of Tether just 'pulling the rug' as they say.


If you'd like to speak to market influence rather than centralisation, no problem. In the case of Tether - you have not presented any conclusive evidence that they're issuing USDT out of thin air. By all means, come back to us when you have that evidence. Otherwise, whatever Tether do - in the longer run - bitcoin existed before Tether did - and it will remain intact long after its gone. I'm sure there would be some short-medium term drama in a tether downfall scenario - but it is not a showstopper where bitcoin is concerned. @DazedInPontoon has given you an example of a much more dramatic event that didn't kill off bitcoin in the past.

Dealing with the others separately as they fall under the category of 'influencers', Elon's tweets have impacted the conventional market. Claims/statements/fud on CNBC does so every day re. the conventional market. It's a lot more pronounced where crypto is concerned as its nascent and subject to a hype cycle - with an ever increasing intake of new folk becoming stakeholders. On-chain metrics have shown that those who rushed in after Elon were also the late/new-comers who exited when his later tweets were not perceived to be as complementary.



letitroll said:


> Say what you will about the monetary system in the EU/USA.......but these are OUR institutions & democratically controlled and ultimately if you started a party who's flag pole policy was to fix the supply of money.....and you got enough votes.....well thats what would happen.


We had Church and State and they have been largely disentangled. Hardly anyone heretofore had ever considered why the state should have a monopoly on money but that has changed/is changing. It seems to me that the time has come to address that. How is competition and the availability of options bad for society?


----------



## letitroll

Semantics - your future new world currency has traded democratically appointed civil servants like Christine Lagarde & Jerome Powell......for Elon Musk & Michael Saylor.......the freedom you've gained is the right send money to anyone, anywhere in the world.......the last time I checked I could do that too (& the places I couldn't Iran/North Korea...well I'm happy to do my little bit to slow down global terrorism)


----------



## tecate

letitroll said:


> Semantics - your future new world currency has traded democratically appointed civil servants like Christine Lagarde & Jerome Powell......for Elon Musk & Michael Saylor.......the freedom you've gained is the right send money to anyone, anywhere in the world.......the last time I checked I could do that too (& the places I couldn't Iran/North Korea...well I'm happy to do my little bit to slow down global terrorism)


It's permissioned. It depends on whether someone permits it or not. It depends on if someone will allow access to the banking system in the first instance. Going back to the original claim, by contrast you're incorrect to say that bitcoin isn't decentralised because bitcoin is an open network. Anyone can use it. Nobody can be prevented from making a transaction on the bitcoin network and transactions can't be reversed - by anyone.

If you're happy with the current system, then keep on using it. You do you. You'll notice though that you keep on making the very same mistake - you don't look beyond your own needs. I recently moved funds out of a country that applies capital controls. Rather than deal with their bs (and possibly never be able move funds), I converted to crypto - job done. 

As regards sanctions, I'm happy to see that sanctions aren't going to work very effectively any more. Imagine weaponising the money system in order to make conditions so bad on the ground as to force ordinary people to be desperate enough to rise up. I know Venezuelans who have lost family members when a basic procedure would have saved them - due to the application of sanctions. Meanwhile, the regime leaders and supporters in sanctions-hit countries won't be the ones that will be short of these things.


----------



## DublinHead54

tecate said:


> I recently moved funds out of a country that applies capital controls. Rather than deal with their bs (and possibly never be able move funds), I converted to crypto - job done.



What do you mean by capital controls for you personally? Are you referring to tax?


In this example you converted fiat currency to crypto and then accessed in account in another country and converted it back to local fiat?


----------



## tecate

Dublinbay12 said:


> What do you mean by capital controls for you personally? Are you referring to tax?
> 
> 
> In this example you converted fiat currency to crypto and then accessed in account in another country and converted it back to local fiat?


Of course I'm not referring to tax - if I was referring to tax, I would have said tax. I'm referring to capital controls. Many governments and banking systems in the world make life very difficult in certain scenarios - especially when the individual is looking to remove funds from the jurisdiction. They don't want to see your their money go bye-bye. @letitroll thinks that the whole world has access to his privilege and his experience is everyone elses. I introduced that example to demonstrate that there's all sorts of mayhem that goes on in the world - when it comes to banking/moving funds, etc.


----------



## DublinHead54

tecate said:


> At the end of the day, If I want to transact 0.0005 BTC to anyone on the planet today, I can and there isn't anyone that can prevent or reverse the transaction. None of the people on your list included.


This can be a little more nuanced do you agree? It is true for you and I as bitcoin holders providing we store in our own wallets. However conventional government / regulators can prevent new market participants entering (binance UK recent ban) or for those keeping coins in exchange wallets don't have full ownership (MT.Gox hack). Like it or not for Bitcoins adoption to continue it does need to maintain a good relationship with traditional financial market participants i.e. regulators. This is a conversation on Tether and given it is a Top 10 player in thr global Commercial Paper they should be making the same disclosures as Banks. What reason do they have for not? Any supporter of Bitcoin knows that it operates on a public Blockchain...that's part of how we achieve consensus. Having a major player in the eco system not being fully transparent doesn't sit well with me. How have you got yourself comfortable with their Disclosures?

I agree if Tether turns out to be a fraud that it won't be the end of Bitcoin. However it will likely have a severe impact on the price and given that for a lot of people Bitcoins success is based on the price increasing rather than adoption.




tecate said:


> @DazedInPontoon has given you an example of a much more dramatic event that didn't kill off bitcoin in the past.


I don't remember people saying that My.Gox would be the end of Bitcoin, that was really the early days of Bitcoin. But if that is what they said back then given Bitcoin is largely unchanged why would it have been a valid argument then and not today or vice versa?


----------



## DazedInPontoon

If tether fails I bet you'll basically see articles almost word for word like this one except with Tether in place of Mt Gox:









						Bitcoin Sees the Grim Reaper
					

Mt. Gox trapping customers’ money could be the last straw for the virtual currency.




					nymag.com
				




I held coins through that, I was of course unaffected directly since I self-custody. In the ecosystem/price it was short term chaos, but long-term irrelevance for those who had not kept coins on Gox.


----------



## tecate

Dublinbay12 said:


> This can be a little more nuanced do you agree? It is true for you and I as bitcoin holders providing we store in our own wallets. However conventional government / regulators can prevent new market participants entering (binance UK recent ban) or for those keeping coins in exchange wallets don't have full ownership (MT.Gox hack).


Mentioned in the context of claims made that bitcoin is not decentralised. On that basis, no need for further nuance. The aspects you mention are other items - and worthy of discussion in their own right. However, they don't mean that bitcoin is not a decentralised network.


Dublinbay12 said:


> Like it or not for Bitcoins adoption to continue it does need to maintain a good relationship with traditional financial market participants i.e. regulators.


If you're saying that bitcoin arrived in the world simply as an idea - then code - and nothing more - born into a world where all we have is an established fiat based monetary system - with total network effect (not even network effect - applied by force) - then for sure, we're on the same page. I've been saying as much for the past 4 years. 
.


Dublinbay12 said:


> This is a conversation on Tether and given it is a Top 10 player in thr global Commercial Paper they should be making the same disclosures as Banks. What reason do they have for not? Any supporter of Bitcoin knows that it operates on a public Blockchain...that's part of how we achieve consensus. Having a major player in the eco system not being fully transparent doesn't sit well with me. How have you got yourself comfortable with their Disclosures?


More transparency rather than less in this instance is all good - I'm completely in favour. I'm not here to represent tether - I couldn't care less about them. However, people should be aware of all facets to this ongoing saga - there are no clean hands and theres been ill-intent from all sides. I gave the example of them being slammed out of the banking system on multiple occasions.
We can only speculate (seeing as no side can produce complete evidence) but my 2 satoshis is that given it didn't come up with regulatory compliance as its no.1 objective - and given the rough time they'd been given in order to try and bank and keep the business going - they're bound to have had to cut corners in the first number of years to stay operational. Most of these regulatory agencies can go back as many years as they want - and so, maybe they'll take them out based on something that happened a number of years ago already (which is what that Bloomberg article is based upon). However, they may have started rough n ready but I think its highly unlikely they would have been putting a regulatory foot wrong the last while if they can help it. They now have a sizable business to look after - why put that at risk?



Dublinbay12 said:


> I agree if Tether turns out to be a fraud that it won't be the end of Bitcoin. However it will likely have a severe impact on the price and given that for a lot of people Bitcoins success is based on the price increasing rather than adoption.


It depends on the time horizon of the individual. I expect there to be plenty of drama (we have that anyway even without any proper evidence of wrongdoing). However, I don't see it being anything other than noise which would play out over the short-medium term. Tether doesn't magically get to take away the characteristics of bitcoin if it sinks/is taken out of the equation, etc. On a short time horizon, I'm sure it will seem like the end of the world. With a longer outlook, bitcoin will be stronger for the experience. The industry is much broader.




Dublinbay12 said:


> I don't remember people saying that My.Gox would be the end of Bitcoin, that was really the early days of Bitcoin. But if that is what they said back then given Bitcoin is largely unchanged why would it have been a valid argument then and not today or vice versa?


Have a look at that milestone event in bitcoin's history. Bitcoin was over-reliant on Mt.Gox at the time. The market suffered for quite a while afterwards - but life goes on. The difference in this case is that there are other stablecoins in existence - one of which has been growing at a faster rate than tether. The difference is that these other stablecoins were started when banking wasn't pursuing a strategy of shutting them out to the same extent as what Tether encountered.


----------



## DublinHead54

DazedInPontoon said:


> If tether fails I bet you'll basically see articles almost word for word like this one except with Tether in place of Mt Gox:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Bitcoin Sees the Grim Reaper
> 
> 
> Mt. Gox trapping customers’ money could be the last straw for the virtual currency.
> 
> 
> 
> 
> nymag.com
> 
> 
> 
> 
> 
> I held coins through that, I was of course unaffected directly since I self-custody. In the ecosystem/price it was short term chaos, but long-term irrelevance for those who had not kept coins on Gox.



That article isn't about Mt.Gox failing.


----------



## DublinHead54

tecate said:


> More transparency rather than less in this instance is all good - I'm completely in favour. I'm not here to represent tether - I couldn't care less about them. However, people should be aware of all facets to this ongoing saga - there are no clean hands and theres been ill-intent from all sides. I gave the example of them being slammed out of the banking system on multiple occasions.
> We can only speculate (seeing as no side can produce complete evidence) but my 2 satoshis is that given it didn't come up with regulatory compliance as its no.1 objective - and given the rough time they'd been given in order to try and bank and keep the business going - they're bound to have had to cut corners in the first number of years to stay operational. Most of these regulatory agencies can go back as many years as they want - and so, maybe they'll take them out based on something that happened a number of years ago already (which is what that Bloomberg article is based upon). However, they may have started rough n ready but I think its highly unlikely they would have been putting a regulatory foot wrong the last while if they can help it. They now have a sizable business to look after - why put that at risk?



Regulatory Compliance isn't a hurdle set to deter business, it is designed to protect market participants and individuals. It is very clear that due to regulation financial markets are much safer now in a post financial crisis, case in point that during the pandemic we did not see banks go under and all had good capital levels to continue operations under stress. I don't believe that Tether was 'shut-out' of the banking system just because it was a cryptocurrency related entity, rather it was unable to meet the KYC / due diligence of those entities it wanted to bank with. Yes there has been a lot of 'FUD' around this and it gains mainstream media attention when banking rights are revoked, but banking rights are revoked from hundreds of entities everyday. 

I agree that they didn't start Tether with regulatory compliance as its no.1 goal, but at the same time, questions have to be asked about their teams experience to run a top 10 Commercial Paper entity and the lack of transparency. What I find concerning is that most crypto companies once out of the startup phase have recognized the need to hire experienced people. If you look at Circle (USDC) that is what they have done, whereas Tether is still run by the founders of which one is a former plastic surgeon acting as the CFO. From what I can find on linkedin and news wise they haven't gone out and poached experienced hires from other industries, that is major red flag. 

We can speculate, but there are red flags there and there is no reason why Tether can't provide full disclosure. 



tecate said:


> It depends on the time horizon of the individual. I expect there to be plenty of drama (we have that anyway even without any proper evidence of wrongdoing). However, I don't see it being anything other than noise which would play out over the short-medium term. Tether doesn't magically get to take away the characteristics of bitcoin if it sinks/is taken out of the equation, etc. On a short time horizon, I'm sure it will seem like the end of the world. With a longer outlook, bitcoin will be stronger for the experience. The industry is much broader.


When you say bitcoin will be stronger for the experience, are you referring to the price ending up higher? Is your view that when Bitcoin moves along the adoption curve its price will increase so that in the long term that price will end up at multiple greater than today?


----------



## tecate

Dublinbay12 said:


> That article isn't about Mt.Gox failing.


It describes difficulties that the company was encountering 6 months before its final demise. For the point he's making - it amounts to the same thing. In a tether downfall scenario, there will no doubt be similar doom n' gloom - but bitcoin will continue in its development nonetheless.


