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This is good news for quality cryptocurrency organizations. Bitfinex has problems, so does Tether and it's good to see bad actors in the crypto world getting weeded out, called out and put down.
> This is good news for quality cryptocurrency organizations. Are there any? I’m being honest and not snarky here: I’ve yet to see a single company in the space that’s not at least somewhat shady.
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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…
True, but cryptocurrencies - especially now, with ICOs - move such absurd amount of money that they do become a big problem. And it probably won't take much effort from SEC to make the whole charade collapse everywhere, so it might be a pretty good investment of time after all.
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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?
The Tether foundation itself isn't going to buy back the USDT because then it will just have to burn them because it no longer has the supposed dollar backing it.
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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?
And again, you're missing the point that it doesn't seem like they are selling the USDT for anything, BTC or otherwise. They're just printing it and buying BTC with it.
EDIT:
That may seem like splitting hairs but the point is they aren't issuing them in exchange for value, they're just creating them and then using the value they supposedly have based to purchase BTC.
An analogy if you still don't understand the difference; it's the difference between buying a $50 Gift Certificate to a store with $50 USD or just printing one on my printer. One represents $50 USD that exist and were exchanged to buy it, and the other represents nothing.
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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…
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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…
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?
What is the point of Tether? Is it for dodging taxes?
I believe "stablecoins" will be needed in the cryptoworld, especially if the goal is still ultimately to have crypto coins used a "currency". But I'm not sure there's any reason why they need to be "pegged to the dollar" or any FIAT currency. It just needs to be relatively stable, perhaps in relation to the total market cap of cryptocurrencies at any given point in time.
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.
But it is just circumstantial at this point. There are a lot of ifs related to Tether, but it has that fishy feeling to it.
While I think there is a very good chance that Tether is not backed by USD, I think the regulators may actually be more interested in USDT being used for money laundering and non-reporting of investment proceeds. In fact, that is likely a larger crime with respect to US regulators.