Of possible interest to readers of this is Zeke Faux’ investigation into Tether’s financials in today’s Bloomberg. He starts by pointing out Yellen’s concern about the company’s rapidly expanding issue (now $69B worth, making it a potential economic risk)
I’m starting to see where some of crypto sector’s antagonism towards traditional journalism comes from. It’s a hit piece, filled with nasty allusions to people’s former careers as child actors or cartoonists (specifically Inspector Gadget).
Faux began canvassing Wall Street traders to see if they’d noticed Tether buying anything.
His best source is a former banker in Puerto Rico who claims he held 98% of tether’s assets. It’s definitely been informed by reading the Wildcat Stablecoins piece.
Faux discusses Bitfinex’s rescue, a crisis provoked when Polish Prosecutors seized a partner’s assets, and the company walked back its claims about always having a 1:1 ratio of traditional currency to tethers. He then finds a Bahaman company (Deltec Bank & Trust) that admits working with Tether (created by the former Inspector Gadget creator). Deltec’s chairman has a much more positive view of Tether, he says the reserves existed when he investigated the company in 2018.
Faux says he obtained (but won’t say from where or from whom) a document detailing Tether’s assets and says that they include billions of short-term loans. These do not include Evergrande though he does make a parallel to them and says it’s unusual for a money market to rely on them given the risk. Tether has also apparently loaned billions to Celsius Network (another crypto-related quasi bank). Celcius’s CEO says its ‘commercial paper is low-risk’ and borrows from Tether at 5% interest.
To me, this reads as if it’s pretending to be a damning indictment of Tether, in that it takes that tone and struts that way (look at the cover!), but every legitimate person in crypto Faux speaks to seems to back Tether’s claims about their reserves. Sam Bankman-Fried said he’d bought billions of Tethers because of traditional banks’ reluctance to deal with crypto companies. Celsius’ leaders seem confident in Tether which lending them money, Deltec investigated Tether and came away happy. Other than the Bitfinex liquidity issue caused by the Polish authorities, which required Tether begin using short-term loans, it seems like Tether does have assets, although Faux claims the reliance on short-term loans is potentially more risky than a traditional money market account.
Would love to hear everyone’s thoughts on the article.