They lost all access to banking meaning that there was no physical way for them to create redeem Tethers. That makes it de facto un-backed. This is addressed in 14/ through 18/. They lost access to banking, and continued to issue Tethers.

> 18/ Because Tether did not have a significant bank relationship in its name from at least March 2017 until September 15, 2017, it could not directly process any fiat deposits for purchases of Tethers by customers on either the Tether website or via the Bitfinex trading platform.

And yet in that period they issued some 400M tethers.

> That makes it de facto un-backed.

It makes them un-backed by US Dollars in a bank account.

It does not make them un-backed by securities denominated in US dollars, which was my point. It's also likely why she never pursued a fraud case.

That was a settlement for fraud under the Martin act. Fraud was the charge settled.

Fine, a criminal fraud case. Nobody went to jail.

do you have any reasonable justification to move the goalposts like that?

The standard of evidence is very different between civil cases (preponderance of the evidence) and criminal cases (beyond a reasonable doubt).

Is the distinction meaningful in the course of reaching a settlement? Both parties agree on the facts at hand. I suppose you could make that case were the judge to make the determination on the basis of evidence, but the Tether folks signed the agreement of their own volition with the NYAG. At that point the evidence shouldn't be in question - and hence the standard isn't in question - simply their admission, no? Ok, not an admission, maybe an acquiescence.

I would say the evidence in a settlement or plea deal would be of equivalent quality whether a criminal or civil trial.

Further, I'd suspect the majority of folks who accept plea deals in criminal matters don't end up in prison either.

LOL

>>They lost all access to banking meaning that there was no physical way for them to create redeem Tethers.

Temporarily being unable to transfer USD to fulfill redemption requests is not the same thing as being unbacked. Having USD-denonimated commercial paper backing the tether is still having something of value backing it, which is in a different universe from tether being unbacked.

People need to be more careful to not make inflammatory accusations, that are not substantiated, about an operation. This is true even if there are numerous red flags associated with the operation.

They were also unable to receive deposits, and issued Tethers anyways. Ones they claimed on their website for years were backed 1:1 with dollars in a bank account they controlled. This is the substantiated fraud outlined in the settlement.

The fraud was they said, on their website, for years, that they had 1 USD in their bank accounts as liquid currency for every USDT outstanding. They unequivocally did not - at numerous times.

> “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system." - Letita James, NYAG.

Their new wording about 'reserves' was not in place at the time. They changed the wording in March of 2019. The wording at the time was:

> "Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USDT is always equivalent to 1 USD."

This was also the wording at the time Bitfinex grabbed $800M out of their bank account and left them an IOU.

That was a lie, and it's not my claim, it's Letitia James'

Finally re: commercial paper, I haven't seen a shred of evidence they own a single scrap of it. In fact the FT seems to be unable to find anyone else who has seen evidence of it either, despite their being ostensibly the 6th or 7th largest holder of commercial paper in the world sandwiched up between Vanguard and JP Morgan. Could they be? I guess. On a scale of 1 to 10 how likely do I think that is? About a zero.

>>This is the substantiated fraud outlined in the settlement.

That there is evidence of fraud does not justify making an unsubstantiated allegation that the tether was unbacked. No reasonable reading of "unbacked" would find it consistent with the tether being backed by USD-denominated commercial paper as opposed to USD.

I am not here to defend Tether, just careless language used when criticizing a party.

>>Finally re: commercial paper, I haven't seen a shred of evidence they own a single scrap of it.

That's an entirely fair statement. Like I said, I am not here to defend Tether. If anything, being careless with criticisms undermines the credibility of critics, and makes it harder for their salient arguments to be heard. So if you do have a good case against Tether, I'd suggest sticking only to the facts so that the case gets a fair shake.

For the record I do see what you're saying about my choice of language. I personally see my reading in line with that of CNBC and in line with the wording in the settlement - although I can certainly choose to hold myself to a higher or at the very least a more conservative standard. Thanks for keeping the conversation honest and grounded :) and thanks for clarifying your position.

My pleasure and thank you for keeping an open mind and showing civility.