Tether reserves breakdown: + 76.0% in cash & cash equivalents + 12.5% in secured loans + 10.0% in precious metals + 1.6% in other investments including Bitcoin (Source: Tether_to)
Prompt: “Now ask this question: What’s backing your cash in banks? Turns out it’s hard to answer.”
This led to a flow of confusions. “If…Then….Else queries…”
The 65% of that 76% is commercial paper, which even on Tether’s chart is not a cash equivalent. It’s perfectly possible to discover what is “backing” your cash in banks. Unlike Tether, banks produce audited accounts including full balance sheets.
Commercial paper is a not a bond. it’s a money market instrument.
As a general rule, I am skeptical of anyone who ignores the obvious problem with Tether printing money that doesn’t exist, and instead tries to turn the conversation to irrelevancies, such as: – The Fed – Fiat currency – Banks.
And these are just sample responses. Dan Held, the Bitcoin Advocate came up with his explanation to the rescue of Tether.
He has published a detailed support which is titled “Don’t Fear Tether” This was published somewhere around January 2021.
Held published that he is not going to publish a 40 page report in this regard as none of the users would be convinced.
However he quoted: “The amount of energy needed to refute bullshit is an order of magnitude larger than to produce it. – Brandolini’s law.”
He has covered the purpose of Tether, the basics of how the crypto markets work, the claims, tether is a fractional reserve/not audited, Tether is used to pump Bitcoin, what Tether collapse actually destroys – DeFi, and on Bitcoin has survived much worse.
So, those who would like to have an exhaustive read should check “The HELD Report”
Regarding Fractional Reserve Dan Held published; “There is some legitimacy to this claim. We do know that Tether was partially backed for a period of time (April 2019) when Bitfinex borrowed $850,000,000 to cover a hole due to fraud by one of their payment processors.”
Regarding the audit he has published, “Many rightfully ask that Tether should produce regular audits. However, this is harder than it sounds. The problem is that no reputable (aka big 4) accounting firm would take them on as a client. So it’s a chicken and egg problem of not being audited, but no one is willing to audit them. And those accounting firms that would be open to auditing them, the FUD folks wouldn’t trust the audit.”
Irrespective of who has to say what, Paolo Ardoino is like: “Indeed “100% backed. Full-Stop!” is epic.”
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