#Alameda wipe out looks to be exposing #tether to a run on the bank (coin) that it wont likely survive. This event will implode the crypto ecosystem. Contagion will take down all exchanges.
It’s my opinion (for over a year) that this will happen as I believe #tethers ‘commercial paper’ is actually largely swaps that it does with a few major exchanges. #ftx was likely a huge player
What I think happened was exchanged took cash money from new accounts and gave them newly created #tethers #usdt
They got the usdt via swaps with tether.
Exchange gives tether ‘I owe you $1 bln’ note (commercial paper)
Tether gives exchange $1 bln tether
They got the usdt via swaps with tether.
Exchange gives tether ‘I owe you $1 bln’ note (commercial paper)
Tether gives exchange $1 bln tether
The exchanges would likely agree to pay tether some nominal interest rate on the $1bln note. Perhaps a LIBOR (at most a couple percent)
The exchanges then basically took their clients money and treated it as their own once they gave the client the usdt they obtained with swaps
The exchanges then basically took their clients money and treated it as their own once they gave the client the usdt they obtained with swaps
The exchanges also play with the usdt they borrow attempting to trade for profit. Some speculate they even trade against their clients at times for profit.
But what has likely happened…
But what has likely happened…
Their clearly been huge trading / investing losses had by all in crytpo world. It also doesn’t matter where any safe investments of cash might have been made. It’s likely been lost unless it was just in short term treasuries and these crypto execs don’t seem super conservative
I believe that as all these exchanges were competing for growth the used significant portions of the cash they took from clients (via the usdt swap arrangement) and spent large portions of it on. Computers, staff, lawyers, accountants, advertising, rent, property
Bonuses for themselves, sponsoring sports teams, naming stadiums, political donations, bribes, Lambo’s, bottles and models. You name it. The combination of bad investments and general expenses finally reached a typing point.
More outflows required than they have inflows to offset and one by one these ponzi exchanges on a ponzi ecosystem are blowing up. Tether is so huge when it goes it will completely destroy the system. All faith will be destroyed and few exchanges if any will survive.
Trading volumes and on-boarding for new accounts will collapse. No institutional investment. No money for ad spending. Forced cost cutting. Weakness. Crypto winter… Bitcoin to $1000 or less. All other shit coins to zero
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