The most recent was Sep 2022 by BDO.
They have a mix of assets (as you'd expect, because they have different liquidity requirements). But the majority is in short term (<45 day) US Treasury Bonds or Cash and Bank deposits. The other largest asset class is money-market funds, which is a pretty well understood asset class.
It's not nothing though - certainly more than FTX had.
But I am noting they do have 3rd-party attestations (NOT audits!) which is the same as what Circle does with USDC.
FTX used their FTT token to prop up their balance sheet. This attestations says USDT isn't like that.
(I don't trust any entities in the crypto space, but just for the record)
Oh well, probably nothing!
Did they say this? I thought it was quarterly (same as what Circle does with USDC)
> in December BDO said they were going to stop dealing with crypto companies.
Yeah who would blame them?
Issuing stable coin seems like an easy business on paper. You collect $$$, mint coins, collect interest on those $$$ in a bank and that's your profit. Does everyone become greedy and lose the treasury in gambling instead, or what?
If the other company makes good use of the loan and recovers to pay the original company back — great, you still have enough assets to cover your deposits. That may be what happened with Bitfinex. On the other hand, the other company might go tits up. Now the first company has no money to cover deposits, declares bankruptcy, and if all is right in the world the execs see some punishment.
Ideas: Greed, incompetence, a combination of the two.
Just guesses out of thin air: Collect $1b, don't just keep $1b sitting around in low-risk instruments 1:1. Take $200m for yourself. Try to turn it into $1.2b through risky investments.
For one, finding a bank that will hold your money will be tough. They’re taking on significant liability, for the AML officer, personal criminal liability.
Mechanically, what does this mean? When someone buys Tether from you, to which bank account do you have them wire the money? By the way, your suggestion is a reasonable leap. But it still involves handling U.S. dollars, and now you've added a new regulated area (wealth management).
It's easy to imagine the transgressions starting small. Say you have someone ready to wire you $100mm. You don't yet have a bank account, but you're working on it. Do you tell them to pound sand? Or do you temporarily use a side account, to hold the funds until the main one is ready?
I'm not very familiar with how treasuries get bought/sold/transferred between parties. But they seem pretty cash-equivalent, Uncle Sam will sell as much as you want, and your profit margin is baked into it.
This is better! But a couple issues. One, this means the U.S. Treasury has an open book into your in and outflows. Not sure that's Tether's vibe. Two, you've limited yourself to people who can transfer Treasuries. Given Tether doesn't provide consumer redemption, this isn't a huge issue. But transferring Treasuries takes more financial savvy than wiring cash, and that savvy is likely to ask for their interest (as is common in collateral arrangements).
It's relevant to the difficulty of launching and operating a U.S. dollar stablecoin.
What I meant by saying 'it seems easy on paper' is that the need to be profitable shouldn't force you to make decisions which eventually lead your treasury to not being valuable enough to back the minted coins.
Also: Perhaps I don't understand how tether works, but I don't see why they need to be liable for holding customer funds. Why do they need a deposit/withdrawal process at all? Can't they just do the following?
IF USDT on open markets is <$1 THEN buy coins and burn them
IF USDT on open markets is >$1 THEN mint coins and sell them
And then they can do whatever they want with the treasury, no? Store it in banks or buy US treasury bonds, etc. Just don't lose it.
So now there's a business where the only way to make money is to break the regulations that exist to stop banks from doing exactly what they're doing. It's in the cryptocurrency environment, where the entire culture is made up of scammers, chumps, and chumps who aspire to be scammers. And in that environment, there's a big pile of money that could be transferred out without any oversight at all.
At that point, it isn't just that people "become greedy", but that every single aspect of the situation is aligned to select greedy people and create a situation that rewards theft.
so it worked for uber & AirBNB, i'm sure these companies doing this are asking why not for them?
You're assuming an intent to make (all) customers whole.
In Ponzi Scheme you collect $$$, mint coins or forge other confirmation, move money to Panama or spend it and when asked to pay out, you use other investors money. The only reason for making some customers whole is to keep the scheme going.
The problem for Ponzi operator starts when too many victims want they money back and there is no big enough source of it to cover payouts.
We can be pretty confident that they don't. If they did they would have a third party accounting firm provide an attestation that they did