<a href="https://www.msn.com/en-us/money/markets/federal-investigators-probe-cryptocurrency-firm-tether/ar-AA1sVTzV" rel="nofollow">https://www.msn.com/en-us/money/markets/federal-investigator...</a> has the article
Ah, finally, will Tether get its day in the litigious sun? It's well known in cryptocurrency circles that their coin is not backed 1:1 to USD, similar to FTX, only that FTX crashed and this was found out the easy way. Cracking Tether will be much harder as they resist audits.
Zeke Faux's Number Go Up (<a href="https://www.amazon.com/Number-Go-Up-Cryptos-Staggering/dp/0593443837" rel="nofollow">https://www.amazon.com/Number-Go-Up-Cryptos-Staggering/dp/05...</a>) started as an investigation into Tether. He found some extremely suspect clues, but he wasn't able to crack it. Hopefully the feds are able to shed some light on it.
Tether was launched in 2014 [1]. It has over $120bn in outstanding liabilities against unknown assets [2]. When it fails, it will rival the fourth-largest 'bank' failure in U.S. history [3].<p>This has been a complete failure of U.S. regulatory bodies.<p>[1] <a href="https://www.investopedia.com/terms/t/tether-usdt.asp" rel="nofollow">https://www.investopedia.com/terms/t/tether-usdt.asp</a><p>[2] <a href="https://coinmarketcap.com/currencies/tether/" rel="nofollow">https://coinmarketcap.com/currencies/tether/</a><p>[3] <a href="https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States" rel="nofollow">https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...</a>
"backed" is a somewhat unclear term. Given tether don't only hold cash their securities will have mark-to-market valuations. At purchase prices, in a legitimate operation, they should be "backed", but if they were forced to finance redemptions at losses from purchase price then I suppose might not be "backed".<p>However, they must have been sitting on so much interest up to now given where rates went recently that, provided they ran a fairly conservative operation, they should have plenty of reserves.
How bitcoin got huge was basically tether money printing. since it wasnt backed by anything, they just printed tether and bought bitcoin. a group did it behind the scenes, got massively wealthy.
I'm very curious to see how this investigation plays out, especially considering the debt situation here in the US. It appears (according to tether's audit reports) that tether went from about 64 billion in treasuries mid-2023 to about 92 billion mid-2024. That's 27 billion in demand for treasuries over that one year period which (if my math and research is correct) is about 3% of all treasury demand for roughly that time period.<p>It does appear that tether holds short-term maturity treasuries, and I don't know how that fits into the larger demand picture.<p><a href="https://assets.ctfassets.net/vyse88cgwfbl/63oJePOHqIvrcnXWMPZ1M0/4cfaf2e7cdf80c30b17fdc70faaf741f/ESO.03.01_Std_ISAE_3000R_Opinion_30-06-2023_BDO_Tether_CRR.pdf" rel="nofollow">https://assets.ctfassets.net/vyse88cgwfbl/63oJePOHqIvrcnXWMP...</a><p><a href="https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtYgICGy/d7462f312aa15b872f8474322ba90363/ISAE_3000R_-_Opinion_on_Consolidated_Financials_Figures_30.06.2024_RC134792024BD0209.pdf" rel="nofollow">https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtYg...</a><p><a href="https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html" rel="nofollow">https://ticdata.treasury.gov/resource-center/data-chart-cent...</a>
Federal investigators should probably also probe who controls that sizeable chunk of dormant bitcoin that's projected to be valued higher than a significant chunk of the US economy in a few years.<p>This used to be a non-serious question. But now we've got presidential candidates calling for national debt ceilings that will result in a default on US debt, and therefore crash the US dollar. Bitcoin's getting integrated into every payment app as if these companies are readying for an eventual modern equivalent of a run on the banks. Except with everyone moving their money to crypto instead of getting 'real dollars' to stuff into their mattresses.<p>There's a 99.99%+ likelihood that Satoshi just.. lost his wallet one day, or died, or whatever.<p>BUT -- assume a 0.01% possibility that there is something else at play with that early-mined bitcoin. Assume the _impact_ of a negative outcome with it will eventually be on the order of entire economies.<p>If you use common practice to calculate security risk by multiplying the likelihood of risk by it's potential impact, there is certainly enough at play here to justify the US government putting a couple agents on a search for a week to figure out who this guy is/was, and who now controls all of those apparently-lost coins.
