The truth is that there are still an awful lot of questions that have yet to be answered. The other day alone. It was rumored that evergrande was about to be soft nationalized. Then, just a few hours later, new rumors emerged suggesting that evergrand was about to be left to fail. We do now think that chinese currency bonds are going to be repaid, but it seems like the ccp. Will allow us dollar debts to be ignored with no consequence and the big one. In my mind, the one that really came out of left field that sounded ridiculous at first is the connection between evergrand, the chinese property market and tether the cryptocurrency stablecoin. Now i know that at first a link between everground and crypto might not seem very plausible, but the evidence is starting to mount and a theory has started to develop basically its possible that tether and by proxy the entire crypto market has been providing backdoor finance into The property sector in china and thats what were going to discuss today, this supposed link between the two markets and what it could mean for crypto in the coming months, but first really quickly make sure to like this video and subscribe to the channel were putting out Loads of content, just like this constantly that you dont want to miss out on at this point. Most people know whats going on with tether and their potential fraud, but for anyone who doesnt know its really not too complicated, basically tether or usdt is a stablecoin or a cryptocurrency that tracks the value of the us dollar.

It exists because its easier to exchange one crypto for another than to trade, one crypto for a dollar as a result of this stable coins, provide much needed liquidity to the crypto markets and tether or usdt is the largest stable coin in the world. As of right now, there are 68 billion dollars of usdt in circulation, so it is by no means a small fish now in order to ensure that one usdt is always worth one. U.S dollar tether claimed that each coin was backed by a physical us dollar. In an account held by them, which would allow them to buy back every single coin if needed over the last year, however, it has emerged that this was a lie. The u.s department of justice started investigating tether and basically found out that it wasnt, backed by us dollars, as they had claimed nowadays, tether claim that each usdt is backed by us dollars or cash equivalents or from time to time receivables from loans made to third parties. Basically, they now decide what they back usdt with and they admit to sometimes using other assets. Most recently, theyve claimed that 50 of usdt is backed by commercial papers, which can be thought of as short term company bonds. In short, anyone who knows anything about crypto considers tether and usdt to be a huge scam, because they are literally printing their own money, based on the illusion of it being backed 100 by dollars when in reality, it isnt the way tether get around all the legal Problems that theyre lying would cause is by simply refusing to address anything that they cant outright, deny they make statements about anything positive about their business and just pretend that the problems dont exist.

Now, when we heard that 50 of tethers reserves were commercial papers, pretty much, everyone just assumed that it was some sort of loan between tether and the exchanges or bitfinex, but more recently, tether have come out and emphatically denied this. Now the question is: what are those commercial papers? Well. Tether have told us that the commercial papers are real, that they are all double a rated, but they have refused to state whether or not any or even all of it is chinese. Now, with the way tether operate and with the state of the corporate bond market in china, we pretty much know for sure that if the commercial papers werent chinese, they would have said so. We can also assume that if the commercial papers were from a reputable and stable bank like hsbc that they would be quick to say that as well, so its very likely that this debt, isnt from as reputable as source as tether, would like you to think. We also know that these commercial papers are not coming from the us or europe. The reasons for this are a little complicated, but basically, 30 billion dollars is a lot of money and no one has been buying commercial papers by that quantity over here. It also recently emerged that the chinese property developers have been using commercial papers and shell companies as backdoor loans to finance their operations. After the three red line, policy was introduced by the ccp, which basically stopped developers from being able to take out more debt.

In 2020 alone, over half a trillion dollars in commercial papers was issued by chinese property developers. Now, usually, commercial papers, arent a great source of interest and youre, probably going to be looking at a return close to 0.001 a year for someone with 30 billion dollars worth of assets like tether, thats, a measly 3 million a year and for tether that just wouldnt Be worth the risk, but if a company were in trouble say the government of the country they operated in wouldnt, let them release any corporate bonds and they needed more cash to finish their projects. They would probably be willing to pay far higher interest rates and theyd be willing to work with less than reputable companies, so which possible industry in the developing world could need 30 billion dollars and is also willing to work with a company like tether. Who is widely regarded as being guilty of fraud and has practically no positive reputation? Well, the idea that tether has been providing backdoor finance into the chinese property market is starting to sound a little more plausible. Now, when it comes to evidence, though, unfortunately it is all circumstantial, but to be perfectly honest, everything in the chinese economy is shrouded in mystery and kept behind closed doors. So there was never going to be a smoking gun just a fair bit of smoke. That being said, there are some very interesting events which only convinced me further that this has been going on.

Firstly, tether usually has to print more usdt as the crypto market rises, to facilitate the increase in trading volume, and earlier in the year, tether started to print more usdt, as the crypto market rose. As expected, what was not expected was that tether would continue to print usdt when the market stopped rising in mid april. In fact, 15 billion dollars worth more usdt was printed between mid april and june when the crypto market had fallen. Coincidentally, at the same time, evergrand and other chinese property developers were reporting, risks of defaults, making it seem like tether could have been providing them with the much needed liquidity required to pay their debts and the chinese government, let alone anyone else in the world. Wouldnt have even known about it. Reuters have also reported that evergrand affiliated shenzhen bank is under investigation after it illegally loaned up to 20 billion to evergrand via indirect channels. This could be those backdoor loans from subsidiaries or shell companies that we mentioned earlier. Its also worth noting that again, 20 billion dollars is a huge loan, even for the worlds largest banks like jp morgan, so a mid sized chinese bank having access to that kind of money is suspicious on its own. Then, in july fitch ratings, one of only three ratings agencies in the us recognized by the securities and exchange commission, came out and said that tether could disrupt credit markets due to its commercial paper issuance one month prior to that, the boston fed president announced that stable Coins and specifically tether could trigger a crisis in the financial markets.

More recently, yellen and powell have been speaking of the need to regulate stable coins and, in particular, tether due to fears about reserves and their actions. Now youll have to forgive me for going to jim cramer for information im, not a fan of his any more than any of you are, but he is a public figure at risk of being sued for slander. So if he makes a claim from inside sources, the chances are, they are reliable. Well, kramer stated that he has chinese sources who know that tethers reserves are made up of chinese commercial paper, which just goes on to strengthen my belief in this story. Unfortunately, thats, where were left wanting as to whether or not the theory is true, im leaning towards a 80 likelihood that it is the case, and i think that in the future, more pieces of evidence are going to emerge which will support this idea. Until then, we can only wait if youre new to the channel and you enjoyed this video then make sure to subscribe. If you want to help spread, the word then consider liking the video and youtube will do its part by pushing this video out to more people. Just like you, i really do appreciate all the support you give the channel, even if its just leaving a like down below theres a link to my favorite brokerage called etoro, where you can trade stocks and shares crypto commodities, foreign currencies and, more all for zero percent.

Commission and theres also a link down below in the description to block five, where you can get up to 250 dollars in free bitcoin and you can earn interest on whatever crypto you hold, whether its bitcoin ether or even stable coins. You can earn as much as 14 interest a year. Ive also started up a second channel called stoic finance 2 and ive just set up a crypto channel called stoic crypto so make sure to check both of those out as well. Finally, i am working on setting up my own website where i post videos and articles in the future and ive got a patreon in the works as well.