On further reflection, this is less sketchy than I initially thought, although it’s so strange that I feel like there’s got to be something sketchy going on. Obviously they have downside risk on the collateral, and the nature of the collateral is completely opaque, but that’s true whether it’s a USD loan or Tether.
One reason you might do this is to let affiliates who are defending the peg collect the arbitrage profits. Everyone else has to pay the redemption fee, but the borrower here can pay .997 on Tether and put it back to the issuer for a $1 credit against their loan.
Also curious if this loan is what’s holding up audited financials. Does an auditor need to sign off on non-impairment if this loan to a greater extent than an attestation? Or maybe some Enron-era off-balance sheet financing rules apply somehow?
Honestly the idea of an entity claiming [some asset that isn’t the entity’s equity but also feels a little like the entity’s equity] as an asset and a component of capital is breaking my brain. I think I’d need to make a conspiracy theory-type chart to really understand it. Ain’t no one got time for that. Easier to just let Matt Levine tell me what to think.
everyone thinking he should shut up but they learned to just say out loud crimey crime crime crime yeah I did it and nothing happens
I’m sure this is old but I laugh at it every time the guy who had to do enron’s bankruptcy is now doing this for ftx and said this
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here."
I have witnessed something similar to this working in financial regulation here in Australia. Of course it was a company with revenue barely over $1m and run by an already convicted tax cheat rather than a multi ‘billion’ dollar exchange with stadium naming rights lol
Yeah funds seem very not saifu especially in the event of a bad recession. Exchanges being a hotbed of scammers aside I mean. People aren’t depositing and currencies they were earning revenue in are crashing. Ugly.
think it’s more obvious they don’t understand crypto at all and so many crimes were committed that it’s going to take time to figure out what the hell to charge them with
there’s so many different financial type crimes to charge vs say robbery or murder
Holy crap, now I’m really interested in buying. If it drops below £10k I genuinely think I may pull the trigger. There’s one more insane, ridiculous, speculative bull run left in this bitch right?
