Let’s talk about crypto!
Tether is the fourth-biggest cryptocurrency in the world by market value. And it’s got some economists — including an official at the U.S. Federal Reserve — worried.
Meanwhile, some investors believe a loss of confidence in tether could be crypto’s “black swan,” an unpredictable event that would severely impact the market.
Tether is what’s known as a stablecoin. These are digital currencies that are tied to real-world assets — the U.S. dollar, for example — to maintain a stable value, unlike most cryptocurrencies which are known to be volatile.
Tether has over $68bn under their management and has only 13 listed employees on LinkedIn.
That’s a record! The previous record holder was Bernie Madoff’s ponzi scheme with $50bn under management and 25 employees.
Isn’t this concerning given Tethers refusal to be audited?
There is just over $68bn Tether in existence, meaning Tether theoretically has $62bn under their control.
That is over $5bn in assets per employee of Tether.
If that seems comically low it’s because it is. It’s a world record for total amount of money managed per employee.
The only similarly small number of employees for such a large amount of money under management was Bernie Madoff’s ponzi scheme, which had $50bn under management with just 25 employees.
What benefit is there to having such a low number of employees?
Lower costs yes but with the money they control and need to invest surely it would make sense for them to have more than just 13 employees doing this?
Or is it because it’s easier for them to conceal fraud when there’s only a handful of people being exposed to it and most of them have a large interest in keeping the fraud going.
Tether has just under $30bn in commercial paper which makes it one of the largest US commercial paper market investors in the entire world, alongside the likes of Vanguard (17,600 employees) and BlackRock (16,500 employees).
THIRTEEN EMPLOYEES EVALUATING THE CREDITWORTHINESS OF NEARLY 30BN IN COMMERCIAL PAPER LOANS AND WITHOUT THE OVERSIGHT OF AUDITING.
Remember: Tether has never been properly audited, refuses to be audited and has been caught lying through their teeth multiple times
Recently, they have also been blocking everyone on social media who demands for transparency and audits of their coin.
So why is Tether so controversial?
The issues surrounding tether hold significant implications for the nascent cryptocurrency world. And economists increasingly fear that it could also impact markets beyond digital currencies.
Some investors and economists are worried tether’s issuer doesn’t have enough dollar reserves to justify its dollar peg.
In May, Tether broke down the reserves for its stablecoin. The firm revealed that only a fraction of its holdings — 2.9%, to be exact — were in cash, while the vast majority was in commercial paper, a form of unsecured, short-term debt.
That would place Tether in the top 10 biggest holders of commercial paper in the world, according to JPMorgan. Tether has been compared to traditional money-market funds — but without any regulation.
With more than $60 billion worth of tokens in circulation, Tether has more deposits than that of many U.S. banks.
There have long been concerns about whether tether is being used to manipulate bitcoin prices, with one study claiming the token was used to prop up bitcoin during key price declines in its monster 2017 rally.
Does this not absolutely terrify anyone else?