So, they need to find gullible 3rd parties that accept to give them hard cash (USD) in exchange for their in house created clown money (BUSD), and then use this hard cash to go to the market and buy USDC. How is this different from FTX padding their balance sheet with billions of their own made up clown money? Crypto is ponzies all the way down.
In the hypothetical situation, both the BUSD and USDC are fully backed by USD. However, from an external observer's perspective, it is indistinguishable from the case where $1-2B USD is stuffed in a mattress in a country without extradition treaties.
(Which is why regulated financial institutions are externally audited and stuff.)
In general I agree crypto feels like ponzi. But in this specific case, they seem to be fully solvent relative to US dollars? If clown money was floating, it would definitely be iffy. But it's tethered to the dollar. It's almost an IOU in that sense relative to the dollar. They don't have enough specific "currency" (usdc), but as long as I can withdraw to USD, it is not a scam.