Dublinbay12 said:


> Regulatory Compliance isn't a hurdle set to deter business, it is designed to protect market participants and individuals. It is very clear that due to regulation financial markets are much safer now in a post financial crisis, case in point that during the pandemic we did not see banks go under and all had good capital levels to continue operations under stress. I don't believe that Tether was 'shut-out' of the banking system just because it was a cryptocurrency related entity, rather it was unable to meet the KYC / due diligence of those entities it wanted to bank with. Yes there has been a lot of 'FUD' around this and it gains mainstream media attention when banking rights are revoked, but banking rights are revoked from hundreds of entities everyday.
> 
> I agree that they didn't start Tether with regulatory compliance as its no.1 goal, but at the same time, questions have to be asked about their teams experience to run a top 10 Commercial Paper entity and the lack of transparency. What I find concerning is that most crypto companies once out of the startup phase have recognized the need to hire experienced people. If you look at Circle (USDC) that is what they have done, whereas Tether is still run by the founders of which one is a former plastic surgeon acting as the CFO. From what I can find on linkedin and news wise they haven't gone out and poached experienced hires from other industries, that is major red flag.
> 
> We can speculate, but there are red flags there and there is no reason why Tether can't provide full disclosure.


You're entitled to your opinion and I'm sure that there are instances where crypto companies have been shut out for a number of rationale. No doubt this has varied from a genuine belief that there's a non-compliance issue, or banks having decided its crypto and so its simply easier to not even begin to entertain it. Lastly, there are cases of big banking wanting to suppress crypto also (over and above kyc/aml concerns). You only have to look at the myriad of complaints, court actions and findings by various bodies worldwide that have surfaced in recent years on this basis. 

USDC was started in a very different environment to Tether. It would have had precisely the same difficulties had it tried to establish itself in 2014 as opposed to late 2018.



Dublinbay12 said:


> When you say bitcoin will be stronger for the experience, are you referring to the price ending up higher? Is your view that when Bitcoin moves along the adoption curve its price will increase so that in the long term that price will end up at multiple greater than today?


I wasn't referring to the price. I'm referring to the protocol and its eco-system adapting to various difficulties down through the years and ending up more robust and resilient as an outcome. 
As regards the price, as bitcoin moves along the S curve, its logical that there will be an ever increasing pressure on price given that it is a fixed supply digital currency/asset.


----------



## DublinHead54

tecate said:


> USDC was started in a very different environment to Tether. It would have had precisely the same difficulties had it tried to establish itself in 2014 as opposed to late 2018.



What is different in the environment? Tether and USDC face the same issues today and on the face of it USDC appears to be more transparent and reputable and probably why it is seeing growth. There has nothing prevented Tether from implementing the same corporate governance in 2014 as USDC has today, surely if anything this would have been welcomed by regulators and market participants. As a counter, coinbase was founded in 2012 in this different environment and it has managed to win over regulators. 

I am not arguing that Tether is a fraud, I am saying that there are clear red flags that are concerning, I am disagreeing that the red flags can be fobbed off as 'FUD' or some form of orchestrated anti-crypto rhetoric. 

Tether is currently very important to the Bitcoin network, and as such those participating in the ecosystem should be asking for much more transparency from Tether to avoid any short term price issues. It should be recognized that most people think of the success of Bitcoin with long term price appreciation, and this is a threat to price appreciation in the short term which impacts the timeline for long term price appreciation. This alone should be enough for people to recognize the risk.


----------



## tecate

Dublinbay12 said:


> What is different in the environment?


Year on year, establishment finance has become more open-minded to crypto. 2014 was incredibly early - there was damn all enlightenment around back then. Take the evolution of JP Morgan relative to crypto as an example. In 2017, its CEO is saying bitcoin is a fraud, a year later he's saying that he will sack any employee that trades crypto on a personal basis and today they are facilitating crypto in the portfolios of their wealthy clients. Its opening out albeit that its two steps forward, one step back. We have the likes of HSBC ( infamous in its facilitation of cartel money laundering in the past) writing to clients saying that they won't permit them to trade MSTR stock on the basis that the company holds a lot of btc - suggesting that they're taking that measure in the interests of their customers.



Dublinbay12 said:


> USDC appears to be more transparent and reputable and probably why it is seeing growth.


I agree.




Dublinbay12 said:


> There has nothing prevented Tether from implementing the same corporate governance in 2014 as USDC has today


I disagree. Circle were around back in 2014 but they didn't start a stablecoin business back then.



Dublinbay12 said:


> As a counter, coinbase was founded in 2012 in this different environment and it has managed to win over regulators.


Apples and oranges - the nature of the business is completely different.



Dublinbay12 said:


> I am disagreeing that the red flags can be fobbed off as 'FUD' or some form of orchestrated anti-crypto rhetoric.


Then you're misunderstanding the point that I've been making. Tether are not on my Christmas card list. I don't give a fiddlers about them. However, the motivations of many who make big fat claims about Tether also need to be questioned. That is not 'rhetoric'. If people have evidence, then bring it forward. They're not doing that - they're just casting aspersions.




Dublinbay12 said:


> Tether is currently very important to the Bitcoin network, and as such those participating in the ecosystem should be asking for much more transparency from Tether


Anyone credible in the crypto space has been calling for precisely that. Reporting isn't anywhere near where it needs to be but it is getting better  - so at least there's that.



Dublinbay12 said:


> ...to avoid any short term price issues. It should be recognized that most people think of the success of Bitcoin with long term price appreciation, and this is a threat to price appreciation in the short term which impacts the timeline for long term price appreciation. This alone should be enough for people to recognize the risk.


An upward price trajectory may be a secondary effect of ongoing adoption - but to my mind, continued adoption is what's most important in terms of what will determine the success or otherwise of bitcoin.


----------



## DublinHead54

tecate said:


> started in a very different environment to Tether. It would have had precisely the same difficulties had it tried to establish itself in 2014 as opposed to late 2018.





tecate said:


> Year on year, establishment finance has become more open-minded to crypto. 2014 was incredibly early - there was damn all enlightenment around back then. Take the evolution of JP Morgan relative to crypto as an example. In 2017, its CEO is saying bitcoin is a fraud, a year later he's saying that he will sack any employee that trades crypto on a personal basis and today they are facilitating crypto in the portfolios of their wealthy clients. Its opening out albeit that its two steps forward, one step back. We have the likes of HSBC ( infamous in its facilitation of cartel money laundering in the past) writing to clients saying that they won't permit them to trade MSTR stock on the basis that the company holds a lot of btc - suggesting that they're taking that measure in the interests of their customers.
> 
> I disagree. Circle were around back in 2014 but they didn't start a stablecoin business back then.
> 
> Apples and oranges - the nature of the business is completely different.



If a Stablecoin business and a Crypto Exchange are 'apple and oranges' then you can't compare a stablecoin business and JP Morgan either. Regarding the quotes above, there is nothing stopping Tether despite being created 'in a different environment' from putting in place the same corporate governance as Coinbase or Circle, which are both companies that were created in that 'different environment'. The adoption of Crypto by JP Morgan is an entirely different topic to disclosures and corporate governance of Tether, they are apple and oranges. 

I'm arguing for Tether to be as transparent as the likes of Blackrock, and there is nothing that should stop them and it would end any redflags straight away. They could do it tomorrow if they wanted. Are you arguing against this?


----------



## tecate

Dublinbay12 said:


> If a Stablecoin business and a Crypto Exchange are 'apple and oranges' then you can't compare a stablecoin business and JP Morgan either. Regarding the quotes above, there is nothing stopping Tether despite being created 'in a different environment' from putting in place the same corporate governance as Coinbase or Circle, which are both companies that were created in that 'different environment'. The adoption of Crypto by JP Morgan is an entirely different topic to disclosures and corporate governance of Tether, they are apple and oranges.


Except that I didn't 'compare' a stablecoin business to JP Morgan. I provided the JP Morgan info as an example of how attitudes have changed when you continued to maintain that market conditions were the same in 2014 as they were in late 2018. Circle existed as a company in 2014 but they didn't start their stablecoin business until late 2018. Such a stablecoin business cannot be carried on without cooperation from the banking industry.



Dublinbay12 said:


> I'm arguing for Tether to be as transparent as the likes of Blackrock, and there is nothing that should stop them and it would end any redflags straight away.


As I said in my last post, anyone credible in the crypto space is asking for more transparency - not less. 



Dublinbay12 said:


> They could do it tomorrow if they wanted. Are you arguing against this?


As regards what's at play, it's a matter of speculation and nothing more. Neither of us are privvy to the inner workings of Tether.


----------



## DublinHead54

tecate said:


> Except that I didn't 'compare' a stablecoin business to JP Morgan. I provided the JP Morgan info as an example of how attitudes have changed when you continued to maintain that market conditions were the same in 2014 as they were in late 2018. Circle existed as a company in 2014 but they didn't start their stablecoin business until late 2018. Such a stablecoin business cannot be carried on without cooperation from the banking industry.


Attitudes towards crypto are changing, but what relevance does that have on why Tether can't have the same corporate governance as other Crypto companies? I am not maintaining that market conditions are the same, nor did I ever say that. I've said there is nothing different in the market that would prevent Tether from having the same corporate governance as other companies. How does a change of opinion on Crypto by Jamie Dimon show that it does?


----------



## tecate

Dublinbay12 said:


> Attitudes towards crypto are changing, but what relevance does that have on why Tether can't have the same corporate governance as other Crypto companies? I am not maintaining that market conditions are the same, nor did I ever say that. I've said there is nothing different in the market that would prevent Tether from having the same corporate governance as other companies. How does a change of opinion on Crypto by Jamie Dimon show that it does?


I made the point that the market conditions under which Tether commenced their stablecoin business in 2014 differed greatly from the underlying conditions relative to the commencement of USDC in late 2018.


----------



## tecate

Tether's latest attestation report has been published. By comparison with its last disclosure 3 months ago, treasury bills held have gone from 3% to 24%. The company has also provided ratings for commercial paper held. 
Critics say a full audit is still lacking - and some claim that it could easily have funds in place on the day of attestation - but not before/afterwards.

This thing will keep going on - although I'd imagine that the company will keep improving its level of reporting. It has a sizeable business to protect. It's still possible that some regulatory body or other goes after them based on them having strayed in the past.

Meanwhile, it seems that Circle wants to become a bank. Another stablecoin provider - Paxos - has been pursuing a banking trust license. 

With or without tether, stablecoins will continue.


----------



## DublinHead54

tecate said:


> Tether's latest attestation report has been published. By comparison with its last disclosure 3 months ago, treasury bills held have gone from 3% to 24%.



What is your view on the US of Treasury Bills? 

This links a sizable chunk of the crypto market directly with the Fed. The Fed that you and @WolfeTone have criticized repeatedly in discussion on this forum.


----------



## tecate

Dublinbay12 said:


> This links a sizable chunk of the crypto market directly with the Fed. The Fed that you and @WolfeTone have criticized repeatedly in discussion on this forum.


I'm quite happy to listen to any counter argument re. any criticisms that I may have expressed re. the Fed (albeit that I'd suggest that such a discussion would be off topic on this thread). The crypto sector has arisen amidst the backdrop of a conventional fiat-based monetary system. Of course there will be an interface between the two. Many crypto networks may be parallel networks but they don't exist in a vacuum. For its part, Tether is specifically designed to be a conduit between those systems.

Getting back on topic, critics bemoaned the nature of Tethers USDT backing. Therefore, its difficult to imagine how that constituency would do anything other than welcome the increase in T-Bill holdings as per the latest attestation report.


----------



## WolfeTone

Dublinbay12 said:


> What is your view on the US of Treasury Bills?



They are bordering close to toilet paper now. It's why one BTC buys you 40,000 $. 

I'm reading a thread on social media about spiralling rents and house prices. The general gist between 2 contributors is that rents and house prices are out of control and beyond any reasonable valuation. 
It took about 10 exchanges for the two contributors to realise they are in different countries. One in Canada and one in Ireland. 
I'm guessing you can add US and UK to that also, in capital cities at least. 

This is all being driven by money printing. Stock markets reaching new highs, bond yields in the negative. 

But because it is being orchestrated by central banks the followers are sheepishly tagging along in the belief that their central bank overseers know what they are doing. 

Does anyone have confidence in this central bank command economy anymore?


----------



## letitroll

@WolfeTone

US Treasuries are toilet paper  I got a good chuckle out of that.

Lets take a step back and think about BTC/Tether with facts - Tether is the main cross quoted instrument & liquidity counter-party for BTC (some indicate 75% of all BTC transactions are settled in USDT)

Tether/USDT is two or three guys with a laptop in the Virgin Islands 'printing/minting' Tether coins digitally and releasing them into the crytpo closed loop universe......feeding liquidity and manufactured digital dollars as they please with bizarre conflicted relationships with various exchanges & cypto brokers where they've admitted to providing loans to these same affliates using customer deposits in the past. Lets be real here....these are all the same people.....in the real world they would be deemed related parties..tether/bitfinex/binance/bithumb

Tether itself is probably levered at best 33 to 1 but more likely 100:1 against actual dollars...........but if loans are to affiliate exchanges/brokers and those affiliates default, indeed any counterparty defaults the leverage ratio could go to many many times that very quickly.

The accounting firm, Moore Cayman (you ever hear of them?No you havent) providing the 'attestation' (NOT an audit) on tether accounts/assets has no international bonafides at all. ZERO. In fact they have FOUR employees listed on linkedin https://www.linkedin.com/company/moorecayman/ .....four employees! audting a firm with $63bn of assets!, 3% of which is cash, the rest which is supposedly spread across the worlds commercial paper markets, numerous loans to affiliates & 1000's of counterparties for which a credit risk exists. Moore Cayman is the cop on the beat watching out for everyone to ensure redeemabilty for real $'s but really at the end of the chain its BTC holders.

If US Treasuries & their implicit promise are toilet paper........what word would you use for the twinned BTC/USDT complex given the above @WolfeTone ? You do see a problem though above, right @WolfeTone ?


