So I read this explanation from Matt Levine a few weeks ago and it sounded convincing.
But now I’m wondering, that was because the collateral you post against your short was assumed to be posted with the entity you borrowed the Tether from.
But can’t people make deals where they post collateral with a proper bank, and then if the counterparty goes bankrupt you just pay the estate back worthless Tether and keep the dollars posted with the reputable bank?
I’m not involved in these types of dealings so perhaps this is a silly question but I would have thought this was how things were done.
You’re gonna have a real hard time finding someone to take the opposite side of that bet using fiat money in any size. Crypto insiders generally know Tether is a fraud and further haven’t got the fiat liquidity to make such a bet
But now I’m wondering, that was because the collateral you post against your short was assumed to be posted with the entity you borrowed the Tether from.
But can’t people make deals where they post collateral with a proper bank, and then if the counterparty goes bankrupt you just pay the estate back worthless Tether and keep the dollars posted with the reputable bank?
I’m not involved in these types of dealings so perhaps this is a silly question but I would have thought this was how things were done.