Crypto hustlers, meet kissing-cousin Bernie Madoff
Before he was exposed as the world’s greatest Ponzi schemer, Bernie Madoff brooked no questions about his business. He wouldn’t discuss his options-trading strategy or identify counterparties. Nor would he identify the party that kept track of client money by providing custodial services.
I’m not saying everyone who refuses to answer such questions is operating a Ponzi scheme. I am saying Ponzi-scheme operators refuse to answer them.
Last week those questions were asked of Tether, a cryptocurrency that calls itself a stablecoin because its value is supposed to be pegged to the dollar. After the peg broke last week, Tether said it wouldn’t disclose which organization is providing custody of its $40 billion worth of Treasury bond holdings. Nor would it say where the assets are stored or which firms handle trading on its behalf.
“This is information that is privileged … we don’t want to give our secret sauce,” Tether’s chief technology officer told the Financial Times. “Our counterparties are not public. We are not a public company.”
If Tether’s goal was to undermine faith in crypto, I can’t imagine doing a better job.
Faith is especially important with crypto because there’s really nothing else underpinning it. Crypto aficionados will argue faith is all that’s behind the dollar, but there is at least one crucial difference: If you pay taxes using crypto, the IRS will come after you for…