----------



## WolfeTone

letitroll said:


> providing the 'attestation' (NOT an audit)



Who audits the Federal Reserve?



letitroll said:


> to ensure redeemabilty for real $'s but really at the end of the chain its BTC holders.



Yes, you keep pushing this line. I'm starting to think it is only you that has this insight and for some reason you are only willing to share it with posters on AAM and nowhere else.
Because if you did, if it was shared widely across financial markets, don't you think that it would effect the bitcoin price negatively by now? I think you promised some months back, 



letitroll said:


> If i was holding BTC - I’d be dumping……its gonna be a bloodbath



But then again, it's not as if you are offering definitive insight is it? Its all speculative masquerading as 'facts' 



letitroll said:


> *some indicate* 75% of all BTC transactions are settled in USDT



I'm sure 'some' do. How are you Roubini? 


letitroll said:


> Tether itself is probably levered at best 33 to 1


Probably, maybe, might be, might not be...   


letitroll said:


> but more likely 100:1



Really? 



letitroll said:


> ...what word would you use for the twinned BTC/USDT complex given the above



FUD.


----------



## letitroll

Ok no answer - I understand - cognitive dissonance is a bitch


----------



## WolfeTone

letitroll said:


> what word would you use for the twinned BTC/USDT complex given the above



Answer:


WolfeTone said:


> FUD





letitroll said:


> Ok no answer


??


----------



## Duke of Marmalade

WolfeTone said:


> They are bordering close to toilet paper now.


China, for example, holds $1.2trn in US Treasury Bills.  I guess they do have a big demand for toilet paper.  They hold no  bitcoin reflecting the fact that it has no utility value whatsoever.


----------



## WolfeTone

Duke of Marmalade said:


> China, for example, holds $1.2trn in US Treasury Bills.



They must be thrilled at Bidens $6trn stimulus, accountable from out of nothing but thin air.




Duke of Marmalade said:


> They hold no bitcoin reflecting the fact that they consider it has no utility value whatsoever.



I corrected that for you.
I think it has proven itself as good hedge against fiat currency in the current centralised command banking economy.


----------



## tecate

letitroll said:


> Tether/USDT is two or three guys with a laptop in the Virgin Islands 'printing/minting' Tether coins digitally and releasing them into the crytpo closed loop universe......feeding liquidity and manufactured digital dollars as they please with bizarre conflicted relationships with various exchanges & cypto brokers where they've admitted to providing loans to these same affliates using customer deposits in the past. Lets be real here....these are all the same people.....in the real world they would be deemed related parties..tether/bitfinex/binance/bithumb



The 'three guys with a laptop' is the narrative you want to believe. However, it is wayward vs. the reality. Stablecoins generally have added 2x the entire market cap of Paypal over the past 6 months. As it stands today, Tether has a market cap of $63 billion dollars. Regardless of whats going on at Tether, they couldn't possibly lack the required human capital to run it.

As regards your other claim i.e. Tether prints as it pleases - here's Lyn's tweet:


__ https://twitter.com/i/web/status/1426287505792507911
In the absence of actual evidence, claims made should not be passed off as fact. I'm quite happy for anyone to suggest that there _could_ be shenanigans going on at Tether. Passing unsubstantiated claims off as fact isn't in any way helpful.


----------



## letitroll

@tecate lets look at facts:

Tether claims it has $63 BILLION dollars of equity......for reference AIB & BOI have combined 24bn euro's of shareholder equity....so Tether is 2.2x the size of Ireland's largest two banks.

Tether claims $63bn of 'assets'.....broken down by their own addmision into cash/commercial paper/bonds/loans......the size/scope of the operation would have literally 1,000's of counter-parties to this paper....defaults/recoveries would be common across such a vast asset book requiring daily management across many departments - risk, recovery etc.

Whats supporting $63bn in assets?









						LinkedIn Login, Sign in | LinkedIn
					

Login to LinkedIn to keep in touch with people you know, share ideas, and build your career.




					www.linkedin.com
				
















						LinkedIn Login, Sign in | LinkedIn
					

Login to LinkedIn to keep in touch with people you know, share ideas, and build your career.




					www.linkedin.com
				




Tether.to has 21 employees listed on Linkedin - most are kind of associate hogs claiming to be advisors to Tether while they 17 other roles listed running at the same time etc. I didnt make up the number 3. I can only find three employees who's full time non concurrent role is working for Tether.....lets say 50% of tether employees dont have a linkedin account (very unlikely given Tether would skew younger).....lets 2x 3 employees....we get to 6 employees

6 Employees running a $63bn what is in essense a credit fund just given their own disclosed asset mix

Ok doesnt sound good but might be legit........so who's looking out for the $63bn of assets that have been given to these folks to look after......who's the dark knight checking and re-checking accounts, making sure the money is there.

These guys - Moore Cayman - are their accountants & auditors - https://www.linkedin.com/company/moorecayman/





FOUR employee global organization nobody has ever heard off in the Cayman Islands, auditing a SIX person organization that is holding customer assets totalling $63bn across a portfolio of cash/bonds/commerical paper/loans.

Even Bernie Madoff kept a team of 30 people around & managed to get E&Y to sign off on things.....and he only 'managed' ~$4bn


----------



## tecate

letitroll said:


> @tecate lets look at facts:
> 
> Tether claims it has $63 BILLION dollars of equity......for reference AIB & BOI have combined 24bn euro's of shareholder equity....so Tether is 2.2x the size of Ireland's largest two banks.
> 
> Tether claims $63bn of 'assets'.....broken down by their own addmision into cash/commercial paper/bonds/loans......the size/scope of the operation would have literally 1,000's of counter-parties to this paper....defaults/recoveries would be common across such a vast asset book requiring daily management across many departments - risk, recovery etc.
> 
> Whats supporting $63bn in assets?
> 
> Tether.to has 21 employees listed on Linkedin - most are kind of associate hogs claiming to be advisors to Tether while they 17 other roles listed running at the same time etc. I didnt make up the number 3. I can only find three employees who's full time non concurrent role is working for Tether.....lets say 50% of tether employees dont have a linkedin account (very unlikely given Tether would skew younger).....lets 2x 3 employees....we get to 6 employees
> 
> 6 Employees running a $63bn what is in essense a credit fund just given their own disclosed asset mix



 You've claimed 'facts' again. Pulling up a LinkedIn profile is not 'facts'! You're making assumptions - and again, you're painting the worst of narratives with your '3 guys and a laptop'! How do you know that the company don't have a no LinkedIn profiles policy as part of OpSec? There's absolutely nothing definitive in pulling up a LinkedIn profile.

Secondly, the whole point of blockchain is removal of intermediaries. With that, crypto companies don't tend to have a need to employ anywhere near as many people as TradFi entities. Third, you made a comparison with AIB & BOI - in line with the previous point, the needs here are entirely different and so any such comparison is wayward. In any event, how do you know what their requirement is in terms of staffing to run this type of business?

Lastly - and most importantly, are you seriously telling me that as a company it's going out of it's way to save a few salaries whilst running a $60 billion dollar company? Are you claiming that they're self sabotaging themselves and not providing themselves with the day to day resources to run the company? It would make no sense for them to do that.
Tether may very well have been started by three guys and a laptop - I could well believe that. Brian Armstrong started Coinbase with $100k - it has a market cap of $68 billion today. However, its highly unlikely that the resources of Tethers current incarnation (with a market cap of $63 billion) is limited to '3 guys and a laptop'.




letitroll said:


> Ok *doesnt sound good* but might be legit..


Hang on - you were pulled up on the 'facts' claim and then came back with another 'facts' claim which it seems is underpinned with a 'doesn't sound good'. In other words, you don't have firm evidence. You could express concern re. stuff that leads to a 'doesn't sound good' conclusion and suggest that more scrutiny/regulation is required. That's reasonable. What's not reasonable is jumping straight to baseless conclusions without evidence - which is what Tether Truthers have been (and are) doing. What doesn't in any way help their credibility is the fact that these people started out from the viewpoint that they hated everything to do with decentralised crypto/blockchain.



letitroll said:


> @tecate lets look at facts:
> FOUR employee global organization nobody has ever heard off in the Cayman Islands, auditing a SIX person organization that is holding customer assets totalling $63bn across a portfolio of cash/bonds/commerical paper/loans.


Anyone credible in the crypto space is looking for more transparency where Tether is concerned. At the end of the day, entities that are centralised - be they exchanges or stablecoin issuers - should be regulated on that basis. I've long since said that I don't trust any centralised entity - but equally, there's all sorts of shenanigans at play in the regulatory and political sphere relative to crypto.
Lack of a full audit will continue to leave everyone second guessing. However, that's what it is - second guessing. There is no confirmation from either side. So someone can quite rightly express concern but declaring Tether to be issuing USDT without backing as part of a strategy to drive up the crypto market is not fact as it stands today.
In the meantime, I refer you back to Lyn  Alden's tweet via my last post. If you claim that USDT is being magic'ed up to drive the bitcoin price, can you explain why issuance of USDT has been flat over recent months whilst the bitcoin price has moved from $29k to $47k?

Other than that, you claimed that if USDT falls apart, then bitcoin is done for. That in no way is my thesis. Whilst we don't have the evidence, I'm open to the possibility of Tether running a sham of an operation. Even if that's our final destination, bitcoin will survive and continue to progress.


----------



## Duke of Marmalade

letitroll said:


> @tecate lets look at facts:
> 
> Tether claims it has $63 BILLION dollars of equity......for reference AIB & BOI have combined 24bn euro's of shareholder equity....so Tether is 2.2x the size of Ireland's largest two banks.
> 
> Tether claims $63bn of 'assets'.....broken down by their own addmision into cash/commercial paper/bonds/loans......the size/scope of the operation would have literally 1,000's of counter-parties to this paper....defaults/recoveries would be common across such a vast asset book requiring daily management across many departments - risk, recovery etc.
> 
> Whats supporting $63bn in assets?
> 
> 
> 
> 
> 
> 
> 
> 
> 
> LinkedIn Login, Sign in | LinkedIn
> 
> 
> Login to LinkedIn to keep in touch with people you know, share ideas, and build your career.
> 
> 
> 
> 
> www.linkedin.com
> 
> 
> 
> 
> 
> View attachment 5759
> 
> 
> 
> 
> 
> 
> 
> 
> LinkedIn Login, Sign in | LinkedIn
> 
> 
> Login to LinkedIn to keep in touch with people you know, share ideas, and build your career.
> 
> 
> 
> 
> www.linkedin.com
> 
> 
> 
> 
> 
> Tether.to has 21 employees listed on Linkedin - most are kind of associate hogs claiming to be advisors to Tether while they 17 other roles listed running at the same time etc. I didnt make up the number 3. I can only find three employees who's full time non concurrent role is working for Tether.....lets say 50% of tether employees dont have a linkedin account (very unlikely given Tether would skew younger).....lets 2x 3 employees....we get to 6 employees
> 
> 6 Employees running a $63bn what is in essense a credit fund just given their own disclosed asset mix
> 
> Ok doesnt sound good but might be legit........so who's looking out for the $63bn of assets that have been given to these folks to look after......who's the dark knight checking and re-checking accounts, making sure the money is there.
> 
> These guys - Moore Cayman - are their accountants & auditors - https://www.linkedin.com/company/moorecayman/
> 
> View attachment 5760
> 
> FOUR employee global organization nobody has ever heard off in the Cayman Islands, auditing a SIX person organization that is holding customer assets totalling $63bn across a portfolio of cash/bonds/commerical paper/loans.
> 
> Even Bernie Madoff kept a team of 30 people around & managed to get E&Y to sign off on things.....and he only 'managed' ~$4bn


I checked AIB it has 9,421 employees on LinkedIn!!
This Tether thing stinks to high heaven.  But why is it surviving?  I note @tecate is preparing his escape route for if and when Tether does implode.
Maybe he is right, bitcoin can survive that, I am gobsmacked at its resilience so far.


----------



## ArthurMcB

tecate said:


> You've claimed 'facts' again. Pulling up a LinkedIn profile is not 'facts'! You're making assumptions - and again, you're painting the worst of narratives with your '3 guys and a laptop'! How do you know that the company don't have a no LinkedIn profiles policy as part of OpSec? There's absolutely nothing definitive in pulling up a LinkedIn profile.


I think what letitroll has done here is reasonable and shows that Tether probably has few employees unless someone can reasonably demonstrate otherwise.


----------



## tecate

Duke of Marmalade said:


> I checked AIB it has 9,421 employees on LinkedIn!!


I can't say that I'm familiar with the intricacies of the stablecoin business but I highly doubt making a comparison with the staffing of a retail bank is in any way helpful. Tell me Duke, what is the correct staffing level for the issuer of a stablecoin? Follow up question: You have a $63 billion dollar business and decide to penny pinch a few million on salaries such that the business can't be run effectively on a day to day basis? Is that what we're really talking about here?



Duke of Marmalade said:


> I note @tecate is preparing his escape route for if and when Tether does implode.


Yeah, an incredibly crafty move on my part given that I was the first in these parts to express concern about tether back in January 2018. Anyone credible in the crypto space wants more transparency where Tether is concerned. That's transparency - NOT people that so very badly want crypto to fail making claims that they cannot back up.


----------



## WolfeTone

ArthurMcB said:


> I think what letitroll has done here is reasonable and shows that Tether probably has few employees unless someone can reasonably demonstrate otherwise.



True. And according to this site it has 19 employees across 3 locations. 

