Is Powell going to drop the bomb tomorrow
In the last 24 hours, $56 Billion in USDT volume was traded. That is more than Bitcoin, ETH, and the next 3 largest coins combined. It is the glue holding the world of crypto exchanges together.
I'm sure most of you have seen the movie "The Big Short". For the simplified cliff notes refresher - Leading up to the 2008 financial crisis, huge batches of dog-shit mortgages at high risk of default were being bundled up into various securities and bonds, which were then bought and sold by financial institutions around the world. When the defaults started rolling in....bla bla bla....global financial system collapses. Any financial institution holding the dog shit went down (either ending in bankruptcy or government bailout). Cool, remember that.
So Tether FUD has been a meme since Tether was a thing...for good reason too. Since inception, the stablecoin has been caught up in a seemingly endless stream of shadiness and legal issues. A bunch of the OG Tether execs/funders charged with bank fraud, ties to other fraudulent crypto criminal activities, shady ties to Bitfinex, The NYAG suing Tether/Bitfinex and holding them liable for lying about reserves and hiding, the current DOJ investigation...etc etc
Around 2019, Tether low key changed the claim on its website from "We are backed 1-to-1 with cash", to "we are backed by cash and cash equivalents". Of course this was swept under the table quickly in wild wild west cryptoverse.
Since January 2020, Tether's market cap (and distributions) has exploded from just $4+ Billion to now over $62+ Billion. Supposedly all safely backed by some form of financial reserve.
After the NYAG situation, earlier this year Tether was forced to finally publicly disclose their reserve composition. Although they didn't reveal much, the Microsoft Word-quality pie chart they posted did confirm that in fact just a fraction of their holdings is actual cash...the vast majority being held in "Commercial Paper."
What's commercial paper? It's short-term (unsecured) debt issued by companies. They're typically used to raise money for short term funding needs like buying inventory, payroll, or pre-paying construction vendors….kind of like an "IOU" of the corporate world. It usually gets a rating, and is usually pretty safe...so long as the companies issuing it remain solvent.
As of the latest Attestation by their sketch accountant shows Tether holds just $6.2 Billion in cash, $30.8 Billion in commercial paper, the rest T-Bills and RRPs. [https
... keep reading on reddit ➡I am a graduating Masters student in MechE with quite a lot of coursework in CS as well. I am personally most interested in control systems that are used in the industry. In terms of YouTube videos I have seen a couple on flight control systems used in the Apollo missions and Saturn V, and I got too excited to learn more about them. I am already reading the first few faa and nasa articles that you get on Google on the topic. Do you guys know of any good books in the field? Thank you in advance.
Again, credit goes to u/kengriffinsbedpost i was asked to post this for him.
Below is a theory DD I wanted to get a discussion started started on.
A lot has been in the news lately regarding Bank of America and BOFA Securities. I have been monitoring commercial paper issuances for a while and now believe this should be an item of interest as investors begin jockeying for the most money in bankruptcy.
As I said above I monitor new commercial paper issuances almost daily. On Monday BOFA Securities, a name I had not seen in a while popped up with a large amount (1.6 billion) and higher yield. That tells me 2 things, they want unsecured funding and they want it fast (yield they are offering was more than double other "blue chips")
Something else strange happened with BOFA Securities on Monday. They redeemed over 2 billion worth of senior notes. https://investor.bankofamerica.com/press-releases/detail/1881/bank-of-america-announces-redemptions-of-2-503-senior
This is where it is still theory and more wrinkle brained apes can help disprove or fill it out. Commercial paper can be used for operating expenses, payroll, accounts payable and other short term liabilities. A short term liability is one that is to be paid within the year. Guess what date are on all of those redeemed notes.
OCTOBER of 2022 or still classified as a short term liability available to be paid with commercial paper proceeds.
Ok but why does this matter? This matters because if they are paying off senior notes that have a high priority in bankruptcy proceedings with commercial paper that is unsecured it could be a sign they are already planning how BOFA investors can get higher in the bankruptcy hierarchy.
I think we are close to the end, I will continue to keep an eye on CP and this is heartbreaking because the institutions buying CP are likely pensions and municipalities that are going to be left holding the bag.
Edit 1: Commercial Paper had a huge impact during the 2008 financial crisis. Once institutions (pensions, governments) lose faith in their liquidity or if they lose the necessary ratings to invest the real liquidity problems will start for banks. Below is a link to a paper on CP in 2008
https://www.aeaweb.org/articles?id=10.1257/jep.24.1.29
just wondering if this is something Tether can draw out indefinitely with shenanigans
Just heard this gem from Lysol the other day and had to wait until it came on again to make sure I heard it right. https://www.ispot.tv/ad/qfQX/lysol-laundry-sanitizer-clean-is-good-sanitized-is-better I did. WTF is wrong with these people, anyhow?
e.g. Loan proceeds to company are solely used to buy Bitcoin.
Example:
- User buys Tether with fiat.
- Tether lends that fiat from their treasury to company.
- Company buys Bitcoin, with fiat, with the proceeds of the loan. Driving up the price of Bitcoin.
- Repeat steps 1 through 3.
As long as people are buying Tethers the price of Bitcoin will keep rising.
He knows it’s his future in-law’s fault that his brother’s SL55 was stolen. But how…?🧐🤔
Hi everyone, a follow up to my post yesterday explaining the main issues at play and how banks continue to have cheap easy access to funds.
What is Commercial Paper?
