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patio11's profile
Patrick McKenzie
Patrick McKenzie
Patrick McKenzie
@patio11

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Patrick McKenzie

@patio11

I work for the Internet, at @stripe, mostly on accelerating startups. Opinions here are my own.

東京都 Tokyo
kalzumeus.com
Joined February 2009

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    1. Patrick McKenzie‏ @patio11 14 Oct 2018
      • Report Tweet
      • Report NetzDG Violation

      During that period, the tokens which participants treat as fully backed are fully backed*. It’s the classic liquidity risk problem that banks are familiar with: the balance sheet is good for the money but we can’t lay hands on more than X0% of it within a short period.

      1 reply 1 retweet 36 likes
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    2. Patrick McKenzie‏ @patio11 14 Oct 2018
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      (Assuming arguendo that Tether is not a straight up fraud and that its balance sheet is USD equivalents. I have maybe 60% confidence that both of those are true.)

      4 replies 2 retweets 37 likes
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    3. Patrick McKenzie‏ @patio11 14 Oct 2018
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      Anyhow, what the community under appreciates at the moment is that illiquidity is not the only consequence of losing a banking relationship. Banks do talk to each other (quite a bit) and it is difficult to keep billions of dollars under the radar indefinitely.

      1 reply 1 retweet 26 likes
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    4. Patrick McKenzie‏ @patio11 14 Oct 2018
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      Eventually, a bank or, more likely, a regulator is going to say “Actually this doesn’t look like a legit deposit that we’re uncomfortable with supporting due to AML/regulatory reasons. It looks an awful lot like proceeds of crime intermingled with grey money.”

      1 reply 0 retweets 27 likes
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    5. Patrick McKenzie‏ @patio11 14 Oct 2018
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      And the terrifying outcome, from the cryptocurrency economy perspective, is the regulator doing what the USFH did with respect to Mutum Sigillum (Mt Gox’s US front): “OK, we’re going to give you two choices.”

      1 reply 0 retweets 20 likes
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    6. Patrick McKenzie‏ @patio11 14 Oct 2018
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      Door #1: Prove that it’s legal money. This should be trivial for you because KYC is the law and your compliance should be automatic. So have your lawyer suit up. BTW we expect this to take 3+ years. Door #2: We propose a 50% haircut.

      2 replies 3 retweets 33 likes
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    7. Patrick McKenzie‏ @patio11 14 Oct 2018
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      Gox’s bankruptcy administrator took the haircut. That was an eminently sensible call. I think there is a material risk that Tether absorbs a billion dollar hair cut.

      2 replies 5 retweets 31 likes
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    8. Robin Kunde‏ @robinkunde 14 Oct 2018
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      Replying to @patio11

      Why happened to the money that the bank kept?

      1 reply 0 retweets 0 likes
    9. Patrick McKenzie‏ @patio11 14 Oct 2018
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      Replying to @robinkunde

      The US Treasury appreciates their largesse.

      2 replies 0 retweets 0 likes
    10. Robin Kunde‏ @robinkunde 14 Oct 2018
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      Replying to @patio11

      Oh so it’s like a no-fault admitted settlement?

      1 reply 0 retweets 0 likes
      Patrick McKenzie‏ @patio11 14 Oct 2018
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      Replying to @robinkunde

      Essentially; lawyers might have slightly more precise take.

      1:22 PM - 14 Oct 2018
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