Tether employees 

What is not reasonable, imo, is this persistent inference that bitcoin price is dependent or pumped by the issuance of Tether. There is little, or no, real substance to this. It is speculation that has persisted for so long now that if there were any real substance to it, it would be  widely exposed by now and not limited to FUD threads on sites like AAM. 

That is just my observation, I don't think it's unreasonable.


----------



## Duke of Marmalade

tecate said:


> Follow up question: You have a $63 billion dollar business and decide to penny pinch a few million on salaries such that the business can't be run effectively on a day to day basis?


Indeed that is the question.  Is it a $63bn business with a LinkedIn presence 1 in 2,000 of AIB or is it Fred in the Shed having a good laugh, and cleaning up on the bitcoin manipulation.
Anticipating your riposte, I admit that I do not know.  But the huge anomalies that @letitroll has highlighted and your own call for greater transparency not to mention the wise words of Prof Roubini means I won't be keeping my dollars (if I had any) in Tether.


----------



## tecate

Duke of Marmalade said:


> Indeed that is the question.  Is it a $63bn business with a LinkedIn presence 1 in 2,000 of AIB or is it Fred in the Shed having a good laugh, and cleaning up on the bitcoin manipulation.


Tether could be cooking the books but no-where have I seen the suggestion that they can't/won't staff their operation to facilitate day to day activity. Many startups do originate with 'Fred in the Shed' - but they hardly have to make do with too few people - having built a business with a market cap of $63 billion.



Duke of Marmalade said:


> But the huge anomalies that @letitroll has highlighted and your own call for greater transparency not to mention the wise words of Prof Roubini means I won't be keeping my dollars (if I had any) in Tether.


My own view is that the potential is always there - as they're a centralised entity. The problem with the nutty professor is that he wants so badly for crypto to fail so he will latch on to anything. Because he has quadrupled down - having originally declared bitcoin dead back when it was $13/bitcoin, there's no way out for him now. If bitcoin continues on its path, then the reputational damage for him is far greater than fax machine guy's internet screw up. His is not a pragmatic view - if it was, then he'd simply be calling for appropriate regulation. He (and the rest of the merry band of Tether Truthers) aren't doing that - they're throwing fuel on the fire and hoping that it will blow up. In actual fact, it's not unreasonable to imagine a scenario where Tether haven't done much wrong but the FUD becomes a self fulfilling prophesy - which could lead to panic selling and USDT losing its USD peg. It's happened on a number of occasions already - but who's to say that it doesn't get out of hand.


----------



## letitroll

Terra’s stablecoin does its own 2008 crisis — UST crashes and takes Bitcoin with it​








						Terra’s stablecoin does its own 2008 crisis — UST crashes and takes Bitcoin with it
					

A store of inflation, a hedge against value.




					davidgerard.co.uk


----------



## Brendan Burgess

_What is a dollar, anyway?_​_It’s important to remember that very little of this has anything to do with actual money. We’re talking about a token priced in other tokens, which are priced in other tokens, which might be tradeable for actual money at some point.

DeFi means a lot of utterly illiquid rubbish can be claimed to have a “price.” This doesn’t mean you can get that many actual dollars for it, or that they even exist in the system.

Hardly anything in the UST system touches an actual dollar at any point. The closest are the parts that touch BTC or ETH, which at least have actual-dollar prices.

There was never anything like $18 billion in actual dollars backing UST. The massive numbers you see in headlines about crypto are a lie._


----------



## tecate

We might as well have gotten Letitroll / Duke / Brendan to do that write up - as the author - in his blog!! - is vehemently and diametrically opposed to decentralised crypto.

I'm off to call interpol and have them call off the search - welcome back letitroll.


----------



## Brendan Burgess

tecate said:


> is vehemently and diametrically opposed to decentralised crypto.



Hi tecate

I presume that this bias of his means that there was no UST crash or Bitcoin crash and that he was making it all up? 

Brendan


----------



## tecate

Brendan Burgess said:


> Hi tecate
> 
> I presume that this bias of his means that there was no UST crash or Bitcoin crash and that he was making it all up?
> 
> Brendan


What his bias means Brendan is that he has zero credibility. Given the stuff that he has come out with over the years, I couldn't even have a grain of confidence in anything that he comes out with. That doesn't in any way mean that there are not issues to be resolved within crypto projects or related to the crypto ecosystem or digital asset infrastructure, regulation, etc. etc. He may well start off with genuine grievances re. defective items relative to bitcoin, tether, terra/luna, etc - but given where his bias is at, I can in no way take  his word on the step he has persistently gone with in claiming things that he can't substantiate.

If all someone is predisposed to do is to seize on anything they can grasp at to give it a dressing down and run it into the ground, that might provide validation to your position on the subject but that's as far as it goes.

I'm well aware of the issue with UST/Luna and it's something that interests me. It's a subject that's being discussed extensively within digital assets circles (and was a topic before it even happened - as algorithmic stablecoins have had technical difficulties in maintaining their USD pegs). It's an incredibly difficult thing to put together but that's innovation for you. One thing is for certain is that both bitcoin and the digital assets space generally will benefit from this short term difficulty.

Bear in mind also that although it has some bearing on Bitcoin insofar as the Luna Foundation Guard put about $1 billion worth of bitcoin on its balance sheet, you'll appreciate that if we go down this rabbit hole, then we're going into the intriacies of another project entirely.


----------



## Brendan Burgess

tecate said:


> What his bias means Brendan is that he has zero credibility. Given the stuff that he has come out with over the years, I couldn't even have a grain of confidence in anything that he comes out with.



I am still confused. Are you saying that his report that UST and Bitcoin crashed is made up? 

Brendan


----------



## tecate

Brendan Burgess said:


> I am still confused. Are you saying that his report that UST and Bitcoin crashed is made up?


I'm very clear in what I'm saying ->



tecate said:


> He may well start off with genuine grievances re. defective items relative to bitcoin, tether, terra/luna, etc - but given where his bias is at, I can in no way take  his word on the step he has persistently gone with in claiming things that he can't substantiate.
> 
> If all someone is predisposed to do is to seize on anything they can grasp at to give it a dressing down and run it into the ground, that might provide validation to your position on the subject but that's as far as it goes.


If there is anything in the above that you don't understand, come back to me. However, just so that we're clear, I have not seen anyone suggest that UST didn't lose its USD peg or that this saga (based on the LFG having taken a significant position in BTC) hasn't had a knock-on effect on Bitcoin's unit price.


----------



## DazedInPontoon

DazedInPontoon said:


> If tether fails I bet you'll basically see articles almost word for word like this one except with Tether in place of Mt Gox:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Bitcoin Sees the Grim Reaper
> 
> 
> Mt. Gox trapping customers’ money could be the last straw for the virtual currency.
> 
> 
> 
> 
> nymag.com
> 
> 
> 
> 
> 
> I held coins through that, I was of course unaffected directly since I self-custody. In the ecosystem/price it was short term chaos, but long-term irrelevance for those who had not kept coins on Gox.



... and now we're at that point I suppose but in a twist Tether wasn't the first stable coin to experience a loss of peg afterall. This twitter thread is apparently a *good* description of the UST/Luna situation https://twitter.com/jonwu_/status/1523793482850050048 though there seems to be a lot to unpack there and I don't think I care enough to spend more time really understanding it in depth.

I'm not worried about bitcoin, this is just another example of why not requiring backing in order to function is better than backing and why I never touch stable coins.


----------



## tecate

DazedInPontoon said:


> I'm not worried about bitcoin, this is just another example of why not requiring backing in order to function is better than backing and why I never touch stable coins.


This is the point. The likes of Gerard have always claimed that a Tether collapse would spell the end for Bitcoin. Here we have an algorithic stablecoin of significant market cap. (and vested in bitcoin as a collateral asset) losing its peg and Bitcoin is still alive and kicking (albeit with a short term hit on unit price).


----------



## Brendan Burgess

tecate said:


> If there is anything in the above that you don't understand, come back to me.



Why do you have to make it so complicated? 

I asked a simple question and you could have confirmed that he was correct in his report of the facts.

That is all I was trying to establish without having to read and parse a long essay on his history.

Brendan


----------



## tecate

Brendan Burgess said:


> Why do you have to make it so complicated?


I'm not seeing anything complicated in my answer although I'd wager there's a smattering of the rhetorical at play here.



Brendan Burgess said:


> I asked a simple question and you could have confirmed that he was correct in his report of the facts.


I am not stating that he was and is correct 'in his report of the facts'. I'm stating that nobody has disputed that UST lost its USD peg and that there was some short term impact on Bitcoin unit price. I'm also stating that Gerard's past record is to go beyond facts to make allegations he has been unable to substantiate.



Brendan Burgess said:


> That is all I was trying to establish without having to read and parse a long essay on his history.


I'm sorry if you find my responses tedious but respectfully, if I was to respond a second time, I wouldn't respond any other way - it's necessary in order to respond with some degree of context, nuance & accuracy.


----------



## Brendan Burgess

Lads

Every thread is becoming a repeat of other threads.  So we can have just one huge Bitcoin/crypto/blockchain thread or separate threads dealing with different issues.

I think that the latter is better, so I have deleted all the recent posts not dealing with the thread title:

Tether/Stablecoins are the hot air inside the Bitcoin bubble...their regulation will burst it​This is a very specific topic.

The Irish Times says that TerraUSD has collapsed.  Has it? Could someone (Tecate?)  maybe do a summary of the different stable coins and the pros and cons of them and their implications for cryptos.









						TerraUSD meltdown sends shockwaves through crypto markets
					

Bitcoin slumps to 16-month low as sell-off gains momentum




					www.irishtimes.com


----------



## Duke of Marmalade

Should be short and sweet.


----------



## evil_g

I see Tether dropped as low as .95 this morning. Currently sitting at .98.

https://www.ft.com/content/5887ef43-d43a-4608-a1ac-aacc99f076b9#myft:my-news:page

Free money for the select few who can redeem these at face value, no? How can a vacuum like this persist?


----------



## Brendan Burgess

evil_g said:


> the select few who can redeem these at face value,



I find this fascinating but don't understand the details.

Can some people actually buy these at .98 and cash them for 1 ? Who are these people?  

If I bought Tether for $1 , can I not convert it into real dollars? 

Brendan


----------



## evil_g

Brendan Burgess said:


> I find this fascinating but don't understand the details.
> 
> Can some people actually buy these at .98 and cash them for 1 ? Who are these people?
> 
> If I bought Tether for $1 , can I not convert it into real dollars?
> 
> Brendan


https://www.ft.com/content/7ced3098-84a3-4c22-85ec-ac323d6d70e0




> Here’s a quick, simplified explanation of how Tether works. The company guarantees one-for-one redemptions at $1 to “verified customers”, with the caveat that redemption might be delayed “if such delay is necessitated by the illiquidity or unavailability or loss of any reserves held by Tether to back the Tether Tokens”.






> In normal circumstances, the handful of verified-customer institutions that can access Tether’s primary exchange window would buy discount coins in the secondary market then redeem them direct, thereby reducing supply and arbitraging the price back to $1.






> But an ugly demise for the Terra stablecoin since Monday has caused synchronised panic across the crypto space, including for assets similarly marketed as safe. Speculation is rife about solvency issues at coin custodians, funds and even tradfi shops, which has been raising familiar questions about the exact nature of Tether’s reserves and its real-world protections against a run. And for the past few hours, the arb trade doesn’t seem to be happening.



Who are these people? I have no idea. Do they even exist? If they do, they must surely be bleeding Tether's reserves dry right now, no?


----------



## evil_g

https://www.coindesk.com/price/tether/


----------



## Brendan Burgess

_The company guarantees one-for-one redemptions at $1 to “verified customers”, with the caveat that redemption might be delayed “if such delay is necessitated by the illiquidity or unavailability or loss of any reserves held by Tether to back the Tether Tokens”._

So, in other words, we might redeem them one for one or we might not.

Brendan


----------



## evil_g

Brendan Burgess said:


> _The company guarantees one-for-one redemptions at $1 to “verified customers”, with the caveat that redemption might be delayed “if such delay is necessitated by the illiquidity or unavailability or loss of any reserves held by Tether to back the Tether Tokens”._
> 
> So, in other words, we might redeem them one for one or we might not.
> 
> Brendan








Four hours ago. If they are redeeming them, they must currently be hemorrhaging money. 

If they are not redeeming them, or they stop at some point....well, that's the ball game, no?


----------



## tecate

evil_g said:


> Four hours ago. If they are redeeming them, they must currently be hemorrhaging money.
> 
> If they are not redeeming them, or they stop at some point....well, that's the ball game, no?


As discussed previously, Tether is a private entity and so there is always potential for wayward behaviour. That said, on redemptions and USDT going off it's dollar peg, they've been here many times before and have always weathered it.
UST is an algorithmic stablecoin so they're quite different by design.


----------



## evil_g

tecate said:


> As discussed previously, Tether is a private entity and so there is always potential for wayward behaviour. That said, on redemptions and USDT going off it's dollar peg, they've been here many times before and have always weathered it.
> UST is an algorithmic stablecoin so they're quite different by design.


Thanks for the reply.

How do Tether describe their business model do you know? If each tether is backed one for one by a dollar equivalent asset how do they fund their infrastructure / make a profit? Genuine question.

[edit]

I found this:

https://productmint.com/tether-business-model-how-does-tether-make-money/#:~:text=Executive Summary:,as well as through investments.




