[londons_explore]

Financially literate people see that tether might be backed by thin air. They're pretty clear on their homepage that "Every Tether token is 100% backed by our reserves, which includes traditional currency and cash equivalents, and may include other assets and receivables from loans made by Tether to third parties.".

"receivables from loans" can be worth nothing if it's a loan to someone with no assets.

I believe the whole thing is intended to be sufficiently backed to not collapse easily, but is by no means 100% backed with actual cash.

[sgt101]

The thing is that someone will know, if someone does know what the level of backing is then they can figure out what the point of collapse would be and that will allow the construction of a scheme to make it collapse. If they can do that then there is a bunch of money to be made.

[vkou]

> If they can do that then there is a bunch of money to be made.

Hoping to make money by betting on Tether collapsing is like taking out insurance against the event of a combined global thermonuclear war & genocidal alien invasion of the Earth.

If you win the bet, you won't have anyone to collect from.

[tomjakubowski]

You could make money off Tether's collapse if you shorted it the simple way (and managed to time it very well) - borrow units of Tether from someone, sell them at $1 (ka-ching) later purchase the same quantity Tether at $0.00001 and return them to your lender for a tidy profit.

I suppose if Tether collapsed to the extent that it was impossible to trade it at all, you'd have a hard time buying the worthless Tether back. What happens if you're short a stock traded only on the NYSE and the stock exchange itself disbands? Or maybe the better analogue is, how do you fulfill your end of the deal as a short seller and return the shares owed to your counterparty if the company disbands in the meantime?

[Sylveste]

>Or maybe the better analogue is, how do you fulfill your end of the deal as a short seller and return the shares owed to your counterparty if the company disbands in the meantime?

If you're short a company and the company goes properly bankrupt then the shares are literally worthless paper, you just throw them away.

I've been in this situation with interactive brokers and the position just disappears. (You get the profit as though you closed the position at a price of zero.) Shares of something that doesn't exist similarly don't exist. They just vanish.

[Sylveste]

>If you win the bet, you won't have anyone to collect from.

They have $78B of assets, not $78T. It wouldn't rival even the smallest of national defaults. Heavy rhetoric but a bit OTT don't you think?

[vkou]

That money isn't in a jurisdiction you may necessarily be able to reach.

They also have no obligation to pay anyone a cent of their reserves. Any USDT->USD exchanges they do/claim to do are a courtesy, not a requirement.

[piva00]

> "receivables from loans" can be worth nothing if it's a loan to someone with no assets.

Eerily sounding like CDOs from 2008, collaterised debt obligations.