[jcfrei]

> print USDT, buy BTC on sham exchanges, send BTC to Coinbase, sell for USDC.

The steps you described don't result in new USDC being minted. That happens only when people send dollars to Coinbase and change them to USDC.

> If it were legitimate flows, you would actually expect USDC to far outpace USDT given the much greater ease of conversion and trust in the sponsors.

No, USDT has been around for a lot longer and lots of very liquid trading pairs are based on it. So if you need to buy lots of crypto currency you might need tethers so you can buy on an exchange with a liquid trading pair (BTC/USDT on Binance being the most liquid trading pair).

[cameldrv]

I think it does. People send USD to Coinbase to buy Bitcoin. Coinbase maintains the stable value of USDC by creating new USDC and selling it to people for BTC. The cash to back USDC comes from people depositing USD to buy BTC.

You can think of it virtually as three balanced flows:

USD -> USDC -> BTC (Retail BTC Investors)

BTC -> USDC (Tether refugees)

USDC -> USD (Coinbase)

[jcfrei]

> Coinbase maintains the stable value of USDC by creating new USDC and selling it to people for BTC.

If tou want USDC you can simply change your dollars on coinbase. No need for them to use their own funds to maintain a stable price - there's no usdc/usd market on coinbase.

[qeternity]

I should have added an implicit step: sell for USD, convert to USDC. It’s a lot easier to launder and move illicit USDC funds than it is USD.