> *Executive Summary:*
> 
> _Tether is a cryptocurrency that is pegged to a given fiat currency, for example, the USD, as well as physical assets such as gold.
> 
> Tether makes money from various fees, by issuing loans to other institutions, as well as through investments._



With regards to fees:



> The company charges $150 for every customer that wants to have their account verified. Verification is needed to deposit and withdraw cash with Tether.
> 
> Apart from its verification fee, Tether also charges deposit and withdrawal fees. Users can only transact directly with Tether if they deposit a minimum of $100,000.
> 
> For deposits, Tether charges a fee of 0.1 percent. A similar fee structure is applied to withdrawals. However, a minimum withdrawal fee of $1,000 is always applied.



No details on the withdrawal fee structure is provided, but the revenue from fees is surely buttons relative to their overheads.

Then the good stuff, with regards to loans:



> Tether, furthermore, makes money from issuing loans to other businesses and institutions that then pay interest on those loans.
> 
> In October 2021, for instance, Tether loaned $1 billion to Celsius Network, which is a cryptocurrency lender.
> 
> Its CEO Alex Mashinsky came out days later and confirmed that Celsius would pay between 5 to 6 percent in interest per year. Essentially, Tether would generate between $50 million to $60 million per year from that transaction alone.
> 
> Tether got under fire in September 2021 after subsequent reporting revealed that it also had lent billions of dollars to large Chinese companies, which is often avoided by money-market funds due to the greater involved risk.



And investments:



> Lastly, Tether also generates a small portion of revenue from investing in other businesses and participating in their growth.
> 
> In January 2021, for example, it invested $1 million into Exordium, a studio focused on blockchain game development. The investment granted it a pro-rata right to 20 percent of Exordium’s profit.
> 
> Investing in the crypto ecosystem is a strategy that is largely employed by other exchanges such as Binance or Coinbase.



What's the current outlook on these loans and investments? Have they invested any of their reserves?


----------



## letitroll

Bloomberg - Are you a robot?


----------



## evil_g

evil_g said:


> What's the current outlook on these loans and investments? Have they invested any of their reserves?



To answer part of my own question. In relation to:



> Tether, furthermore, makes money from issuing loans to other businesses and institutions that then pay interest on those loans.
> 
> In October 2021, for instance, Tether loaned $1 billion to Celsius Network, which is a cryptocurrency lender.
> 
> Its CEO Alex Mashinsky came out days later and confirmed that Celsius would pay between 5 to 6 percent in interest per year. Essentially, Tether would generate between $50 million to $60 million per year from that transaction alone.







Meanwhile:
FT: Crypto industry shaken as Tether’s dollar peg snaps


> Paolo Ardoino, Tether’s chief technology officer, on Thursday vowed to defend the token’s dollar peg and said the company had bought “a ton” of US government debt, which it is willing to offload in that effort. But in an interview with the Financial Times, he declined to give details about its $40bn hoard of US government bonds because he did not “want to give our secret sauce”.





> “Our counterparties are not public. We are not a public company,” he said. “So we keep that information [to] ourselves, but we are working with many big institutions in the traditional financial space.”


----------



## letitroll

“Our counterparties are not public. We are not a public company,” he said. “So we keep that information [to] ourselves, but we are working with many big institutions in the traditional financial space.”

As I mentioned earlier in this thread Tether has used this line before.......they claim to hold commercial paper.......and by size of assets they claim to hold they should be one of the largest commercial paper counterparties in the world......yet when financial investigative journalists have spoken to people in the biggest CP brokerage houses nobody has heard of them.

The simplest explanation is that they haven't heard of them because the commercial paper doesn't exist.....and either do the dollars they claim hold.


----------



## Tickle

evil_g said:


> With regards to fees:





evil_g said:


> No details on the withdrawal fee structure is provided, but the revenue from fees is surely buttons relative to their overheads.


150 dollars to join the party. It has ponzi scheme written all over it!


----------



## tecate

letitroll said:


> As I mentioned earlier in this thread Tether has used this line before.......they claim to hold commercial paper.......and by size of assets they claim to hold they should be one of the largest commercial paper counterparties in the world......yet when financial investigative journalists have spoken to people in the biggest CP brokerage houses nobody has heard of them.
> 
> The simplest explanation is that they haven't heard of them because the commercial paper doesn't exist.....and either do the dollars they claim hold.


Tether or Bitfinex are not on my Christmas card list but by the same token there's a lot of talking that gets done about 'simple explanations' and no evidence. Evidence is actionable - anyone in the crypto space has an interest in gaining that insight. However, as I've pointed out many times, there are tether truthers who despise the notion of decentralised money coming out with this stuff. 
Anyone in the space will tell you that depending upon any centralised entity is something that is likely to go wrong given enough time. However, there is nothing substantive as yet to prove Tether to be unsound. Produce that and I'm interested. 

The other point is that just like right now with the demise of an algorithmic stablecoin that had vulnerabilities that upended it, Tether being upended will not spell the end of bitcoin. Would it cause a mess? - definitely. Will it kill it? Absolutely not.


Tickle said:


> 150 dollars to join the party. It has ponzi scheme written all over it!



Indeed - a company charging a fee for a service is definitely evidence of a ponzi scheme. All stablecoin projects account for $170 billion in market capitalisation right now. They all charge fees - so they're all definitely ponzis. That's without a doubt.


----------



## DublinHead54

I take the audit and disclosures of Tether at face value, my one concern based on the 2021 YE disclosures is ~6% ($5bln) of assets is made up of 'Other Investments (including digital tokens). This suggests that depending on price they could face a 6% shortfall if prices went south and there was >94% redemption. However, I consider this a small risk. 

Overall, though having such dependence on Tether for the trading market to function is not ideal and does increase systemic risk. This is true for any type of market and why traditional finance introduced things like central clearing parties to reduce the systemic risk if one large institution defaults. 

This risk should reduce as other stablecoins gain market share and dependence on tether reduces.

My question to @tecate is can we not get rid of stablecoins for trading purposes? 

I first used stablecoins to get out of my trading positions during periods of volatility and maintain the flat $ equivalent. I used them as it didn't require taking money out of exchanges and at the time from a tax perspective it was considered token to token so no tax required. Now that tax rules are that it is (taxable (in places like Ireland, US, UK etc) and connection of exchanges to fiat is stronger do we need them? Example on my degiro account if I sell a stock it just sits in cash on the platform until I withdraw. As established traditional finance adopts crypto, won't we just have a similar experience and hence the need for stablecoins physically backed my currency goes away?


----------



## tecate

Dublinbay12 said:


> My question to @tecate is can we not get rid of stablecoins for trading purposes?
> 
> I first used stablecoins to get out of my trading positions during periods of volatility and maintain the flat $ equivalent. I used them as it didn't require taking money out of exchanges and at the time from a tax perspective it was considered token to token so no tax required. Now that tax rules are that it is (taxable (in places like Ireland, US, UK etc) and connection of exchanges to fiat is stronger do we need them? Example on my degiro account if I sell a stock it just sits in cash on the platform until I withdraw. As established traditional finance adopts crypto, won't we just have a similar experience and hence the need for stablecoins physically backed my currency goes away?



I have no idea, @Dublinbay12 - but then I'm not sure if that's the right way to look at it anyway. Shouldn't we just let the market decide?

If in your particular case, you no longer have a use case for them, then for sure - don't use them. However, I think there are different groups/categories of users of these things with different use cases being applied. I really never saw much chatter about the tax aspect being a leading motivation - I'm open to correction but I'm fairy sure that in most places, there's been clarity on this for a while (i.e. if you trade from one digital asset to another, that's a taxable event). The explosion in the use of stablecoins has come in after that clarification.

Insofar as I understand it, they provide less friction. For the digitally native, you can swap between a stable and other digital assets on a decentralised exchange with ease. Furthermore, there have been major issues with interaction between this new world of digital assets and the legacy banking system - and there still are. I'd wager that plenty of folks see the idea of simply staying within the crypto ecosystem as far more frictionless than trading in and out of it via the legacy system.

Stables also give the holder the ability to take direct ownership rather than have a bank custody funds. There's some value in that. We also have to always remember that our experiences are not everybodies. These digital assets are a global phenomenon that transcend borders. If you're in country X where the local currency is unstable, a mixture of crypto and stables may be a very attractive prospect. If you're already in that eco-system, its then easier to get your hands on USD equivalent - in spite of capital controls that potentially are being applied by government.

Also for lending markets, stables are playing a role. In developing nations, finance for small businesses can be hard to acquire or very expensive. Collateralised lending is becoming a big deal on that basis. Then from the perspective of the Americans, many think that they are (either consciously or accidentally) getting the upper hand here - as USD stables are actually advancing the use of the dollar globally - just in a different form.

Of course, there are risks - whether it's concerns with the backing via centralised stablecoins or algo design when it comes to algorithmic stables. From that perspective, it's one big experiment that's ongoing. With that, I'd expect there's plenty of development in the works. I've no doubt but that there will be more regulation on the way where centralised stables are concerned and they'll probably move from being buyers of commerical paper to buyers of bonds.

You previously expressed interest in algorithmic stablecoins. I'd love to see them work - but as per this weeks example (the implosion of Terra), it remains to be seen if there is a design possible that can be implemented where they can't be unhinged. We'll have to wait and see how that develops. Would be great if it was possible as then there's no concern about backing.


----------



## DublinHead54

tecate said:


> I have no idea, @Dublinbay12 - but then I'm not sure if that's the right way to look at it anyway. Shouldn't we just let the market decide?
> 
> If in your particular case, you no longer have a use case for them, then for sure - don't use them. However, I think there are different groups/categories of users of these things with different use cases being applied. I really never saw much chatter about the tax aspect being a leading motivation - I'm open to correction but I'm fairy sure that in most places, there's been clarity on this for a while (i.e. if you trade from one digital asset to another, that's a taxable event). The explosion in the use of stablecoins has come in after that clarification.
> 
> Insofar as I understand it, they provide less friction. For the digitally native, you can swap between a stable and other digital assets on a decentralised exchange with ease. Furthermore, there have been major issues with interaction between this new world of digital assets and the legacy banking system - and there still are. I'd wager that plenty of folks see the idea of simply staying within the crypto ecosystem as far more frictionless than trading in and out of it via the legacy system.
> 
> Stables also give the holder the ability to take direct ownership rather than have a bank custody funds. There's some value in that. We also have to always remember that our experiences are not everybodies. These digital assets are a global phenomenon that transcend borders. If you're in country X where the local currency is unstable, a mixture of crypto and stables may be a very attractive prospect. If you're already in that eco-system, its then easier to get your hands on USD equivalent - in spite of capital controls that potentially are being applied by government.
> 
> Also for lending markets, stables are playing a role. In developing nations, finance for small businesses can be hard to acquire or very expensive. Collateralised lending is becoming a big deal on that basis. Then from the perspective of the Americans, many think that they are (either consciously or accidentally) getting the upper hand here - as USD stables are actually advancing the use of the dollar globally - just in a different form.
> 
> Of course, there are risks - whether it's concerns with the backing via centralised stablecoins or algo design when it comes to algorithmic stables. From that perspective, it's one big experiment that's ongoing. With that, I'd expect there's plenty of development in the works. I've no doubt but that there will be more regulation on the way where centralised stables are concerned and they'll probably move from being buyers of commerical paper to buyers of bonds.
> 
> You previously expressed interest in algorithmic stablecoins. I'd love to see them work - but as per this weeks example (the implosion of Terra), it remains to be seen if there is a design possible that can be implemented where they can't be unhinged. We'll have to wait and see how that develops. Would be great if it was possible as then there's no concern about backing.



Good points. I'd lean on the side that Tether is still used mostly for trading purposes given the dominance of trading volume on the centralized Binance exchange, however I agree there are many uses in the wider market. 

There is definitely a roll to play for stablecoins in the markets, but I'd like to see the dominance of single players like Tether reduce as I believe it will strengthen the overall crypto infrastructure and help prevent future crashes. 

The algo coins do work and Terra was a great example until it wasn't. From reading what caused the crash it appears like it was a targeted very large trade that caused the sell off and exposed weakness in the algorithm. So they just need further evolution and testing for extreme moves, similar to how banks stress test for extreme market moves (they never did it really before the financial crisis).


----------



## Sunny

Dublinbay12 said:


> View attachment 6239
> 
> View attachment 6238



That alone would make me run a mile. It is just crazy that this company is getting away with this. These are still not audited by a respectable audit firm. I have no idea who is issuing the commercial paper or the CD's that they claim to have but I can guarantee you 100% that they do not hold paper with a high enough credit rating to justify it as cash equivalent. They are not buying the paper through the market. They are obviously doing some private placement deals with who knows. I also seriously doubt that they directly hold $34 billion in Treasury Bills. 

Forget the arguments about crypto or anything else. Just look at the company itself. It is built on nothing but sand.....


----------



## tecate

Sunny said:


> That alone would make me run a mile. It is just crazy that this company is getting away with this. These are still not audited by a respectable audit firm. I have no idea who is issuing the commercial paper or the CD's that they claim to have but I can guarantee you 100% that they do not hold paper with a high enough credit rating to justify it as cash equivalent. They are not buying the paper through the market. They are obviously doing some private placement deals with who knows. I also seriously doubt that they directly hold $34 billion in Treasury Bills.
> 
> Forget the arguments about crypto or anything else. Just look at the company itself. It is built on nothing but sand.....


And if that's your assessment, that's fair enough. Then don't choose to access USDT - simples.


