Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

bloomberg.com

Post reply on HN
Print view View original

51–60 of 421 posts

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

#51

Post by js2 »

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.

Here’s what I don’t understand. You can exchange bitcoins for fiat currency. But afaik you can’t exchange USDT for fiat. So why is anyone willing to take the risk of holding on to USDT? Why are any exchanges even willing to touch it?

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

#52

Post by drcode »

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".)

Well, they definitely had many US customers until about a year ago, fwiw.

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

#53

Post by jonknee »

drcode wrote: post #44
ebbv wrote: post #31

Earlier quoted context omitted.

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.

I hear you and this whole situation is clearly shady af, but at the end of the day BTC is fungible with USD, so I'm not sure at this in and of itself is that big of an issue (besides any explicit legal concerns that I can't speak to). If you're providing a currency pegged to the USD, then selling tether for BTC might be one piece of a strategy to do this- The issue for me is more that no one knows what's happening to…

You're missing the point, OP is suggesting that Tether isn't really backed by USD. So instead of trading something backed by USD for BTC, they're just creating worthless IOUs and buying BTC (typically bidding it up on down days). It smells a lot like fraud.

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

#54

Post by JumpCrisscross »

js2 wrote: post #51
ebbv wrote: post #31

Earlier quoted context omitted.

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.

Here’s what I don’t understand. You can exchange bitcoins for fiat currency. But afaik you can’t exchange USDT for fiat. So why is anyone willing to take the risk of holding on to USDT? Why are any exchanges even willing to touch it?

> Why are any exchanges even willing to touch it?

They’re earning fees from uninformed buyers coming from a community with an ideological aversion to governments. The first part makes it profitable. The last means the risk of their reporting you to the proper authorities is slim.

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

#56

Post by ceejayoz »

js2 wrote: post #51
ebbv wrote: post #31

Earlier quoted context omitted.

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.

Here’s what I don’t understand. You can exchange bitcoins for fiat currency. But afaik you can’t exchange USDT for fiat. So why is anyone willing to take the risk of holding on to USDT? Why are any exchanges even willing to touch it?

It lets the exchanges avoid dealing with USD, which they believe (IMO wrongly, but hey) exempts them from know-your-customer laws. A lot of Coinbase's customer service issues stem from KYC laws and the verification it requires.

Some of them are being very squirrely with their users, telling you your "USD" balance which is actually USDT.

Some may believe it's a fraud, but be happy to benefit from the apparent boost it's giving cryptocurrency values and think they're safe enough if it collapses.

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

#57

Post by TeMPOraL »

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…

> They’re complicated and stand to harm mostly those who inflicted it on themselves

They're about as "inflicted on yourself" as most fraud is. You could say that a grandma getting scammed by a person pretending to be a government official[0] also brought it on herself, and so did the guy scammed by an insurance MLM. The truth is, there's enough of buzz around cryptocurrencies that it starts to impact regular citizens[1]. It's becoming a public issue, and so it's a perfect moment for the government to step in and start dealing with the fraudlent part of the cryptocurrency ecosystem.

--

[0] - Recent subject of fraud prevention campaigns by the police in Poland, not just a stereotype.

[1] - Hell, I heard a story about cryptoexchanges in local radio news this very morning.

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

#59

Post by jonknee »

JumpCrisscross wrote: post #48
treve wrote: post #20

Earlier quoted context omitted.

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

> Ponzi schemes also only harm those who inflict it on themselves Ponzi schemers lie to their investors. (Madoff purported to run a reputable shop.) It’s harder to argue, to the broader public, that someone buying Tether with Bitcoin could reasonably think they made a legitimate investment.

A lot of exchanges don't give you the choice and just give you Tether when you sell Bitcoin. What are the odds that a lot of people don't know the difference between USDT and USD?

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

#60

Post by drcode »

ebbv wrote: post #47
drcode wrote: post #44

Earlier quoted context omitted.

I hear you and this whole situation is clearly shady af, but at the end of the day BTC is fungible with USD, so I'm not sure at this in and of itself is that big of an issue (besides any explicit legal concerns that I can't speak to). If you're providing a currency pegged to the USD, then selling tether for BTC might be one piece of a strategy to do this- The issue for me is more that no one knows what's happening to…

Issuing USDT when there's no USD backing it up is an issue when you claim that it is backed 1:1. That is called fraud.

I'm being 100% pedantic here (I fully agree tethers are ridiculously shady) but if tether one day rises to 1.05 USD, and the tether company then sells more for BTC to bring it back to 1.00 USD, and the tether company subsequently converts the BTC to USD, how is that fraud?
Post reply on HN