[ckastner]

> Step 2: find a bank willing to let you be a money transmitter for millions of anonymous pseudo-dollars whose owner you have no idea of, setting off every single money laundering alarm in the building.

This was the biggest red flag behind Tether to me, where we are talking about not millions but billions of pseudo-dollars.

The risk profile is beyond anything reasonable that a bank could or would accept. Tether minting $2bn in a week means $2bn cash inflows from mostly people that the bank probably doesn't know, all for what can only be a negligible fee.

[pjc50]

The billions of dollars of _backing_ should show up somewhere. https://twitter.com/dsquareddigest/status/140291428628503347...

> again - who is on the CP desk at Tether? Who is their account manager at Goldman Sachs? Who do they talk to at, say, the GE corporate treasury? Commercial paper is a short term money market that has to be managed and rolled - you can't just buy and hold the bonds anonymously.

Dan's argument is that the alleged size of their holding implies doing a lot of business, which should be being done by humans making phone calls to each other, and the gossip network doesn't seem to be able to locate any such people. Given that there are market participants whose job is e.g. "today I need to sell $100m of three month commercial debt to someone, time to start calling", one of them ought to know who's running the Tether business.

That nobody can see them in the market is a red flag.

[FireBeyond]

Hell, their bank's supposed* Deputy CEO in an interview couldn't even name the two types of banking license that are applicable in the Bahamas, or which one they had, but he knew they had one, and "possibly the other, I'm not sure".

* He was the Deputy CEO according to the interview and his LinkedIn (though there was all sorts of hilarity there, like claiming he graduated HEC Lausanne at 15, and becoming a Professor of Finance somewhere in Lebanon while running multiple funds all over. But after the disastrous interview, he was quickly deleted from the bank's website. And then re-added when people started questioning that. And then removed again when the bank hurried to "revamp" their website (to a WordPress installation, no less, and gaining 15 years of experience in the process).

[jiggawatts]

From what I heard, Tether had invested heavily in "emerging markets" instead of the established US markets, which explains why nobody at Goldman Sachs has dealt with them.

[acdha]

What do you mean by “emerging markets”? Goldman Sachs has tons of people whose entire jobs are dealing with those in the common meaning of the term – they manage dedicated funds for their customers! It seems highly unlikely that they wouldn’t have at least some basic awareness of anyone doing business at that scale.

Given the space and the degree to which they refuse to reveal normal financial information, I assume they’re either directly involved in fraud/money laundering or are treating other cryptocurrency companies’ debt as far more stable than it actually is. This is such a common criticism and there’s no reason why you’d keep it this secretive if the news was good.

[DebtDeflation]

Only if by "emerging markets" you mean Binance (and other crypto companies). Because that is almost certainly the source of any CP that Tether holds.

[pjc50]

Emerging markets? Which of course means that even if they started with $X of collateral a year ago, they're exposed to the wider market crash which is happening and therefore have much less.

[mrep]

Not to mention currency risk. I heard they were invested in china which if they were their yuan are now worth 6% less to get the same amount of USD which customers are expecting USDT to be in.

[FireBeyond]

In 2019, they were claiming $3.5B a week. Even worse.