----------



## evil_g

tecate said:


> And if that's your assessment, that's fair enough. Then don't choose to access USDT - simples.



Yes. This is all very simple, and will have no knock-on effects beyond the direct participants in this get rich quick scheme.


----------



## tecate

evil_g said:


> Yes. This is all very simple, and will have no knock-on effects beyond the direct participants in this get rich quick scheme.


I wasn't referring in that post to knock-on effects - that doesn't mean that I don't think there could be in a worst case scenario. A USDT unravel would be much messier than the Terra unravel we've experienced this week. However, the sector has broadened considerably over the past few years - there isn't total reliance on USDT. On that basis, it wouldn't spell the end of Bitcoin.

One way or another, there is going to be greater regulation year-on-year where centralised stablecoins are concerned. If there are gaping holes in Tether's reserves, then that will come to the fore at some stage. If there aren't then they have quite a sizable business at this point - so the chances are they will become more and more compliant going forward. 
Algorithmic stablecoins could be a different kette of fish - but they'll have to find ways to build them robust enough that they can't be unhinged before they start absorbing really big money.


----------



## DublinHead54

Bitcoin doesn't need a high price to survive. Investors just want a high price.

If Tether goes under it will have an impact on the price of bitcoin but it won't end Bitcoin. 


stablecoins that are backed by real world assets such as US Treasuries will eventually be capped as there are only so many assets available to purchase. Obviously the market will find other ways to support stable coins like algorithm based coins. Stablecoins will remain a part but at a certain point the market will find alternatives


----------



## tecate

Dublinbay12 said:


> Bitcoin doesn't need a high price to survive. Investors just want a high price.


Bitcoin has proven it can survive at a whole range of prices. As regards where that price eventually settles, the tokenomics that the project sets out relative to supply/demand has everything to do with that.



Dublinbay12 said:


> If Tether goes under it will have an impact on the price of bitcoin but it won't end Bitcoin.


Yup - all day long. We've seen that on a smaller scale this week and the panic that can cause on a shorter timeframe (albeit that UST implicated BTC as a reserve asset so that complicated matters further).



Dublinbay12 said:


> stablecoins that are backed by real world assets such as US Treasuries will eventually be capped as there are only so many assets available to purchase. Obviously the market will find other ways to support stable coins like algorithm based coins. Stablecoins will remain a part but at a certain point the market will find alternatives


The global bond market has a market cap of $119 trillion. I can't imagine we need to consider stables running out of assets to buy anytime soon. I really hope you're right and some algorithmic project can get the formula right such that its robust enough not to be vulnerable to being unhinged. Do you have anything specific in mind re. new alternatives to stables or do you mean a Fed-coin?


----------



## Duke of Marmalade

I Googled *algorithm based stablecoins*.  This is my understanding.  Say you have 100 abs priced at $1.  The price is decided by supply and demand, no collateral backing; how it gets a price to begin with is a mystery.  Anyway back to the example.  Demand dries up and it falls to 50c.  The protocol halves your number of abs to 50 so that the price rebounds to 1$.  So you have had price stability but the same market cap volatility.
Please someone tell me that I haven't got this right; it is just too crazy to be true


----------



## DublinHead54

tecate said:


> The global bond market has a market cap of $119 trillion. I can't imagine we need to consider stables running out of assets to buy anytime soon. I really hope your right and some algorithmic project can get the formula right such that its robust enough not to be vulnerable to being unhinged. Do you have anything specific in mind re. new alternatives to stables or do you mean a Fed-coin?



There is ultimately a ceiling for assets that can be purchased. 

The $119 trillion represents the entire bond market, but assets that can support stablecoins are a smaller subset of that (UST, Short Term CP etc). The outstanding UST is $23 trillion of which $4bln have a maturity <1yr. Factoring in that Tether is competing with other market participants (China, Pension funds etc) and on average the US gov is selling $1.5bln of new treasuries a month there is a potential cap to growth for physically backed stablecoins. I am not saying this is an immediate issue just that this is a concern hence why it was one of the contributing factors for developing algorithmic stablecoins. 

Regarding alternatives given that the majority of volume in USDT is on centralized exchanges used for trading as we move to a more regulated environment I don't see why users won't just park their cash in cash on the exchange rather than in a 3rd party asset backed by cash equivalent, doing that cuts out risk, without really impacting the market. Historically we had USDT because exchanges couldn't hold your cash. 

Not an alternative idea but an enhancement, it looks like the UST crash was in part caused by a target very large trade, and in my opinion this is an opportunity to enhance the infrastructure of the market, something like a central clearing house leveraging the underlying public ledgers.


----------



## letitroll

tecate said:


> no evidence



An institution obfuscating its holdings, making misleading statements about it reserves & fearing transparency when its ‘holds’ the publics money…..is all the evidence sensible people would need.


----------



## tecate

letitroll said:


> An institution obfuscating its holdings, making misleading statements about it reserves & fearing transparency when its ‘holds’ the publics money…..is all the evidence sensible people would need.


So that's a guess then. And I fully acknowledge that there's enough in all of that to encourage people to be cautious and concerned (I raised this concern here on AAM long before anyone else ever mentioned it). Tether's history is such that it was locked out of the banking system early on with a view to strangling it. Furthermore, it's been targeted by short sellers more recently. It's not unreasonable to think that it doesn't want actionable info falling into their hands so they can work out how to destablise the token. From a joe public perspective, I agree that there needs to be more transparency, I agree that its opaque setup isn't a good look. However, this is not confirmation that they don't have the funds available to back up their tokens.

I'd imagine then that you'd far prefer an algorithmic stablecoin. Would you be in favour of an algorithmic stablecoin if it was robust enough in its design such that it couldn't be de-pegged?


----------



## tecate

Duke of Marmalade said:


> Please someone tell me that I haven't got this right; it is just too crazy to be true


I'm not sure what your objection is, Duke. So we're talking about a stablecoin governed by code. Lets not even go into the technicals - that's what it is at its core. If the code and the stablecoin design relative to that code can maintain a peg against the US dollar (or euro, pound, etc), what issue could you possibly have with that?

The problem thus far is that a number of projects have not been able to devise an algorithmic stablecoin that doesn't have a vulnerability that leads to it being destablised and de-pegged. Obviously that's an issue. However, if they solve that problem, what issue could you possibly have with such a token?


----------



## letitroll

tecate said:


> However, this is not confirmation that they don't have the funds available to back up their tokens.



Your a very trusting person @tecate

30% APR available now on tethers held at bitfinex……quite the deal…..& nothing common sense folks need to worry about……until clear evidence comes out.

https://twitter.com/bitfinexed/status/1525507700657995776?s=21&t=cuTPOUUv3nVsiAs8M7YuXA


----------



## tecate

letitroll said:


> Your a very trusting person @tecate


I'd suggest you read my post again - because I'm anything but trusting. In fact, that's precisely the point. I don't assume in either direction. That leaves you as the trusting one. 

You probably missed this ->



tecate said:


> I'd imagine then that you'd far prefer an algorithmic stablecoin. Would you be in favour of an algorithmic stablecoin if it was robust enough in its design such that it couldn't be de-pegged?


----------



## Duke of Marmalade

tecate said:


> I'm not sure what your objection is, Duke.


Wasn't an objection - just looking for some assurance that my totally crazy interpretation is off the wall.  You are not giving me that assurance.


tecate said:


> So we're talking about a stablecoin governed by code. Lets not even go into the technicals - that's what it is at its core.


I have gone a bit more into the technicals and it gets crazier.  It involves things like using mining activity as a proxy for price, it involves "bonds", it involves "taxing transactions" if velocity is deemed to be too high.  For a start the lag factor in these methods rules out anything that might be called stability.


tecate said:


> If the code and the stablecoin design relative to that code can maintain a peg against the US dollar (or euro, pound, etc), what issue could you possibly have with that?
> 
> The problem thus far is that a number of projects have not been able to devise an algorithmic stablecoin that doesn't have a vulnerability that leads to it being destablised and de-pegged. Obviously that's an issue. However, if they solve that problem, what issue could you possibly have with such a token?


Let's dispense with *Ifs,* If an algorithm could produce Rice Krispies then that would be a good thing.  I presume the Alchemists used the If argument a lot to perpetuate their futile project.

I take it that If an algorithmic stablecoin could be produced you would support it.  That surprises me for I thought your main mantra was to free us from the fraud that is the greenback (remember those pictures of its back) and yet here you seem to laud an algorithm which would have an indestructible peg to said greenback.

One thing really puzzled me.  I understand the concept of managing supply and velocity to stabilise an exchange rate between foreign currencies.  But it relies on the currencies having some intrinsic value in the first place.  Where do these algorithmic stablecoins get their start up value?  Why of course through an IPO of 100 million dollars worth to the lucky first in first served.  This is Ponzi squared.


----------



## tecate

Duke of Marmalade said:


> Wasn't an objection





Duke of Marmalade said:


> This is Ponzi squared.



Yes of course, it's not an objection! 



Duke of Marmalade said:


> Let's dispense with *Ifs,* If an algorithm could produce Rice Krispies then that would be a good thing.  I presume the Alchemists used the If argument a lot to perpetuate their futile project.



Very enlightening Duke. With that attitude, nothing would ever be built and nothing would ever improve.



Duke of Marmalade said:


> I take it that If an algorithmic stablecoin could be produced you would support it.


I asked you what issue could you possiby have with an algorithmic stablecoin that couldn't be de-pegged. I see a long tirade - and no answer. If you want to discuss the topic, you might answer the question.
As to your question, would I 'support' it - it depends on what you mean by support. What I can say is that its something that interests me - and it would solve a couple of things -
1. Remove trust issues re. the backing / lack of backing relative to a centralised / collateralised stablecoin.
2. Make for  truly decentralised stablecoins without centralised points of failure.



Duke of Marmalade said:


> That surprises me for I thought your main mantra was to free us from the fraud that is the greenback (remember those pictures of its back) and yet here you seem to laud an algorithm which would have an indestructible peg to said greenback.


You can deliberately mischaracterise my views all you wish - I don't much care at this point. Notwithstanding that, unlike you I'm prepared to look at difficiencies in the current system and recognise them as such. I haven't seen much in the way of honesty in these debates in acknowledging that there are items that can be improved upon.
Stablecoins are going to play a part in improving global payments.
As has been pointed out to you on multiple occasions, I'm not interested in tearing down the current system for the hell of it. I am interested in new innovations that can work with or in tandem with it - OR - totally separate systems that can run alongside it.




Duke of Marmalade said:


> One thing really puzzled me.  I understand the concept of managing supply and velocity to stabilise an exchange rate between foreign currencies.  But it relies on the currencies having some intrinsic value in the first place.  Where do these algorithmic stablecoins get their start up value?  Why of course through an IPO of 100 million dollars worth to the lucky first in first served.  This is Ponzi squared.


We've seen this time and time again from you and others. You'll just tar and feather every project screaming 'ponzi'. It's either ignorance or embittered defiance or both. Are there wayward projects out there? Plenty of them. Are there also genuine projects trying to innovate? Definitely.


----------



## Duke of Marmalade

tecate said:


> I asked you what issue could you possiby have with an algorithmic stablecoin that couldn't be de-pegged. I see a long tirade - and no answer. If you want to discuss the topic, you might answer the question.


That is just a big IF in the same space as would I think it good if we could make algorithmic rice krispies or if we could turn base metal into gold.  The examples I have seen such as increasing the mining reward in response to the mining hash rate would be so crude and time lagged that they couldn't possibly lead to the sort of stability that a collateralised system provides.  The pseudo scientific basis of these algorithms are just part of the Ponzi fraud to lure gullible punters into thinking they are on to the next bitcoin.
But since you insist I will give an answer.  Do I think it would be a good thing if we could make algorithmic dollars out of thin air?  It would certainly be a most incredible technical achievement on a par with lifting bald men by the hair.  But no it would not be good for mankind if the Central Banks were unable to stamp it out.  In fact it would spell the end of our current financial civilisation - won't happen so it doesn't worry me.


----------



## Brendan Burgess

Duke of Marmalade said:


> It would certainly be a most incredible technical achievement on a par with lifting bald men by the hair.



Duke, how do you come up with such great lines? 

Brendan


----------



## tecate

Duke of Marmalade said:


> That is just a big IF in the same space as would I think it good if we could make algorithmic rice krispies or if we could turn base metal into gold.  The examples I have seen such as increasing the mining reward in response to the mining hash rate would be so crude and time lagged that they couldn't possibly lead to the sort of stability that a collateralised system provides.  The pseudo scientific basis of these algorithms are just part of the Ponzi fraud to lure gullible punters into thinking they are on to the next bitcoin.


Really sounds like you're willing that issue not to be resolved as much as you may think there's a technical issue to resolve. 



Duke of Marmalade said:


> But since you insist I will give an answer.  Do I think it would be a good thing if we could make algorithmic dollars out of thin air?  It would certainly be a most incredible technical achievement on a par with lifting bald men by the hair.  But no it would not be good for mankind if the Central Banks were unable to stamp it out.  In fact it would spell the end of our current financial civilisation - won't happen so it doesn't worry me.


Interesting....insofar as you appear to be out of lockstep with your central banking buddies. Even the Fed and Swift (which could be disrupted itself by stablecoins and other digital assets) have acknowledged the innovation implicated in stablecoins in reports released over the past six months. But at least the peanut gallery is entertained with your bald men reference  . Have I introduced you to the 'old man yells at cloud' meme?


