> There is now the risk that iFinex (who control both Bitfinex and Tether) could be technically insolvent
There seems to be a sizable amount of confusion about the difference between insolvency and illiquidity in the tether-watching community.
The fact that they loaned out funds to Bitfinex means that their balance sheet is fine (they are solvent), but if everyone redeemed their tether tomorrow, they would have to delay the payout, which is a liquidity issue.
In short: Liquidity issues are solved by capital injections (loans or equity sales, much like the BFX LEO), but solvency issues are not.
That seems to assume that Bitfinex can repay them, which is in no way clear.
If Bitfinex can't cover the loss, they're insolvent. If everyone redeemed their Tether, it's not a delay it's "you're not getting all of your money back"
As Bitfinex's finances are far from transparent, it's not clear if they're insolvent or not...
I don't think there is any confusion on definitions of insolvency, there just seems to be disagreement on whether there is any risk iFinex can get their frozen/missing funds back at all, not how long it will take to collect them.
There seems to be a sizable amount of confusion about the difference between insolvency and illiquidity in the tether-watching community.
The fact that they loaned out funds to Bitfinex means that their balance sheet is fine (they are solvent), but if everyone redeemed their tether tomorrow, they would have to delay the payout, which is a liquidity issue.
In short: Liquidity issues are solved by capital injections (loans or equity sales, much like the BFX LEO), but solvency issues are not.