Yes, I should have said 66B in liabilities. We don't know how much they have backing these liabilities.
> A history of lies about audits, for a start ...
Indeed. So we're free to come up with our various estimates. None more correct than the other.
Doesn’t this seem like a massive, systemic threat in itself, that an audit-dodging, opaque institution underpins the ecosystem?
Even if it is all present and correct (for some definition of present and correct) shouldn’t we be highly suspicious purely because of this evasive behaviour?
It was. But it's increasingly less so. The market has hedged this risk somewhat, by decreasing its market share: https://www.theblock.co/data/decentralized-finance/stablecoi.... And will likely continue to do so.
Tether decreased the amount of corporate paper it was exposed to throughout 2022.
December 03, 2021: 44.24% of the reserves was corporate paper
September 30, 2022: 0.07% corporate paper
Over this time frame Tether's shareholder captial cushion (assets - liabilities) increased from $137,337,226 to $250,107,738
If you want to be accurate you can say most of their assets are US treasury bonds.
Such as?
>and the fact that even the crypto-friendly auditing companies are dropping crypto company clients left right and centre
This has to do with the auditing companies being risk adverse as regulatory pressure around crypto increases. It doesn't mean that the reports they made were fraudulent.
For years their website claimed that the company was regularly audited, when they hadn't (still haven't AFAICT) undergone a single audit.
> This has to do with the auditing companies being risk adverse as regulatory pressure around crypto increases.
In at least some cases I think it has more to do with concerns over how the reports they were producing were being used by their clients -
"Mazars Group said in a statement to CNBC that it had “paused its activity relating to the provision of Proof of Reserves Reports for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public.”
“They do not constitute either an assurance or an audit opinion on subject matter. Instead they report limited findings based on the agreed procedures performed on the subject matter at a historical point in time,”
https://www.cnbc.com/2022/12/16/mazars-suspends-all-work-wit...
Have you considered they may have audited it themselves? Just because there wasn't an audit published by an external auditer that doesn't mean no one has ever audited their accounts.
I would consider this every bit as bad. “We marked our own homework! And guess what? It was great!”
The whole concept is ludicrous.
Internal audits still have value as it means that someone can't steakily steal money from the reserves without them noticing.
Further, they paid $41 million to settle a case over their lies - https://fortune.com/2021/10/15/tether-crypto-stablecoin-fine...
I don't think it's a stretch at this point to say they have a history of, at the very least, being highly economical with the truth and misrepresenting their own level of transparency. And I do think your argument is unreasonable.
Take a look back to 2017 on the wayback machine -
"Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD."
"Our reserve holdings are published daily and subject to frequent professional audits."
We know that neither of those things was true.
We don't really know this, and a lot of their assets seem to be things like "corporate paper", which may simply be IOUs from exchanges they've given Tethers to.
> At this point, the question should be: what makes you believe they are insolvent?
A history of lies about audits, for a start. Admissions that they weren't fully backed in court at various points in the past (73% was bandied around by their own people at some point). Plus if the 'corporate paper' situation is anything like described, in any sort of crunch situation it could prove to be worthless.