Tether: The Story So Far (2019) | Hacker News Reader

Tether: The Story So Far (2019)

kalzumeus.com

29 pointspkd9 comments

Since this article was written, the story of Tether has gotten way crazier — to the tune of over 50 Billion “USDT” tokens (unredeemable digital IOUs) created during the past few months.

To put this in perspective, the total Tether market cap at the end of 2019 was $4B. [0]. That’s more than 50 Billion dollars that have flooded the crypto ecosystem since the writing of this article, with no transparency about their backing or the claimed origin of the money.

And all of this cash is supposedly stored in a small bank in the Bahamas (Deltec) and backed by other “corporate paper,” with absolutely no accounting transparency nor audits. Insane!!!

I highly recommend Amy Castor’s investigative journalism on Tether [1].

Hardcore Bitcoiners love to complain about the Fed printing money, and I do too. But Tether is a few hundred orders of magnitude worse.

[0]: https://coinmarketcap.com/currencies/tether/ (select “Market Cap” to see the recent parabolic curve).

[1]: https://amycastor.com/tag/tether/

And this was 2 years ago. It went exponential from there.

If they are for real, which I don't believe at all, they are already in the 10 top holders of US commercial papers in the world - actually the top non financial US regulated company - see details: https://twitter.com/TheStalwart/status/1395903319659405312

As the author of this blog said recently: "we are living in the middle chapters of a Michael Lewis book."

If Tether secretly owned a bunch of their own tokens, couldn't they inflate their "market cap" for free? How would we know if this was happening?

You can track tethers on the blockchain. The ones owned by Tether itself are stored in the treasury account while the rest are mostly held by exchanges. Generally there's not much (<$5B) in the treasury at any time.

There's really no benefit to pumping up the market cap since it draws more scrutiny.

It's widely suspected that most of Tether isn't backed by anything. Some is getting handed out basically for free via giveaways by exchanges.

The evidence seems to be mainly a suggestive lack of evidence. There is over $59 billion in Tether issued versus $49 billion a month ago. Receiving $10 billion in a month isn't easy for a shady company that most banks won't do business with. There ought to be evidence of those flows somewhere.

This may be where the commercial paper comes in. If they're backing issuance with loans that they create themselves no real money needs to be involved.

The article was from 2019. The case with NYAG was settled. Not much wrong-doing was found by now.

NYAG's settlement announcement confirmed the central claims of this post.

I believe that there is evidence that the NYAG is not done investigating.

Edit: And looking at the numbers Tether publishes, they have not added any cash backing since then and all Tethers issued since 2019 have been for IOUs of unknown provence.

Reply on news.ycombinator.com