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A comment on Tether starting to lose its peg too, after Terra did. Parent comment

Re:Tether starting to lose its peg too, after Terra did by sgt101 on Thursday May 12, 2022 @06:45AM (#31352013)
The thing is that someone will know, if someone does know what the level of backing is then they can figure out what the point of collapse would be and that will allow the construction of a scheme to make it collapse. If they can do that then there is a bunch of money to be made.
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Re:Tether starting to lose its peg too, after Terra did by vkou on Thursday May 12, 2022 @07:10AM (#31352260)
> If they can do that then there is a bunch of money to be made.

Hoping to make money by betting on Tether collapsing is like taking out insurance against the event of a combined global thermonuclear war & genocidal alien invasion of the Earth.

If you win the bet, you won't have anyone to collect from.

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Re:Tether starting to lose its peg too, after Terra did by tomjakubowski on Thursday May 12, 2022 @08:30AM (#31353049)
You could make money off Tether's collapse if you shorted it the simple way (and managed to time it very well) - borrow units of Tether from someone, sell them at $1 (ka-ching) later purchase the same quantity Tether at $0.00001 and return them to your lender for a tidy profit.

I suppose if Tether collapsed to the extent that it was impossible to trade it at all, you'd have a hard time buying the worthless Tether back. What happens if you're short a stock traded only on the NYSE and the stock exchange itself disbands? Or maybe the better analogue is, how do you fulfill your end of the deal as a short seller and return the shares owed to your counterparty if the company disbands in the meantime?

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Re:Tether starting to lose its peg too, after Terra did by Sylveste on Thursday May 12, 2022 @09:06AM (#31353546)
>Or maybe the better analogue is, how do you fulfill your end of the deal as a short seller and return the shares owed to your counterparty if the company disbands in the meantime?

If you're short a company and the company goes properly bankrupt then the shares are literally worthless paper, you just throw them away.

I've been in this situation with interactive brokers and the position just disappears. (You get the profit as though you closed the position at a price of zero.) Shares of something that doesn't exist similarly don't exist. They just vanish.

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Re:Tether starting to lose its peg too, after Terra did by Sylveste on Thursday May 12, 2022 @09:05AM (#31353529)
>If you win the bet, you won't have anyone to collect from.

They have $78B of assets, not $78T. It wouldn't rival even the smallest of national defaults. Heavy rhetoric but a bit OTT don't you think?

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Re:Tether starting to lose its peg too, after Terra did by vkou on Thursday May 12, 2022 @02:10PM (#31357913)
That money isn't in a jurisdiction you may necessarily be able to reach.

They also have no obligation to pay anyone a cent of their reserves. Any USDT->USD exchanges they do/claim to do are a courtesy, not a requirement.

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