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An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

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Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#331

Post by b1daly »

rsynnott wrote: post #234
panarky wrote: post #176

Earlier quoted context omitted.

> Bear in mind that this is bitcoin It's still a market, so market logic should apply. > get rich quick with bitcoin I see the same shit with real estate. > sufficient people buying tethers at face value It's a market. Smart money can sell tethers. When there's information that all market participants know, the market price should reflect that information.

> Smart money can sell tethers I don’t think that many people are really holding onto tethers all that much; who has tethers to sell? Bitfinex itself?

Current issuance of tethers is ~$850m, according to the story told by Tether/Bitfinex, these should be held mostly by users. There’s no reason for exchanges to hold (unless they were buying for their own account).

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#332

Post by SwellJoe »

dnautics wrote: post #322
SwellJoe wrote: post #263

Earlier quoted context omitted.

If the fire that this smoke points to is really there, someday soon a lot of people are going to be left holding a bag of worthless tethers. That'd be a pretty bad day, wouldn't it? Kinda like being stuck in Mt. Gox during the end days.

sure, you just have to move quickly, which USDT enables you to do (versus USD, which to do transfers has ECH delays).

I don't think we're talking about the same problem here. If the day comes that Tethers are proven to be insolvent (because there isn't actually a USD in reserve for each Tether in circulation), moving quickly won't make a damn bit of difference. You can't quickly unload an asset when there is no taker. Somebody will be left holding a big fat stack of nothing.

I don't know what's going on with Tethers, honestly, it's not something I've followed very closely; so this may not be a problem at all (and if it's not, I would assume the people involved would be eager to get an audit done and results published so the money train can keep rolling). I'm just saying that unless you believe strongly that Tethers are backed 1:1 by USD, it would be irrational to hold Tethers, even for a short time.

I found it worrying that when the guy they interviewed tried to move his Tethers to another exchange, he couldn't find enough takers (and Bitfinex wouldn't let him exchange for dollars either). So, the argument that Tethers trading at roughly $1USD across exchanges is "proof" that Tethers are sound is shaky, at best. If you can't sell more than a handful of Tethers without crashing the market for Tethers, it's not actually the market setting the price. Something else is going on...something that would be illegal in a regulated market.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#333

Post by darawk »

mannykannot wrote: post #265
darawk wrote: post #210

Earlier quoted context omitted.

Sure. Not claiming it can't have secondary effects. But there's no argument been presented that establishes that it does.

Does not the claim, that Tether is not actually backed by dollars, also double as an argument that it would be difficult for it to behave as intended? - i.e. to the extent that the former may be correct, the latter is likely?

Claiming that it doesn't behave as intended is not equivalent to claiming that it pumps the price of Bitcoin.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#334

Post by alexcnwy »

csomar wrote: post #149
busterc wrote: post #117

I found this comment, by Richard Berger on SeekingAlpha, compelling: > STOP! and think about what this author has revealed. Even IF Tether is NOT running a fraud, the arbitrage positions that automatically exist between Bitcoin and any tether are real and do create incentive to create an arbitraged feedback loop whereby a pegged tether between Bitcoin - any_generic_tether - USD does exist and self feeds, driving up B…

That author is plain wrong and shows deep ignorance about bitcoin and the crypto-market. An unsustainable price of bitcoin will lead to the collapse of other exchanges since people cashing out on these exchanges requires enormous amount of real money. This will create a situation where the price of bitcoin in Bitfinex is higher than other exchanges by a big gap. This is not the case, actually the opposite is true: Bi…

Sound analysis! Quick question: what do you think is going to happen to BCH when coinbase unlocks users' tokens?

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#335

Post by alexcnwy »

arcticfox wrote: post #213
Cakez0r wrote: post #207

Earlier quoted context omitted.

You can short Tether on Kraken.

Shorting Tether is pretty strange, since if it works as designed it will essentially never increase in value, there's no risk on that end. And if it's a fraud that collapses, the short pays off big. Can somebody explain how that effect would get priced into the market? I can't think of another commodity like that.

Interesting point :)

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#336

Post by monochromatic »

busterc wrote: post #117

I found this comment, by Richard Berger on SeekingAlpha, compelling: > STOP! and think about what this author has revealed. Even IF Tether is NOT running a fraud, the arbitrage positions that automatically exist between Bitcoin and any tether are real and do create incentive to create an arbitraged feedback loop whereby a pegged tether between Bitcoin - any_generic_tether - USD does exist and self feeds, driving up B…

I don’t think I quite follow the reasoning here.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#337

Post by jaaames »

SwellJoe wrote: post #332
dnautics wrote: post #322

Earlier quoted context omitted.

sure, you just have to move quickly, which USDT enables you to do (versus USD, which to do transfers has ECH delays).

I don't think we're talking about the same problem here. If the day comes that Tethers are proven to be insolvent (because there isn't actually a USD in reserve for each Tether in circulation), moving quickly won't make a damn bit of difference. You can't quickly unload an asset when there is no taker. Somebody will be left holding a big fat stack of nothing. I don't know what's going on with Tethers, honestly, it's…

You'll be able to unload, but basically only into other crypto. Exchanges that deal with crypto will see crypto prices skyrocket, then shortly collapse, as people buy BTC or other coins then try to move to other exchanges to sell for real USD.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#338

Post by cstrat »

python-guy-vt wrote: post #297
mancerayder wrote: post #192

Earlier quoted context omitted.

You're fundamentally missing the main idea here. If you don't understand the fake Tether situation then in this case consider: Someone makes 1M of counterfeit US Dollars using their own printing machine and puts it in a suitcase, and they exchange that suitcase with you, and in return you give them 1M of bitcoin in their digital wallets. Now do you understand the thread?

Your example is a reflection on counterfeiter and the person being deceived. That has nothing to do with the value of bitcoin.

The value of BTC skyrockets back in 2014 with MtGox due to the WillyBot (https://willyreport.wordpress.com)...

The price of BTC on other exchanges (which had no direct trades from that bot) was still affected and it went up across the board on all exchanges.

So the value of BTC can be manipulated...

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#339

Post by SwellJoe »

jaaames wrote: post #337
SwellJoe wrote: post #332

Earlier quoted context omitted.

I don't think we're talking about the same problem here. If the day comes that Tethers are proven to be insolvent (because there isn't actually a USD in reserve for each Tether in circulation), moving quickly won't make a damn bit of difference. You can't quickly unload an asset when there is no taker. Somebody will be left holding a big fat stack of nothing. I don't know what's going on with Tethers, honestly, it's…

You'll be able to unload, but basically only into other crypto. Exchanges that deal with crypto will see crypto prices skyrocket, then shortly collapse, as people buy BTC or other coins then try to move to other exchanges to sell for real USD.

Why would anyone sell you crypto for Tethers if Tethers are found to have no USD backing? I mean...isn't that the entire point of Tethers?

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#340

Post by cusx »

nissimk wrote: post #204
tlb wrote: post #127

Tether shows the problem with non-shortable securities. If even 1% of traders believe it's valuable and 99% don't, the 1% can happily trade amongst themselves at full value. If there were a short market, the majority non-believers would drive the price down. I think you could find 1% of cryptocurrency traders that believe any theory you care to name.

Futures coming soon. Look what happened to subprime when it became possible to go short.

it wasn't possible to short subprime in the past?
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