Posted on 12/01/2022 8:25:41 AM PST by Red Badger
As the crypto industry struggles in the wake of FTX’s collapse, the question of how the SEC will react is unanswered. Here’s what past investigations tell us about how the SEC sees cryptocurrency and may regulate it moving forward. Illustration: Ali Larkin
The company behind the tether stablecoin has increasingly been lending its own coins to customers rather than selling them for hard currency upfront. The shift adds to risks that the company may not have enough liquid assets to pay redemptions in a crisis.
Tether Holdings Ltd. says it lends only to eligible customers and requires that borrowers post lots of “extremely liquid” collateral, which could be sold for dollars if borrowers default.
These loans have appeared for several quarters in the financial reports that Tether shows on its website. In the most recent report, they reached $6.1 billion as of Sept. 30, or 9% of the company’s total assets. They were $4.1 billion, or 5% of total assets, at the end of 2021.
Tether calls them “secured loans” and discloses little about the borrowers or the collateral accepted. Alex Welch, a Tether spokeswoman, confirmed that all of the secured loans listed in the reports were issued and denominated in tether. The company said the loans were short-term and that Tether holds the collateral.
Tether, which is incorporated in the British Virgin Islands, doesn’t publish audited financial statements or a complete balance sheet, leaving outsiders with an incomplete picture of the company’s financial health. “Tether’s disclosures are limited to the information contained in the mentioned reports,” Ms. Welch said.
The rise in Tether’s lending represents a broad risk to the crypto world. Stablecoins such as tether are anchors in the system. They are vital for trading many cryptocurrencies and are widely held by traders.
(Excerpt) Read more at wsj.com ...
How many retirement funds are incested?
“I wasn’t running Alameda, I didn’t know exactly what was going on, I didn’t know the size of their position,” Bankman-Fried said. “A lot of these are things I’ve learned over the last month [in the days leading up to bankruptcy.]”New leadership at FTX said that Bankman-Fried exercised significant control over the entire empire.
Sorkin pressed Bankman-Fried on Alameda’s gambling on questionable cryptocurrencies, reading a letter out loud from an investor who lost his life savings of $2 million."
USDT will be the big domino to start the collapse.
BTC is facing some major sales by the whales, and holders like El Salvador will see great damage very soon. The FTX issue was merely the tip of the iceberg.
FTX bankruptcy lawyer outlined the main business entities of SBF’s family of affiliated companies:
<><>FTX.com, FTX US, FTX’s venture arm,
<><>trading firm Alameda Research holds the largest cash balance among the core four
The corporate governance in place for each of the main business verticals was minimal,
consisting primarily of SBF and a close coterie of intermingled deputies
*****************************************************
FTX attorney Bromley tells the bankruptcy judge that the
company was being “run as a personal fiefdom of Sam Bankman-Fried.”
<><>a “substantial amount” of FTX Group’s assets “have either been stolen or are missing.”
<><>unclear whether the “substantial amounts” were stolen or mishandled
<><>includes several billion in combined loans that GF-run Alameda Research reportedly made to SBF, two of his deputies, and a company majority-owned by him; or are separate from them.
<><>SBF also raised $420 million from investors on behalf of FTX —
<><>only he paid himself $300 million of that amount, claiming it as a personal reimbursement for re-purchasing the 15% stake in the exchange held by rival company Binance.
*************************************
The court has been told FTX has 36 banks and more than 200 bank accounts.....
....all that laundry........hmmmmmmm.
A. Just about none.
This is an interesting story, but there are no blind widows and orphans to be harmed. Everyone who went into the crypto space did so with their eyes wide open. Banks and other heavily regulated actors who might have taxpayer insured deposits didn’t go near it, couldn’t have.
We have to avoid the reflex to regulate everything. As long as there is a fence and a gate that says (in neon) - ye who pass this point are on your own, this is not such a problem.
The regulated securities entities and federally insured depository institutions can be prohibited from investing there. That is what happened and you will find that banks were effectively firewalled from this fiasco.
It was fun while it lasted
I never fool with what I don’t understand when it comes to money! Never. So, this is worse than a foreign language to me.
“Tether calls them “secured loans” and discloses little about the borrowers or the collateral accepted.”
...’trust us’.
I think this will make the Lehman Bros collapse of 2008 look like a picnic in Central Park...............
Imaginary currency bought for with real currency. What could have ever gone wrong? Oddly, the managers of the imaginary currency companies bought things with the real currency siphoned off. Ah, Madoff would be proud. Ken Lay would be elated. Corzine would be wealthy beyond his talents. Decades of perfecting the con, and grooming the marks.
There may be indirect exposure, however, due to holdings in private equity firms.
LOL.
To think that there were ever people who believed this garbage would work.
Who thought crypto would ever crash? 🙄
not to worry, the con artists who founded the off-shore company Tether personally promise that Tether is really, really, really backed 1:1 with dollar deposits in an unaudited Bahamas sorta-bank named Deltec Bank, which also PROMISES that those dollar deposits are really, really, really there ...
BTW, the great irony of so-called “stablecoins” is that they function as the true currency in the crypto world because ACTUAL crypto is unable to function as a currency even in it’s own world ...
the other essential function of “stablecoins” is to function as a roach-hotel for dollars: dollars go in, but don’t come out ... once dollars enter the crypto world via conversion to “stablecoins”, they disappear ...
“stablecoins” also allow crypto to function as a closed system, independent of the regulated banking system ...
Stablecoins such as tether are anchors in the system.
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Stablecoins not so stable.
The whole system will collapse like a house of cards and many will be destitute.
How many retirement funds are incested?
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“Incested”? It might be a typo, but it actually fits in a beautiful way.
Watch that video to get a feel for the kind of people “behind” it. I wouldn’t trust them to wash my car.
Dang autocorrect!..................
USDT will be the big domino to start the collapse.
I think 2023 is going to be a VERY interesting year.
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