----------



## Duke of Marmalade

tecate said:


> Really sounds like you're willing that issue not to be resolved as much as you may think there's a technical issue to resolve.
> 
> 
> Interesting....insofar as you appear to be out of lockstep with your central banking buddies. Even the Fed and Swift (which could be disrupted itself by stablecoins and other digital assets) have acknowledged the innovation implicated in stablecoins in reports released over the past six months. But at least the peanut gallery is entertained with your bald men reference  . Have I introduced you to the 'old man yells at cloud' meme?


The Central Banks most, most , most certainly will not be promoting algorithmic stablecoins.  Either you know that and are using your usual diversionary tactics, or you don't understand what algorithmic stablecoins are which would somewhat disappoint me as I thought you were an expert, albeit a cultist believer.


----------



## tecate

Duke of Marmalade said:


> The Central Banks most, most , most certainly will not be promoting algorithmic stablecoins.


And I said that where exactly?



Duke of Marmalade said:


> I thought you were an expert


I have never suggested or claimed such a thing.



Duke of Marmalade said:


> albeit a cultist believer.


The only cultist believer here is you. It's precisely the point. Even the Fed and Swift are capable of at least acknowledging certain positive characteristics relative to stablecoins.


----------



## Duke of Marmalade

tecate said:


> The only cultist believer here is you. It's precisely the point. Even the Fed and Swift are capable of at least acknowledging certain positive characteristics relative to stablecoins.


Nonsense.  Central Banks are contemplating Central Bank Digital Currencies.  They are not in any way considering algorithms which will do their job of managing the price level.  I conclude that you don't understand algorithmic stablecoins.


----------



## tecate

Duke of Marmalade said:


> Nonsense.  Central Banks are contemplating Central Bank Digital Currencies.  They are not in any way considering algorithms


And I said that where exactly?


----------



## Duke of Marmalade

You really are unbelievable.  I issue a denunciation of algorithmic stablecoins.  You respond by saying Central Banks are considering stablecoins.  End of this debate as far as I am concerned.  In fact bye bye @tecate.


----------



## tecate

Duke of Marmalade said:


> You respond by saying Central Banks are considering stablecoins.


And I said that where exactly?


----------



## Duke of Marmalade

This is what the death of a cryptocurrency looks like:



In one week TerraUSD has fallen 91%.  TerraUSD made the promise to maintain a USD peg without any USD backing.  This is an impossibility and the hype around its algorithms was a lie.  This is like the Madoff and Ponzi schemes which were built on lies and when the lie was found out the game was up.  Bitcoin is not vulnerable to the same rapid extinction as it actually is not built on a lie - it never really promised anything; mind you the cult is based on an edifice of self deception.
Tether is not Terra, it did not make alchemy like promises.  Tether should still be worth $1 long after Terra is dead and buried and when bitcoin is on life support at 1% of its current price; albeit the market cap of Tether in those circumstances would similarly have fallen to 1% of its current value but simply coz folk have got their money back.


----------



## letitroll

Listen to this - its almost hilarious to listen to the leadership of an entity that is effectively taking customer deposits dodge and weave. If this man owed you 500 euro, you'd assume, rightly that your 500 euro didn't exist anymore.









						George Noble Questions Tether's CTO Paolo Ardoino On Why They Won't Complete an Audit
					

Recorded on May 13, 2022. George Noble has 41 years of market experience. He began his career under Peter Lynch at Fidelity, and in 1984 was chosen to run Fi...




					youtu.be


----------



## Duke of Marmalade

Absolutely brilliant!  Post #96 gives a breakdown of assets and except for a small element of "others" that all looks pretty sound.  Is George Noble et al suggesting that this is lies?  If this is lies then Bitcoin dies with Tether IMHO.


----------



## tecate

Duke of Marmalade said:


> TerraUSD made the promise to maintain a USD peg without any USD backing.


It's an algorithmic stablecoin. The algo design hasn't proven to be robust enough to withstand an attack. For anyone who actually wants to understand how this happened, here's an explanation ->








Duke of Marmalade said:


> This is an impossibility and the hype around its algorithms was a lie.


It is a vulnerability. It hasn't been designed to withstand this type of attack - as found out in the wild. If you were to say that it could be very difficult to achieve that design, I'd agree with you. However, neither of us are qualified to say that an algorithmic stablecoin cannot be designed such that it can withstand such an attack.



Duke of Marmalade said:


> This is like the Madoff and Ponzi schemes which were built on lies and when the lie was found out the game was up.



Calling all algorithmic stablecoins ponzi schemes is an untruthful statement. Anyone that has spent 5 minutes investigating these stablecoins knows that they're not fully tested in the wild. To say what happened with Terra is painful is an understatement. However, nobody can claim a lack of knowledge as regards the lack of maturity of these digital assets.



Duke of Marmalade said:


> If this is lies then Bitcoin dies with Tether IMHO.



In those circumstances, maybe Bitcoin goes down to $10k  with a major shock to the market. A couple of years of doom and gloom - but the bad news for you Duke is that Bitcoin will not die. It has had these shocks many times before and only comes back stronger.


Now I know central bankers are your brethren Duke - so here's a photo taken earlier today of representatives from the central banks of 44 developing nations who've gathered in San Salvador ->





They're attending meetings over a number of days to learn about El Salvador's experience in adopting Bitcoin as legal tender.


----------



## letitroll

tecate said:


> They're attending meetings over a number of days to learn about El Salvador's experience in adopting Bitcoin as legal tender.



I know any friend of bitcoin, is your friend...even dictators & iliberal democracies like El Salvador.....perfect timing for them all to muse how unstable & rife with counterparty risk the whole bitcoin complex is. While also quizzing their El Salvador counterparts what its like to take $103m of REAL money out of a third world countries cash strapped treasury to "buy" a series of alphanumeric entries in disturbed public ledger established by a unknown programmer(s) 14 years ago.........and then to watch the quoted value of that $103m investment plummet to $65m in a matter of weeks......all while Fitch/Moody's/S&P reclassify your debt as junk, given your fiscal position is deteriorating (in part because of the BTC mal-investment) & also because your institutions are collapsing. Definitely loads to talk, hope there's lots of time for Q&A  
https://www.newsweek.com/bitcoin-crash-el-salvador-faces-potential-default-crytocurrency-1706098 

P.S.........suppose its never at all struck you @tecate how curious it is that the nations most interested in adopting bitcoin as legal tender, are the very same nations who also happen to top the worlds various indexes for corruption, bribery....in short the kleptocracy nations.....very weird, what a coincidence.....but to you its all sunshine & rainbows when BTC is involved. I get it.


----------



## tecate

@letitroll : All ground previously covered before your disappearance late last year. How was it you came to be disappeared for six months anyway, letitroll? Very fortuitous for you that when you turn up, the Bitcoin price is weakening.

Steering this back to stablecoins, you may have missed these -> (from post # 108):



And this one -> (from post # 111):




Such an eventuality would remove the cause for complaint we both have with reserve-based stablecoins. I suppose anything that removes your cause for complaint wouldn't be of interest to you though...


----------



## Duke of Marmalade

I develop an algorithmic stablecoin that is so robust that it can’t be depegged.
I IPO $100m worth
I have 100m real $
Subscribers have 100m crypto $

There are those who believe that this might be possible some day.
Goes to explain why there is a cult that currently think digital entries on blockchains can be worth a couple of trillion $.


----------



## tecate

Duke of Marmalade said:


> I develop an algorithmic stablecoin that is so robust that it can’t be depegged.
> I IPO $100m worth
> I have 100m real $
> Subscribers have 100m crypto $
> 
> There are those who believe this might be possible some day.
> Goes to explain why there is a cult that currently think digital entries on blockchains can be worth a couple of trillion $.


Lets take your thinking on this a stage further. You 'develop an algorithmic stablecoin that is so robust that it can't be depegged'. At that stage, such USD stablecoins function as (programmable) USD do they not?


----------



## Duke of Marmalade

I shouldn't be let out.
If I developed an algorithmic stablecoin that is so robust that it can't be depegged from the $:
I would IPO a trillion of them at a 50% discount.
I would get 500bn in real $
The initial subscribers would immediately encash and themselves make a 500bn in real $.
The new owners would have a trillion crypto $.  WIN WIN WIN

And there are those that believe that one day this might be possible and who lecture me that with my lack of vision we wouldn't have invented sliced bread.


----------



## letitroll

tecate said:


> @letitroll : All ground previously covered before your disappearance late last year. How was it you came to be disappeared for six months anyway, letitroll? Very fortuitous for you that when you turn up, the Bitcoin price is weakening.



Are you suggesting that I made bitcoin & cryptos crash?


----------



## tecate

I'll answer for you Duke and you can come back and refute it if you like. If someone developed an algorithmic USD stablecoin that couldn't be depegged, then it would have utility as programmable USD. I know you get all knotted up at the thought of confirming even the mention of anything that could be postive where decentralised tech and blockchain is concerned. 



letitroll said:


> Are you suggesting that I made bitcoin & cryptos crash?


Absolutely not. Isn't that the whole point - you tried to will it down and when it went the other direction, you disappeared. You brought up 'Sunshine & Rainbows'. Are these the conditions we can expect your participation in here? It's just that we're out in all weathers here - whether bull or bear...


----------



## Duke of Marmalade

There are those who faced with a program that can create USD out of nothing would use it as programmable USD whatever that means.


----------



## tecate

Duke of Marmalade said:


> There are those who faced with a program that can create USD out of nothing would use it as programmable USD whatever that means.


Maybe a corporate treasurer or a payments service provider might be able to help you with your ponderance.


----------



## letitroll

tecate said:


> Are these the conditions we can expect your participation in here?



Yep you nailed - and I expect to be here a lot more over the coming months...its gonna be fascinating to watch it all implode.

See when suckers get burned on a speculative mania investment & it goes deeply underwater.........those same people dont come back for a second helping of pain & suffering....and cyrpto/BTC has burned a crazy amount of its constituency this year and we havent even reached full capitulation yet......40% of investor base underwater, yikes.  https://www.cnbc.com/2022/05/09/40percent-of-bitcoin-investors-underwater-glassnode-data.html


----------



## tecate

@letitroll - we probably will have to curb this as it's going towards the general rather than stablecoin discussion. I'll just say that I don't necessarily disagree with aspects of what you bring up there. Sure, people get burnt. However, there are multiple angles that this is being approached from - with multiple constituencies. The people coming after us are all digitally native. We'll have to disagree on this beast being put down permanently. That's not my thesis. Nice quote though!


----------



## letitroll

The youngsters coming after you @tecate will fall for a different version of a ‘get rich quick scheme’, its never the same version twice in a row….……..this is the way.


----------



## tecate

letitroll said:


> The youngsters coming after you @tecate will fall for a different version of a ‘get rich quick scheme’, its never the same version twice in a row….……..this is the way.


I'm not referring to any such 'get rich quick' scheme whatsover. Other than that, I did refer to different constituencies / multiple angles. They're already in play.


----------



## DazedInPontoon

letitroll said:


> See when suckers get burned on a speculative mania investment & it goes deeply underwater.........those same people dont come back for a second helping of pain & suffering....


Do you think MicroStrategy and other institutional investors will continue accumulating or not?


----------



## letitroll

DazedInPontoon said:


> MicroStrategy



That lunatic, Michael Saylor, is going down with the ship no matter what happens & the bond holders will end up with his company in the process......even if it was revealed Jimmy Saville was Nakamoto tomorrow Saylor would double down........dont ever forget his public advise when it was $69k.....sell everything you own, sell your business, your family business and borrow money to buy bitcoin. Reckless & beyond reproach...he may have an IQ of 160 but the people who listen to him I assure you dont and listening to demonstrably intelligent people can be intoxicating for the average Joe - a not insignificant amount of people I can assure you listened to his advice to disastrous results



DazedInPontoon said:


> institutional investors will continue accumulating or not?



Institutions are but the servants of their customers........when bitcoin was going up up & away, institutions customers got interested in it and started asking Fidelity / Blackrock 'JPM etc. about it for their own accounts, FOMO is a very strong emotion.........so like any good business that wants to serve their customers (& not lose customers to others) they began to offer it (didn't hurt that commissions/brokerage fees are outrageous in this space as compared to equities i.e. high margin product).

This recent institutional participation in crypto.....which crypto bros take as a sign of legitimacy & that their 'visions' are coming true.....has got it wrong & back to front............the naïve see a Fidelity & say look they're getting 'into it', they're smart and they are now blessing & anointing it, it must be legit..........but the inverse is true.......institutions are only as smart as their customers, not the other way around. Remember Bank of Ireland's leadership knew developer lending/mortgage lending had lost control in the mid/late 2000's.....they held back as Anglo/AIB et al went crazy....their growth suffered and the institutional "me too" urge to participate in a mania gets to be too strong.....and even the prudent BOI began to lose its mind in 05/06/07 with lending, having resisted the urge for so long. Its not easy for say a Fidelity to stay on the sidelines think about Coinbase stealing their pension customers etc. So even the mighty Fidelity cracked.......so I would see institutional participation in crypto as the beginning of the end, as opposed to start of the beginning (but I would then  )

But back to post #136..........whats the interest level in an asset class, with no intrinsic value or cash flows, after it drops say 90% in value peak to trough..........approximately 0 I would say.............So do institutions keep accumulating, only if their customers are *unlike* my Mark Twain cat above....and they like sitting on hot stoves even AFTER they've been burned.


----------



## Rasputin

tecate said:


> Lets take your thinking on this a stage further. You 'develop an algorithmic stablecoin that is so robust that it can't be depegged'. At that stage, such USD stablecoins function as (programmable) USD do they not?



