U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether • Hacker News Board

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#31

Post by ebbv » Tue, Jan 30, 2018, 6:33 PM UTC

drcode wrote: post #24

Summary for newbs: Bitfinex is a crypto exchange kinda based in Hong Kong and kind of based in Taiwan (this seems to change depending on convenience.) Taiwan recently started becoming more rigorous about monitoring international USD wires, and lots of Bitfinex users had their money stranded in Taiwan. Bitfinex stopped supporting US customers because of these difficulties (AFAIK most customers did eventually get their…

You're skipping a key bit here; billions of Tethers magically appeared on the market in the last month and were used to buy BTC in suspiciously regular fashion, in 100 million USDT amounts, and with no clear evidence that it was actually purchased by anyone using real USD.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#32

Post by sna1l » Tue, Jan 30, 2018, 6:33 PM UTC

fpgaminer wrote: post #29

So, how does this work legally? Bitfinex isn't a U.S. based company and doesn't work with U.S. citizens. The article says where it's based is unknown. Does the CFTC have the authority to subpoena them? Is it because they're claiming Tether is USD pegged, so they gain authority because of their use of the dollar? Honestly just a curious question. (I'm not looking for snarky answers to the effect of "world police".)

Seems like the local government can still make it difficult for them to enforce the subpoena, but I imagine Hong Kong will be pretty amenable. [1]

[1] https://webcache.googleusercontent.com/search?q=cache:vl90MA...

Disclaimer: I'm not a lawyer, just found this from a cursory search.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#33

Post by hendzen » Tue, Jan 30, 2018, 6:33 PM UTC

fpgaminer wrote: post #29

So, how does this work legally? Bitfinex isn't a U.S. based company and doesn't work with U.S. citizens. The article says where it's based is unknown. Does the CFTC have the authority to subpoena them? Is it because they're claiming Tether is USD pegged, so they gain authority because of their use of the dollar? Honestly just a curious question. (I'm not looking for snarky answers to the effect of "world police".)

Among many other reasons, due to the listing of Bitcoin futures on CBOE and CME the CFTC now has some oversight on the spot market.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#34

Post by stevenwoo » Tue, Jan 30, 2018, 6:33 PM UTC

JumpCrisscross wrote: post #7

Cryptocurrencies are in an interesting middle ground, from a regulator’s political perspective. They’re complicated and stand to harm mostly those who inflicted it on themselves. For an ambitious regulator looking forward to an administration’s nominating committee, Senate confirmation hearing or even campaign trail, that makes it unattractive relative to e.g. insider-trading hedge fund managers or Medicare fraudster…

Why unattractive - all the the SEC oversight actions we've seen under the current adminstration/Congress indicates it's going to be all in on Wall Street deregulation - it's a lot of Goldman Sachs' former employees at the sprinkled throughout the administration (this part is probably not a lot different from what Clinton would have done, tbh). The cryptocurrency surge is mostly out of Wall Street by design which makes it a relatively harmless enforcement action (to entrenched interests on Wall Street).

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#35

Post by mhmiles » Tue, Jan 30, 2018, 6:34 PM UTC

drcode wrote: post #24

Summary for newbs: Bitfinex is a crypto exchange kinda based in Hong Kong and kind of based in Taiwan (this seems to change depending on convenience.) Taiwan recently started becoming more rigorous about monitoring international USD wires, and lots of Bitfinex users had their money stranded in Taiwan. Bitfinex stopped supporting US customers because of these difficulties (AFAIK most customers did eventually get their…

Good summary. There’s also the accusation that a lot/most of those tethers were not paid for at all and simply minted and used to purchase Bitcoin.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#36

Post by ceejayoz » Tue, Jan 30, 2018, 6:34 PM UTC

ebbv wrote: post #31

drcode wrote: post #24

Summary for newbs: Bitfinex is a crypto exchange kinda based in Hong Kong and kind of based in Taiwan (this seems to change depending on convenience.) Taiwan recently started becoming more rigorous about monitoring international USD wires, and lots of Bitfinex users had their money stranded in Taiwan. Bitfinex stopped supporting US customers because of these difficulties (AFAIK most customers did eventually get their…

You're skipping a key bit here; billions of Tethers magically appeared on the market in the last month and were used to buy BTC in suspiciously regular fashion, in 100 million USDT amounts, and with no clear evidence that it was actually purchased by anyone using real USD.

