THE NEXT SHOE TO DROP: UPDATE
A few weeks ago, we pointed out that the stablecoin Tether (USDT) exhibited some worrying signs, including a delay on its pledge to fully provide accounting for and revealing its mechanisms and backing for maintaining its “1 to 1” peg to the U.S. dollar. (See “THE NEXT SHOE?,” 22 Nov 2022.)
This past week, The Wall Street Journal published a piece questioning Tether. Titled “Rising Tether Loans Add Risk to Stablecoin, Crypto World,” the article detailed how the company has been lending its stablecoin to users rather than selling them for up-front hard currency. WSJ said the change increases the possibility that the business won’t have adequate liquid assets to cover redemptions in an emergency.
The article also pointed out that being located in the British Virgin Islands, Tether isn’t required to publish audited financial statements or a comprehensive balance sheet.
Tether is currently one of two major crypto stablecoins, which investors often use to park assets, while waiting to get back into other crypto investments, or when securing profits, without fully cashing out to fiat.
Many exchanges offer modest interest yields on stablecoin holdings, and their peg to the value of the dollar makes them an attractive option for investors seeking to preserve assets in times of market volatility.
Needless to say, any problems with Tether would likely make FTX look like a ripple in comparison.
COINTELEGRAPH HAMMERS HOME SBF GET OUT OF JAIL POLITICAL INSURANCE
At least some crypto outlets are leading the charge in expressing outrage over the lenient treatment and coverage so far of Sam Bankman Fried’s corruption.
Over the weekend, Cointelegraph highlighted a tweet exchange between Will Manidis, CEO of the ScienceIO healthcare data platform, and Twitter head Elon Musk.
The exchange occurred after Manidis tweeted on 1 December:
“SBF donating $40m to not go to jail for stealing $10b+ is one of the highest ROI [Return On Investment] trades of all time”
Musk chimed in with a startling claim that SBF may have contributed far more than 40 million to political causes:
“That’s just the publicly disclosed number. His actual support of Dem elections is probably over $1B. The money went somewhere, so where did it go?”
Musk didn’t offer any backing for his claim. But it’s true that SBF’s political spending on behalf of Democrats extended beyond direct contributions to campaigns and PACs recorded by outlets like opensecrets.
For example, SBF spent generously donating to left of center media outlets.
Meanwhile, SBF himself claimed in a late November interview he spent almost as much funding Republicans as Democrats during the 2022 election cycle.
“All my Republican donations were dark,” he told YouTuber Tiffany Fong, adding “reporters freak the fuck out if you donate to a Republican.”
But despite his claims, he offered no evidence, and there is none at political donation tracking site opensecrets, or anywhere else, showing GOP contributions to back his claim.
Lack of evidence didn’t stop mainstream news outlets from jumping on SBF’s claim, to blunt damage owing to massive substantiated SBF spending on Democrats.
Meanwhile, The Daily Caller reported that an SBF advisor shot down SBF’s claim of funding GOP via “dark money” as “flatly untrue.”
Cointelegraph noted that scrutiny of FTX is far from over. Rep. Maxine Waters (D-CA), Chair of the House Financial Services Committee, who has had previous friendly interactions with SBF, issued a politely worded request for him to appear at a hearing on 13 December:
“@SBF_FTX, we appreciate that you’ve been candid in your discussions about what happened at #FTX. Your willingness to talk to the public will help the company’s customers, investors, and others. To that end, we would welcome your participation in our hearing on the 13th.”