Possible tether attack | Bitcointalksearch.org

The capitalization of tether has been declining dynamically for more than 2 months. This is the longest such decline in its history. So far, the number of tokens in circulation had already dumped from $ 83 billion to $ 66 billion. That is over 20%! All of these tokens left the crypto ecosystem and were converted into the dollar without any problems. Tether did not lock any withdrawal. That says a lot about it. Many of the regulated banks would have collapsed after people withdrawng 20% bank deposits. So far there have been no problems BUT ...
We know that tether is not backed by USD. In cash tether have only a few percent of its portfolio, the rest of the funds are hold mainly in corporate bonds, short-term debt, government bonds and other mainly debt-related securities:

Those are safe stuff. But not so much if you need to dump everything in one day because of attack. Especially now, when everything is down. TLT (ISHARES 20+ YEAR TREASURY BOND ETF) is down 36% from its ATH. Its just short term papaer loses that will sooner or later recover because its just bonds that will pay back invested money + interest but not if you are forced to sell on the lows.

Also stable coins has become an interesting idea for an asymmetric bet. Either I buy back USDT with no loss to pay only the margin cost, a few percent a year in case of failure, or I make a tone of money if stable coin collaps.

CTO @bitfinex + CTO @tether_to Paolo Ardoino:

"I have been open about the attempts from some hedge funds that were trying to cause further panic on the market after TERRA/LUNA collapse.
It really seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns etc.
Tools: USDt/USD perps (the perfect attack vector that offers an asymmetric bet), spot short selling, DeFi pools unbalancing, ...
Goal: create enough pressure, in the billions, causing ton of outflows to harm Tether liquidity and eventually buy back tokens at much lower price.
These hedge funds believed and helped all the FUD spread by the truthers in the past months / years:
- they believe/d that Tether was/is not 100% backed
- they believe/d that Tether has/had exposure to Evergrande
- they believe/d that Tether has/had 85% exposure to Chinese CP
- they believe/d that Tether has/had issued tokens from thin air
- they believed that lenders were borrowing from Tether without over-collateralization
- they believed in all the narratives that some competitors were spreading via coordinated troll networks
Despite all the public 3rd party attestations, our collaboration with regulators, our increased transparency efforts, our commitment to phase out CP exposure and move into US Treasuries, our settlements, ... they kept thinking and suggesting that we, Tether, are the bad guys.
But as we always said, Tether had/has in fact >= 100% of the backing, never failed a redemption and all USDt are redeemed at 1$.
In 48 hours Tether processed 7B in redemptions, averaging 10% of our total assets, something almost impossible even for banking institutions.
In more than one month Tether processed 16B in redemptions (~19% of our total reserves), again proving that our operations, portfolio, banking infrastructure and team are solid and battle tested.
Tether also reduced its commercial paper exposure from ~45B to ~8.4B and is set to phase it out in full in the coming months. All the expiring CP have been rolled into US Treasury bills, and we'll keep going till CP exposure will be 0.
Tether portfolio is stronger than ever.
And while the FUD was focusing on Tether, during the last 2 months of #crypto devastation, it was discovered that many lenders and hedge funds considered the holy heroes of our industry were actually taking risks that Tether never touched even with a ten foot pole.
Anyway, eventually these hedge funds, that borrowed and shorted billions of USDt will need to buy them back.
What will happen then?

Tether is the only stablecoin that is proven with fire under extreme pressure.
Now... can other stablecoins survive the same test? Can money losing operations go on forever burning money simply because they have deep pocketed shareholders?
Every non profitable company is always one round of financing away from bankruptcy.
And bankruptcy normally means MtGox eight years ( and counting ) waiting time for its creditors.....
"
https://twitter.com/paoloardoino/status/1541418818664292355?t=DWdoxRK5_oZ7SuoJv8-CBQ&s=19

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