Commercial Paper is a short term (generally less than 270 days) debt/money market instrument issued by a business to fund operating expenses, payroll obligations as well as funding other current assets. Companies use this as a low cost alternative to bank loans or other funding that would dilute equity, these can come in unsecured or asset backed but I will mostly focus on the unsecured. The other main positive for companies issuing commercial paper is that they will not need to report this to the SEC. In the beginning the commercial paper market was mostly used by non-financial companies but since have seen a stark shift to financially dominate. Commercial Paper was also designed not to be targeted towards the public, the minimum issuance on Commercial Paper is generally 100k and unless you are a Qualified Institutional Buyer (QIB) you will be hard pressed to find ways to invest. When used correctly it is a great tool especially for non-financial businesses using an example from our beloved company.
Gamestop sales are always highest in the holiday season, they know they need more inventory but don’t want to burn their cash on hand to buy it before money from sales come in. They issue 100 million in gamestop commercial paper at a discount so those purchasing (loaning them money) will make some interest generally a couple of basis points above the similarly dated treasury bill. Everyone is happy, investors have a safe place to park funds and earn some interest and gamestop has some breathing room in their cashflow until $ from sales come in.
I haven’t heard about this how popular could it be?
Well, very. Not diving too deep into money market mutual funds(MMMF) but since the introduction of these commercial paper has skyrocketed and in 2009 there was more commercial paper issued than Treasury Bills. Let that sink in for a minute, unsecured commercial paper has more $ than treasury bills issued and backed by the US government.
Ok, so I know what it is but what companies are using this and who is buying?
This market is now dominated almost solely by financial institutions, really you could name any large international bank and they probably have a commercial paper program that they can turn to when they need funds. As for who is buying this, well that’s the scary part. It’s y
... keep reading on reddit ➡https://www.scmp.com/economy/china-economy/article/3098981/cryptocurrencies-help-chinese-evade-capital-and-currency (Non paywall: https://archive.is/7nAQB)
This is an old article worth digging back up with the recent events unfolding.
Tl;DR - China only allows citizens to move up to $50k outside of the country each year. Wealthy Chinese citizens want to move more so they can invest in foreign assets. So what do they do? Set up shell corporations to purchase foreign currency....which they then use to purchase overseas real estate and physical assets to park their money. Their new currency of choice...Tether.
This whole equation is so glaringly obvious. Wealthy Chinese investors want to offshore their cash. They can't go through a bank because its illegal. They can't go through a crypto exchange because it's illegal. So they either set up their own shell corporations, or they go through existing corporations.
Investors put their Chinese Yuan into a company (through any number of investment vehicles)... the company gives "commercial paper" to Tether in exchange for newly minted Tethers. Tethers get transferred to the investor's wallet on exchanges, where it can then be freely moved around the world and withdrawn for cash in the desired country they want to park it. Likely, the Tether execs are given a piece of the deposits.
Meanwhile, that Yuan they deposited is then reinvested back into the Chinese market (Evergrande).
This isn't "new" news. Governments already knew Tether was being used for money laundering via "OTC" exchanges. But going through a Chinese exchange is for the chumps. The big boys worked directly with the source. Those governments failed to realize how connected Tether as an entity is to the entire system.
On paper, the "commercial paper" could look legitimately backed by any number of corporations.
That's the scheme. China sink tens of billions of dollars into the US & Canadian real estate markets every year. A huge percentage pay for those transactions in cash. Tether is their vehicle to get the cash there.
Furthermore, it’s used to inject liquidity back into the Chinese economy via the invested Yuan.
The big catch? There's a very high chance that commercial paper couldn't be redeemed for the underlying Yuan in a pinch. Either China seizes the assets, or they simp
... keep reading on reddit ➡
Below is a theory DD I wanted to get a discussion started started on.
A lot has been in the news lately regarding Bank of America and BOFA Securities. I have been monitoring commercial paper issuances for a while and now believe this should be an item of interest as investors begin jockeying for the most money in bankruptcy.
As I said above I monitor new commercial paper issuances almost daily. On Monday BOFA Securities, a name I had not seen in a while popped up with a large amount (1.6 billion) and higher yield. That tells me 2 things, they want unsecured funding and they want it fast (yield they are offering was more than double other "blue chips")
Something else strange happened with BOFA Securities on Monday. They redeemed over 2 billion worth of senior notes. https://investor.bankofamerica.com/press-releases/detail/1881/bank-of-america-announces-redemptions-of-2-503-senior
This is where it is still theory and more wrinkle brained apes can help disprove or fill it out. Commercial paper can be used for operating expenses, payroll, accounts payable and other short term liabilities. A short term liability is one that is to be paid within the year. Guess what date are on all of those redeemed notes.
OCTOBER of 2022 or still classified as a short term liability available to be paid with commercial paper proceeds. And the big joke of all this, Commercial Paper doesn't need reported to SEC if maturing under 270 days.
Ok but why does this matter? This matters because if they are paying off senior notes that have a high priority in bankruptcy proceedings with commercial paper that is unsecured it could be a sign they are already planning how BOFA investors can get higher in the bankruptcy hierarchy.
I think we are close to the end, I will continue to keep an eye on CP and this is heartbreaking because the institutions buying CP are likely pensions and municipalities that are going to be left holding the bag.
Edit 1: Commercial Paper had a huge impact during the 2008 financial crisis. Once institutions (pensions, governments) lose faith in their liquidity or if they lose the necessary ratings to invest the real liquidity problems will start for banks. Below is a link to a paper on CP in 2008
https://www.aeaweb.org/articles?id=10.1257/jep.24.1.29
Edit: link to more detailed information
https://www.reddit.com/r/GMEJungle/comments/q2mtaj/commercial_paper_and_the_banks_main_unsecured/?utm_medium=android_app&utm_source=share