I don't know why, but the one thing cryptobros fear is OFAC. They shrug off fraud, securities violations, and money laundering but when sanctions are mentioned people start running away. We saw this with Tornado Cash and hopefully Tether will get OFACed next.<p>BTW, Tether probably is backed 1:1 or better because they bought $XXB of US treasury bonds at >4% which return billions in profit per year. BTC is also (currently) near all time highs. Whatever hole they had was probably filled in.
Jesus only 6 or 7 years late! It was OPENLY KNOWN and ADMITTED IN COURT they never had the cash backing and were just printing tokens to inflate prices. Why start an investigation now?
<a href="https://x.com/paoloardoino/status/1849876338573799912" rel="nofollow">https://x.com/paoloardoino/status/1849876338573799912</a><p>CEO of Tether -
“As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.”
<i>The U.S. federal government is investigating Bureau of Engraving and Printing's "US Dollar" notes for possible violations of sanctions and anti-money-laundering rules, according to people familiar with the matter.</i><p><i>The criminal investigation, run by prosecutors at the Manhattan U.S. attorney’s office, is looking at whether notes "tethered" to the Federal Reserve's "dollar" have been used by third parties to fund illegal activities such as the drug trade, terrorism and hacking—or launder the proceeds generated by them.</i><p><i>The Treasury Department, meanwhile, has been considering sanctioning the Federal Reserve because of the Bureau of Engraving and Printing's currency notes' widespread use by individuals and groups sanctioned by the U.S., including the terrorist group Hamas and Russian arms dealers. Sanctions against the Federal Reserve would generally prohibit Americans from doing business using the notes.</i>
This is just another example of how shorting Bitcoin during market hours is such an effective strategy, which is as profitable now at $60k as it was at $20k. This takes advantage of the tendency of bad news to drop when the stock market is open. Federal government offices are closed on weekends, so if bad news is dropped or a rumor of bad news, it will be on a weekday and when the market is open, as has been the case.<p>Good news can also drop, but there is a major asymmetry favoring bad news and liquidations, and consequently sudden drops of the Bitcoin price. You don't have to work at a hedge fund to find great methods like this.<p>It also shows why Bitcoin is an inferior investment compared to tech stocks, in which investors do not have to worry about these regulatory risks (except for antitrust, which is a slow, drawn-out process and this can be mitigated with diversification). QQQ has far outperformed Bitcoin even as far back as 2020.
My unsubstantiated conspiracy theory on this is that not only is Tether not backed 1:1 USD > USDT but that they are so disproportionately not backed that they basically printed money during the peak of the pandemic, causing real measurable inflation in the crypto markets
If Tether is a fraud then the entire financial system is clearly a fraud as well. What kind of financial system allows a fraud of this size to continue for over a decade? Let me guess, nobody knew anything. Yet the government knows about every transaction over $600 on all our accounts. It's clown world.
Good timing, along with the election. Going by history there's the likelihood of a ~20% dip in the BTC price before it takes a couple of big steps up in the last few months of the bull run part of the 4-year cycle.<p>If it happens, accumulate.
For those doubting that Tether is fully backed, note that Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment banks and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds
Both presidential candidates have signaled that they are pro-crypto scams (and one thinks that has something to do with the welfare of black men.) It's too late. Bitcoin has entered the house price zone, where people are elected to office on promises to make housing <i>as expensive as possible.</i> We'll have to wait until crypto brings down the entire economy. And after it does, the people who hold it will be bailed out:<p>"Do you know how many disadvantaged minorities are invested in crypto? Especially after we allowed them to invest their social security into it, with matching contributions from the state if they agree to hodl? Are you a racist monster?"<p>Meanwhile 90% of black people will have 90% of their savings in crypto, accounting for less than 2% of all crypto holdings.<p>FTX so far was barely a speedbump. All it taught politicians is that there's a lot of money in doing what crypto whales say, and absolutely no consequences even if it goes belly up in the worst way.