... Tether made loans with tether. Instead of exchanging one tether for another currency worth $1, it lent tether to entities that promised to pay $1 for each tether. If borrowers can’t pay back their loans, tether wouldn’t be able to trade all tethers in circulation for dollars.
In May 2021, Tether had lent Celsius tether worth $1.8 billion, collateralized by $2.6 billion of Celsius’s crypto assets, the report said. Tether had to manage the risk of the loan as crypto prices fell. Eventually the loan was liquidated and Celsius suffered a loss. In addition to lending to Celsius, Tether received loans from the company that were twice its credit limit while owning 7.73% of its equity, the report said.
Yup. "Commercial paper" claimed by Tether as backing of their token was long known to just be IOUs from various buddies of the scam company that runs it (online poker cheat, child molester and proven fraudster if I remember right).
Who could have known. Other than folks who read the CFTC settlement [1] and the NYAG settlement [2].
And their org chart.
1. Tether and Bitfinex CEO J. L. van der Velve used to sell a product he claimed could transform the nicotine in cigarettes into vitamins - and suggested it allowed you to smoke 300 per day.
2. Their chief council, Stuart Hoegner, once held all of the Tether backing reserves in his personal Bank of Montreal account co-mingled with his lunch money, one assumes. He was also director of compliance at Excapsa, parent company of Ultimate Bet, where they had a backdoor interface allowing their friends to see their opponents cards. [3]
3. Giancarlo Devasini, their CFO, is a former plastic surgeon (for about a week) who had to pay a $65,000 fine for pirating Microsoft software in 1996 and was then sued by Toshiba for infringing some of their DVD patents. [4]
[edit] Tether was co-founded by former Mighty Ducks cast member Brock Pierce, the guy who fled to Spain with Mark Collins-Rector while he was an indicted fugitive on child sex trafficking charges. They were then both arrested in a villa full of child pornography. [3]
[edit2] Also note that none of the leadership team wanted to admit they were involved in Tether until it came out in the paradise papers because they used Appleby. Because of course they used Appleby. [5]
[edit3] Almost forgot, the guy who runs their banking partner, Deltec (and Moonstone!), was the creator of Inspector Gadget - Jean Chalopin. [6]
> Almost forgot, the guy who runs their banking partner, Deltec
Ahh, Deltec. At the start of 2021, according to their website, it was a 55 year old bank. By the end, it was a 70 year old bank!
Their "Deputy CEO" gave a hilariously inept interview from his gaming rig. Their 33 year old Deputy CEO, who by his LinkedIn claimed to have graduated HEC Lausanne in Switzerland with a Master of Science at the age 15... celebrating his graduation by immediately being named Professor of Finance at a university in Lebanon. While dividing his spare time between running hedge funds in Switzerland and uhh... Jacksonville, FL.
The name of his fund? Indepedance [sic] Weath [sic] Management. Yeah...
In this hilariously inept interview, he claimed that people's claims about Deltec's money movements being several times larger than all the banking in their country was due to them misunderstanding the country's two banking licenses, the names of which he "couldn't remember right now" (the Deputy CEO of a bank who can't remember the name of the banking licenses), and he "wasn't sure which one they had, but they might have both".
Once the ridicule and all this started piling on, within 24 hours, he was removed from the bank's website leadership page. When people pointed out how suspicious that looked, he was -re-added-.
The bank then deleted the company's entire website and replaced it with a minimally edited WordPress site, where most of the links and buttons were non-functional and remained so for months thereafter.
I mean fuck it, if the cryptobros want to look at all that and say "seems legit to me", alright, let em.
> Tether and Bitfinex CEO J. L. van der Velve used to sell a product he claimed could transform the nicotine in cigarettes into vitamins - and suggested it allowed you to smoke 300 per day.
>They were arrested by Interpol in 2002 in Marbella, Spain. Pierce was released without being charged.[78] Rector eventually pleaded guilty and left the United States.
The three plaintiffs voluntarily dismissed all charges against Pierce without receiving any compensation.[81] Court records show that Pierce paid $21,600 to one of the plaintiff's attorneys because said attorney refused to file the order of dismissal requested by his client until the attorney's expenses were reimbursed.[82]
Left out some pretty major details there. Looks like he’s a free man now and never convicted of any of this?
Maybe I was unclear, but I did not mean to imply that the Mighty Duck in question was involved or guilty of anything other than keeping very questionable company. The majority of that sentence was about Collins-Rector.
Bravo, this is all well known stuff but great job citing sources, the internet has such a short memory. Brock did a stint as the Bitcoin foundation president IIRC in year two of that defunct org
In May 2021, Tether had lent Celsius tether worth $1.8 billion, collateralized by $2.6 billion of Celsius’s crypto assets, the report said. Tether had to manage the risk of the loan as crypto prices fell. Eventually the loan was liquidated and Celsius suffered a loss. In addition to lending to Celsius, Tether received loans from the company that were twice its credit limit while owning 7.73% of its equity, the report said.
Uh oh. Where have we heard that story before?