Mostly the reason I have zero faith in crypto venture capitalists as an institution is that their primary value add is marketing, their due diligence is a joke, and they are functionally equivalent to the shills we all mock.
I have been following Tether for about three and a half years and still I struggle to really grasp how large it is. It is so absurdly large that it has started warping my perception of other huge amounts of money. I hear a million dollar fraud now and my first thought is “that’s it”, and so I am writing this to help provide some comparisons so I can help keep the scale of Tether in mind.
So let’s start with the basics.
Currently on June 10th 2021 Tether has just about $63 billion Tethers. There are also a negligible…
Elon Musk is considered by fools to be among the smartest people alive. He will be discussed as though he has the intellect of Nikola Tesla, combined with the ability to create products of Thomas Edison. This towering intellect is a facade built on the willingness of others to continue to propagate the myth, and nothing makes that clearer than Elon’s relationship with Bitcoin.
Early in February of 2021 it was announced to great fanfare that Tesla had purchased about $1.5 billion in Bitcoin and would now also be accepting Bitcoin for their cars. …
Protos reported that Coinbase was aggressively looking for a ‘top media editor’. It clearly seems intended for Coinbase to build up a content marketing team that will help them manage their own image.
Now I can hear your objections already, that perhaps I am being too harsh on Coinbase. Perhaps they truly intend to build out a world class newsroom and act responsibly as a journalistic entity. Then you read a little bit further and realize that this ‘top media editor’ is going to answer directly to the marketing team.
Coinbase has no desire to participate in anything resembling…
I have recently been asked several times why would Coinbase list Tether. Especially among the revelations of the NYAG and the general controversy surrounding Tether. Fundamentally, what I believe it comes down to is money and knowledge.
It can be difficult to talk about Tether and Bitfinex, not because there is disagreement on the essential facts, but due to the lens through which these facts are viewed.
The skeptics and critics find it unacceptable that these businesses would give over $1 billion to money launderers and NEVER SIGN A CONTRACT. The traders find that to be acceptable behavior.
The skeptics and critics it find it unacceptable that a business that promises to be backed 1:1 by cash always only is backed by 3% cash. The traders find that to be acceptable behavior.
Understanding the role of wildcat banking in the United States is an important portal into the modern role of Tether in crypto. Wildcat banks were banks that were not bound by federal regulations and thus these banks were often under-collateralized and were issuing their own currencies that could only be redeemed (often) by going through them.
Many of these wildcat banks were chartered in Michigan who had made it extraordinarily easy to become a bank, requiring only that the bank sell at least 50k in equity and they deposit mortgage notes with the Michigan state government to back their banknotes…
Tether has shared an asset breakdown with several crypto news outlets. ( Archive)
It has revealed to us that for every Tether in circulation on March 31st, 2021 they had approximately 3 cents.
Obviously it is a little more complicated than that. We know they have to have something else in their reserves. So what is it? The largest share of their backing is in the category they call “Cash and Cash Equivalents and Other Short-Term Deposits and Commercial Paper”. That category is dominated by Commercial Paper. Commercial paper is largely unsecured bonds issued by companies to raise short term…
Acknowledgements: I would not have been able to complete this as thoroughly as I did without building off existing work. It needs to be pointed out that years ago u/SpeedflyChris ( archive) pointed out these same connections. I also relied heavily on WalletExplorer.com a tool created by Aleš Janda.
In January of 2015 Bitstamp was hacked in what they described as a phishing attack. ( Archive) These funds were withdrawn to 1L2JsXHPMYuAa9ugvHGLwkdstCPUDemNCf (referred to as 1L2 for the remainder of this piece for convenience) at first. Bitstamp also sent funds to 1AXsTbi4sSH1M5hccgdEVn5et9xFd7Bxpd (referred to 1AX) and 16KYFJiAoM4aX82xw2V3YBHX72trWNhz48 (referred to as…
Tether has released a brand new attestation (archive) (my copy) showing that they are fully backed! Well, it shows that for at least one entire minute Tether was fully backed.
The most important thing to establish upfront is that this is NOT the report that is mandated by the New York Attorney General in their settlement.
This assurance is looking very specifically at the status of Tether’s reserves as of February 28th 2021 at 11:59 PM UTC.
The auditing firm reviewed Tether’s Consolidated Reserve’s Report, which is included at the end of the document and is simply a statement by…
Bennett Tomlin
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