> At worst, they're choosing investments to maximize personal gain.

At worst, they don't have any investments.

It's possible, but given a choice between "flagrantly lying to the New York AG who just investigated you" vs "buying cheap debt no one else would touch and then overvaluing it, because you aren't regulated", the latter seems like a less legally perilous way of keeping things going.

Yes, that might be more likely. I was just framing things "at worst".

Deltec, the bank that Tether bought, has a desk specializing in zombie debt, so it's entirely possible they have loads of debt bought for pennies on the dollar, that they have through accounting/market shenanigans recognized at par as their "commercial paper".

I mean... technically they're completely unregulated, right?

So they don't even have to perform shenanigans.

They can just buy $1 par debt at $0.01 from Bob's Used Cars and value / declare it at $1. It's a super shady move, and would shake confidence if known, but would seem legally defensible. ("We valued it at a fair price. It turned out we were wrong and overvalued it. Oops.")

They could probably declare it at >$1 if they really wanted to, but why do hard fraud instead of easy fraud?

Well if you take that view, then they don't need the $0.01 paper in the first place. If they are indeed totally unregulated, then they can just commit fraud without risk.

That's where the NY AG's case comes in, I think.

They are unregulated, but they're now required to publish a breakdown of their assets.

Before, they could have said "We have billions and billions in assets." Now, they're required to enumerate and value their assets, to the extent required to publish the breakdown, as part of a legal agreement.

So I guess before it could have been riskless fraud. Now, it's more risky fraud. And overvaluing assets seems like an easy way to keep the wheels turning without obviously pissing off a state AG.

The latter would imply they had any cash to buy debt in the first place. One of the most common, and most credible theories is that they issue Tether to exchanges in exchange for short term debt obligations. There's never any actual money changing hands.

Yep it definitely seems probable that there's risky behaviour at the least.