Another key bit: Tether's website claims "frequent audits", but their auditor a) never completed their first audit and b) just severed their relationship.

https://www.coindesk.com/tether-confirms-relationship-audito...

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#37

Post by ebbv » Tue, Jan 30, 2018, 6:35 PM UTC

treve wrote: post #20

JumpCrisscross wrote: post #7

Cryptocurrencies are in an interesting middle ground, from a regulator’s political perspective. They’re complicated and stand to harm mostly those who inflicted it on themselves. For an ambitious regulator looking forward to an administration’s nominating committee, Senate confirmation hearing or even campaign trail, that makes it unattractive relative to e.g. insider-trading hedge fund managers or Medicare fraudster…

Ponzi schemes also only harm those who inflict it on themselves.

Unless they get so big they affect the economy as a whole.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#38

Post by JumpCrisscross » Tue, Jan 30, 2018, 6:35 PM UTC

IntronExon wrote: post #26

JumpCrisscross wrote: post #7

Cryptocurrencies are in an interesting middle ground, from a regulator’s political perspective. They’re complicated and stand to harm mostly those who inflicted it on themselves. For an ambitious regulator looking forward to an administration’s nominating committee, Senate confirmation hearing or even campaign trail, that makes it unattractive relative to e.g. insider-trading hedge fund managers or Medicare fraudster…

I’m. It sure that I agree. There has been so much blatant scamming and corruption in the cryptouspace that it’s almost certainly in need of some regulatory fire and brimstone. It’s also, however self-inflicted, exploded into the popular consciousness. The SEC would probably also prefer, as prosecutors do, nearly certain victory. The nature of blockchains makes them exceptionally strong evidence, and paper trails. In…

> it’s almost certainly in need of some regulatory fire and brimstone

Sure, but it pains me to see American securities regulators’ already-strapped budgets going after, almost alone, an international problem. Regulatory focus has an opportunity cost. More attention to cryptocurrencies means less to everything else.

> the state can’t really afford to let money laundering on this scale continue

The Treasury and Secret Service are the principal enforcers of U.S. anti-money laundering law. This action is being brought by the CFTC.

In any case, there is lower hanging fruit (in terms of ease of prosecuting, volume of funds laundered, and politics vulnerability) than cryptocurrency-facilitated money laundering which, by its nature, leaves a convenient and immutable public record in fact wake.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#39

Post by TaylorGood » Tue, Jan 30, 2018, 6:37 PM UTC

machinecontrol wrote: post #11

atarian wrote: post #5

What is the point of Tether? Is it for dodging taxes?

Tether is supposedly pegged to USD. Traders use it to store assets while avoiding crypto price volatility without having to deal with fiat currency.

Which, Waves DEX has USD as an option in their wallets. Bypassing the need for Tether altogether, but their exchange is also rather limited..

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#40

Post by jonknee » Tue, Jan 30, 2018, 6:37 PM UTC

fpgaminer wrote: post #29

So, how does this work legally? Bitfinex isn't a U.S. based company and doesn't work with U.S. citizens. The article says where it's based is unknown. Does the CFTC have the authority to subpoena them? Is it because they're claiming Tether is USD pegged, so they gain authority because of their use of the dollar? Honestly just a curious question. (I'm not looking for snarky answers to the effect of "world police".)

They claim to have the USD in a bank somewhere which means the US can come after them. This is why Wells Fargo dumped them (which is saying something!).