Stephen Diehl on Twitter: "Crypto markets are not significantly different than Ponzi schemes. Short-term dollar inflows are used to pay-out short-term outflows and the whole thing stays afloat so long as there's not too many withdrawals. When that day comes, it implodes. (25/)"

Country	Code	For customers of
United States	40404	(any)
Canada	21212	(any)
United Kingdom	86444	Vodafone, Orange, 3, O2
Brazil	40404	Nextel, TIM
Haiti	40404	Digicel, Voila
Ireland	51210	Vodafone, O2
India	53000	Bharti Airtel, Videocon, Reliance
Indonesia	89887	AXIS, 3, Telkomsel, Indosat, XL Axiata
Italy	4880804	Wind
3424486444	Vodafone
» See SMS short codes for other countries

"Tether made false statements about the backing of the 'tether' stablecoin, and about the movement of hundreds of millions of dollars between the two companies to cover up the truth about massive losses." (14/)https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal …

1 reply 56 retweets 382 likes

Show this thread

Stephen Diehl‏ @smdiehl May 15

Last Wednesday, we finally got the court-mandated disclosures of what's actually in the reserves. And not surprisingly when the vault is opened, the money isn't actually there. (15/)

1 reply 23 retweets 389 likes

Show this thread

Stephen Diehl‏ @smdiehl May 15

What we see is a lot of "commercial paper". Which is a form of short-term debt, a company-to-company unsecured loan. It's put on the books for the face value of the loan, but in reality that value depends on the credit risk of the other counterparty to the loan. (16/)

1 reply 30 retweets 359 likes

Show this thread

Stephen Diehl‏ @smdiehl May 15

If the counterparty isn't good for the value of the paper then it's worthless, just an accounting trick. And we don't know who the other parties are. Every Tether is backed by a giant pile of IOUs to strangers. And that's worth exactly what you think it is. (17/)

1 reply 51 retweets 466 likes

Show this thread

Stephen Diehl‏ @smdiehl May 15

A mere 2.9% of Tether treasury is actually in real dollars held by a bank. So for every 1 USDT there is $0.03 real dollars. (18/)https://www.ft.com/content/529eb4e6-796a-4e81-8064-5967bbe3b4d9 …

1 reply 167 retweets 702 likes

Show this thread

Stephen Diehl‏ @smdiehl May 15

Now this is a huge problem because by volume Tether is BY FAR the most traded cryptocurrency in the entire world. Surprising every other token by a significant margin. (19/)

1 reply 25 retweets 355 likes

Show this thread

Stephen Diehl‏ @smdiehl May 15

Also the most traded cryptocurrency FOR bitcoin. 80% of bitcoin volume is where one party is trading Tether for bitcoin. If price of bitcoin is quoted in dollars, and sold in tether, that price isn't reflecting the the vast risk/value differential between the two. (20/)

1 reply 42 retweets 413 likes

Show this thread

Stephen Diehl‏ @smdiehl May 15

It's widely suspected that many exchanges are receiving large deliveries of unbacked tethers, using them to wash trade with themselves for bitcoin to drive up demand, and thus the synthetically inflate the price. This is illegal in other markets. (21/) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066 ….

1 reply 109 retweets 680 likes

Show this thread

Stephen Diehl‏ @smdiehl May 15

A significant portion of bitcoin price formation is therefore quoted in dollars, but paid for in USDT dollars that are only actually backed by three cents. Which would make most of the price formation of bitcoin completely synthetic. (23/)

2 replies 162 retweets 835 likes

Show this thread

Stephen Diehl‏ @smdiehl May 15

Which leads to the obvious inconvenient truth that most people who look at the crypto space come to understand. Most exchanges are *vastly* undercapitalised and will never be able to pay out even a tiny fraction of their customers in real dollars. (24/)

1 reply 88 retweets 694 likes

Show this thread

Stephen Diehl‏ @smdiehl May 15

Crypto markets are not significantly different than Ponzi schemes. Short-term dollar inflows are used to pay-out short-term outflows and the whole thing stays afloat so long as there's not too many withdrawals. When that day comes, it implodes. (25/)

2:14 PM - 15 May 2021