Excuse my ignorance on what probably sounds like a really stupid question, but if an algorithmic stablecoin was developed that was pegged to the $ and couldn't be depegged, why not just use $'s. I mean - what's the point, where is the value in that, and how is that better than just using $'s ?


----------



## letitroll

Rasputin said:


> Excuse my ignorance on what probably sounds like a really stupid question, but if an algorithmic stablecoin was developed that was pegged to the $ and couldn't be depegged, why not just use $'s. I mean - what's the point, where is the value in that, and how is that better than just using $'s ?



You nailed it in a very common sense way.....be wary of derivative abstractions & complexity & cleverness where none need exist.......the complexity is there to benefit the promoters, not users/customers.......and to the extent the complexity is warranted in stablecoins, the use case for it is to avoid regulations/laws/AML/KYC.......put bluntly stablecoins are the functional equialvent of going into an offshore unlicensed Casino & exchanging money for Casino issued chips that represent legal tender (but arent!)


----------



## Duke of Marmalade

Rasputin said:


> Excuse my ignorance on what probably sounds like a really stupid question, but if an algorithmic stablecoin was developed that was pegged to the $ and couldn't be depegged, why not just use $'s. I mean - what's the point, where is the value in that, and how is that better than just using $'s ?


@letitroll explains it very well.  So a typical activity would be sell XYZ crypto and buy ABC crypto.  Apparently it is more convenient to park the proceeds of the sale in crypto space rather than going out into the real world and back again into crypto space.


----------



## letitroll

The other interesting thing about crypto "markets" that shouldn't be lost on people........is they are open 24 hours day, they literally never close....other such 24 hour 'establishments' outside of petrol stations...........*casinos & whorehouses *


----------



## Brendan Burgess

Can you not buy sterling and dollars 24 hours a day somewhere in the world? 

I can't see how that is relevant in any way.

Brendan


----------



## CuriousGeorge11

letitroll said:


> The other interesting thing about crypto "markets" that shouldn't be lost on people........is they are open 24 hours day, they literally never close....other such 24 hour 'establishments' outside of petrol stations...........*casinos & whorehouses *



The casino comparison is a good one because that's what crypto is for a lot of people.
Online gambling is illegal in America but crypto allows people to gamble


----------



## tecate

Brendan Burgess said:


> Can you not buy sterling and dollars 24 hours a day somewhere in the world?
> 
> I can't see how that is relevant in any way.
> 
> Brendan


You have Burgess PLC based out of Dublin - with international subsidiaries all over the place. Wouldn't international settlement be much simpler if it was direct from HQ to subsidiary company? The conventional settlement process might involve a number of intermediaries, implicate settlement risk and take a few days and cost a lot. It doesn't have to. Furthermore, you're finding that you have trapped liquidity in various currencies that's proving to be a wholly inefficient use of capital.
Example 2 - you've just moved to where-the-hell-istan - the local government has implemented capital controls that say that any USD that enters the country will automatically be converted to where-the-hell-istan dollars. The local currency debases faster than a melting ice cube. Wouldn't a USD stablecoin be useful?

Use case goes well beyond that - but we'll start with the above.


----------



## DazedInPontoon

letitroll said:


> That lunatic, Michael Saylor, is going down with the ship no matter what happens & the bond holders will end up with his company in the process......even if it was revealed Jimmy Saville was Nakamoto tomorrow Saylor would double down........dont ever forget his public advise when it was $69k.....sell everything you own, sell your business, your family business and borrow money to buy bitcoin. Reckless & beyond reproach...he may have an IQ of 160 but the people who listen to him I assure you dont and listening to demonstrably intelligent people can be intoxicating for the average Joe - a not insignificant amount of people I can assure you listened to his advice to disastrous results
> 
> 
> 
> Institutions are but the servants of their customers........when bitcoin was going up up & away, institutions customers got interested in it and started asking Fidelity / Blackrock 'JPM etc. about it for their own accounts, FOMO is a very strong emotion.........so like any good business that wants to serve their customers (& not lose customers to others) they began to offer it (didn't hurt that commissions/brokerage fees are outrageous in this space as compared to equities i.e. high margin product).
> 
> This recent institutional participation in crypto.....which crypto bros take as a sign of legitimacy & that their 'visions' are coming true.....has got it wrong & back to front............the naïve see a Fidelity & say look they're getting 'into it', they're smart and they are now blessing & anointing it, it must be legit..........but the inverse is true.......institutions are only as smart as their customers, not the other way around. Remember Bank of Ireland's leadership knew developer lending/mortgage lending had lost control in the mid/late 2000's.....they held back as Anglo/AIB et al went crazy....their growth suffered and the institutional "me too" urge to participate in a mania gets to be too strong.....and even the prudent BOI began to lose its mind in 05/06/07 with lending, having resisted the urge for so long. Its not easy for say a Fidelity to stay on the sidelines think about Coinbase stealing their pension customers etc. So even the mighty Fidelity cracked.......so I would see institutional participation in crypto as the beginning of the end, as opposed to start of the beginning (but I would then  )
> 
> But back to post #136..........whats the interest level in an asset class, with no intrinsic value or cash flows, after it drops say 90% in value peak to trough..........approximately 0 I would say.............So do institutions keep accumulating, only if their customers are *unlike* my Mark Twain cat above....and they like sitting on hot stoves even AFTER they've been burned.


I disagree with pretty much everything here, but I appreciate having this post quoted for posterity.


----------



## DazedInPontoon

Rasputin said:


> Excuse my ignorance on what probably sounds like a really stupid question, but if an algorithmic stablecoin was developed that was pegged to the $ and couldn't be depegged, why not just use $'s. I mean - what's the point, where is the value in that, and how is that better than just using $'s ?


Wow this question honestly blows my mind. I guess we're still that early.

1) You no longer need to worry about whether today starts with an 'S' when making a transaction and considering when it will arrive.
2) Geography becomes irrelevant for transactions.
3) You can self custody your digital dollars without counter-party risk.

The real question is if the perfect stable coin for dollars existed why would you ever use non-stable-coin dollars again? I would be closing all my bank accounts.


----------



## Duke of Marmalade

DazedInPontoon said:


> The real question is if the perfect stable coin for dollars existed why would you ever use non-stable-coin dollars again? I would be closing all my bank accounts.


Exactly.  If money trees actually existed folk could simply plant a few (one would be enough actually) and nobody need ever work again. Crypto paradise - bring it on.
Actually an algorithm which created indestructible links to the dollar out of nothing would be far superior to money trees as the latter would presumably involve some effort in plucking the dollars off the trees.


----------



## Duke of Marmalade

letitroll said:


> That lunatic, Michael Saylor, is going down with the ship no matter what happens & the bond holders will end up with his company in the process......even if it was revealed Jimmy Saville was Nakamoto tomorrow Saylor would double down........dont ever forget his public advise when it was $69k.....sell everything you own, sell your business, your family business and borrow money to buy bitcoin. Reckless & beyond reproach...he may have an IQ of 160 but the people who listen to him I assure you dont and listening to demonstrably intelligent people can be intoxicating for the average Joe - a not insignificant amount of people I can assure you listened to his advice to disastrous results
> 
> 
> 
> Institutions are but the servants of their customers........when bitcoin was going up up & away, institutions customers got interested in it and started asking Fidelity / Blackrock 'JPM etc. about it for their own accounts, FOMO is a very strong emotion.........so like any good business that wants to serve their customers (& not lose customers to others) they began to offer it (didn't hurt that commissions/brokerage fees are outrageous in this space as compared to equities i.e. high margin product).
> 
> This recent institutional participation in crypto.....which crypto bros take as a sign of legitimacy & that their 'visions' are coming true.....has got it wrong & back to front............the naïve see a Fidelity & say look they're getting 'into it', they're smart and they are now blessing & anointing it, it must be legit..........but the inverse is true.......institutions are only as smart as their customers, not the other way around. Remember Bank of Ireland's leadership knew developer lending/mortgage lending had lost control in the mid/late 2000's.....they held back as Anglo/AIB et al went crazy....their growth suffered and the institutional "me too" urge to participate in a mania gets to be too strong.....and even the prudent BOI began to lose its mind in 05/06/07 with lending, having resisted the urge for so long. Its not easy for say a Fidelity to stay on the sidelines think about Coinbase stealing their pension customers etc. So even the mighty Fidelity cracked.......so I would see institutional participation in crypto as the beginning of the end, as opposed to start of the beginning (but I would then  )
> 
> But back to post #136..........whats the interest level in an asset class, with no intrinsic value or cash flows, after it drops say 90% in value peak to trough..........approximately 0 I would say.............So do institutions keep accumulating, only if their customers are *unlike* my Mark Twain cat above....and they like sitting on hot stoves even AFTER they've been burned.


I agree with pretty much everything here and we should all appreciate having this post for the here and now, to paraphrase @DazedInPontoon.


----------



## tecate

Duke of Marmalade said:


> Exactly.  If money trees actually existed folk could simply plant a few (one would be enough actually) and nobody need ever work again. Crypto paradise - bring it on.



Totally disingenuous, Duke. You know well that was in no way his suggestion.


----------



## tecate

Duke of Marmalade said:


> I agree with pretty much everything here and we should all appreciate having this post for the here and now.


Almost? Can you not extend to a full endorsement? If not, where's the variance?


----------



## Duke of Marmalade

Anybody like to disagree that an algorithm that produces digital entries out of thin air with an indestructible link to the $ (in cult language seigniorage) is at least as good as, nay better than a money tree.


----------



## Duke of Marmalade

I do have a minor quibble with post #141.  Institutions are servants of themselves which they achieve by pretending to be servants of their customers.


----------



## tecate

Duke of Marmalade said:


> Anybody like to disagree that an algorithm that produces digital entries out of thin air with an indestructible link to the $ is at least as good as, nay better than a money tree.


Hilarious with what goes on in the conventional world, NOW in this example you have an issue with who benefits from seigniorage!

There are seigniorage-based algorithmic stablecoins and collateral-based algorithmic stablecoins. So if the latter is the one that cracks it, no doubt you will come up with some other reason to be negative about it, right?


----------



## Rasputin

DazedInPontoon said:


> Wow this question honestly blows my mind. I guess we're still that early.
> 
> 1) You no longer need to worry about whether today starts with an 'S' when making a transaction and considering when it will arrive.
> 2) Geography becomes irrelevant for transactions.
> 3) You can self custody your digital dollars without counter-party risk.
> 
> The real question is if the perfect stable coin for dollars existed why would you ever use non-stable-coin dollars again? I would be closing all my bank accounts.


Wow, such unnecessary condescension - I guess you must be the smartest guy in the room.  

1) I never worry about whether there is an S in the day when I'm making any transactions. It really has never impacted my life in any meaningful way. I have no idea why stock markets being open 24/7 is a good thing. I think there are more than enough hours in the day for speculative transactions.
2) Global trade happens every day, and most of the barriers to global trade aren't to do with currency
3) I don't actually want to self-custody my assets. I'd rather self-custody hard cash under my mattress than leave it lying in a digital wallet somewhere where that I have no idea what it will be worth when I wake up in the morning. Counter-party risk is relatively small for the average person if they are sensible about where they keep their assets. I say relatively small, as compared to the risk of holding crypto, which in my view (not the smartest guy in the room) is very, very, very high risk.


----------



## tecate

Rasputin said:


> 1) I never worry about whether there is an S in the day when I'm making any transactions.


I'm sure you'd agree that your experience is not likely to be representative of every individual or corporate entity everywhere in the world in this respect. Why should we restrict ourselves if the ability exists to transact all days - not some days?



Rasputin said:


> 2) Global trade happens every day, and most of the barriers to global trade aren't to do with currency


According to your first point, it doesn't happen every day. On barriers to trade, are capital controls barriers? Is access to international banking a barrier? (and before you consider that, step out of your own shoes and consider that from the point of view of folks in the developing world). There's certainly friction in the current system. Do you think its reasonable for me to pay $100 for a wire transfer that takes an age as I did some months back? Why should we involve intermediaries that add fees and slow down transaction time if we can do so ourselves directly in real time?
If you're a corporate treasurer managing money and find that there's liquidity trapped in various countries and in various currencies just so that payments can be made, isn't that a problem you would solve if a solution presented itself? The same with counterparty risk relative to the settlement process.



Rasputin said:


> 3) I don't actually want to self-custody my assets.


I'll refer you back to my response to your first point on that one.



Rasputin said:


> I'd rather self-custody hard cash under my mattress than leave it lying in a digital wallet somewhere where that I have no idea what it will be worth when I wake up in the morning.


That might be relevant in another discussion but not in a discussion on an algorithmic stablecoin that can't be depegged. Other than that, your mattress storage comes with its own risks.



Rasputin said:


> Counter-party risk is relatively small for the average person if they are sensible about where they keep their assets.


How about assets kept in a sovereign currency that fails when its impossible to store in a leading fiat currency such as USD, Euro, etc (due to the implementation of capital controls)? What about the failure of banks? Each to their own but I'm with DiP on this one. Once there's no more need, I'll pull away from banks entirely and self custody.



Rasputin said:


> As compared to the risk of holding crypto, which in my view (not the smartest guy in the room) is very, very, very high risk.


I'm not sure if you're referring to risks relative to self-custody. If so, I agree that there's great responsibility in that instance. However, once more user friendly products based on multi-sig - where there are a number of signers required to effect a transaction - are introduced, that risk will go away also.


----------

