Luna/USTerra, – Back dollars with Bitcoin, they went bankrupt as soon as there was a bank run.
Tether, print USDT tokens, sell for dollars, use that money to buy Bitcoin. “USD” tokens are now backed by Bitcoin. Rinse and repeat.
Microstrategy, buy Bitcoin, issue convertible note “tokens” and sell for USD, use that money to buy more Bitcoin. USD tokens/notes are now backed by Bitcoins. Rinse and repeat.
The real question is how the tether scheme appears to be perfectly legal, since microstrategy appear to be doing it in plain sight on a publicly traded company. They have created a Bitcoin backed USD “stablecoin” that pays yields to holders.
The SEC is acting as if they would do something about LUNA/USTerra if they could go back in time, but Microstrategy is extremely similar, and the SEC doesnt care one bit.
What Happens at the End of the Term of a Startup Convertible Note?
A Look Inside MicroStrategy’s $2.4 Billion Loan Used To Buy Bitcoin
Why sell usdt for dollars when it’s much easier to purchase crypto with usdt.
Microstrat is essentially doing a levered ponzi and it’s prob not legal.
Printing usdt isn’t necessarily legal. it’s frontier tech that hasn’t been regulated and functions outside USG jurisdiction so it’s hard to enforce anything at all.
All this hinges on USG having the will to enforce. Bitcoin runs against everything the USG wants so they have no incentive to clean up the space. Currently it’s controlled so change will be slow. It’s likely the whole scheme is controlled opposition anyway.
Cannot possibly go tits up.