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

bloomberg.com

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

#171

Post by moduspol »

tlrobinson wrote: post #169
moduspol wrote: post #113

Earlier quoted context omitted.

What risks does the exchange incur from allowing the trade of tethers? Exchanges make their money from people trading--not by holding their own reserves and betting on their values. If Tether value drops to zero, anyone holding Tethers would be upset, but exchanges would just have been profiting from all the trades necessary to bring that value down to zero.

IIRC some exchanges don’t make it clear you’re trading USDT, not USD. If Tether were to implode users might be able to sue the exchange to try to recover the USD value.

For that case, maybe, but I'm correcting parent post's presumption that trading in tethers necessarily imparts some huge risk onto the exchange.

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

#172

Post by thinkmoore »

darawk wrote: post #138

So, to those who are skeptical of Tether...you know that you can convert Tether 1:1 for USD by depositing it at Bitfinex, right? They'll then wire you that USD to any Taiwanese bank account[1] (the only banks that haven't frozen their wires). AFAIK, there are no reports from Taiwanese account holders of trouble with these wires. [1] - https://www.bitfinex.com/posts/203

Who is "you"? From the terms of service:

"Absent a reasonable legal justification not to redeem Tether Tokens, and provided that you are a fully verified customer of Tether, your Tether Tokens are freely redeemable... Furthermore, residents of certain U.S. states are not permitted to be customers of Tether; are not permitted to cause Tethers to be issued or redeemed; and, are not permitted to hold Tether Tokens. Beginning on January 1, 2018, Tether Tokens will no longer be issued to U.S. Persons."

So if you hold Tether Tokens but are not a "customer", you have no claim to be paid. I suppose Tether customers (whoever they may be) might be willing to pay you dollars for your coins, but there's no reason for them to give you 1:1, for sure.

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

#173

Post by foobar2020 »

onewhonknocks wrote: post #132
g09980 wrote: post #129

Earlier quoted context omitted.

This should be much more visible. The market is panic selling on effectively old news.

Agreed. Thank you for saying so. edit: is there a way to bold text in an HN comment?

Unicode to the rescue! Here's how to make 𝗯𝗼𝗹𝗱 text:

http://qaz.wtf/u/convert.cgi

Looks a bit ugly, but works.

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

#174

Post by saas_co_de »

g09980 wrote: post #157
dragonwriter wrote: post #139

Earlier quoted context omitted.

It's not “old news” if it wasn't publicly known in the past (and if the market had known it already, no one would be panic selling based on it.)

I'm just not sure why Bloomberg would choose to omit the date until being pestered online. Doesn't this change things quite a bit? If there was a true smoking gun, they would be shut down then and there already instead of continuing to operate/grow, such as issuing more tethers in the past month.

They don't operate in US jurisdiction or do business with any US corporations so they can run for a while ignoring the subpoenas and the wheels of justice grind slow but it will catch up with them.

Look up E-gold if you want to feel the experience of history repeating itself. For bonus points check the dates when E-Gold was shutdown and when bitcoin was created.

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

#175

Post by s73ver_ »

darawk wrote: post #138

So, to those who are skeptical of Tether...you know that you can convert Tether 1:1 for USD by depositing it at Bitfinex, right? They'll then wire you that USD to any Taiwanese bank account[1] (the only banks that haven't frozen their wires). AFAIK, there are no reports from Taiwanese account holders of trouble with these wires. [1] - https://www.bitfinex.com/posts/203

You know they state in their TOS that they're under no obligation to do so, right?

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

#176

Post by TeMPOraL »

rmrm wrote: post #117
ebbv wrote: post #104

Earlier quoted context omitted.

They're solvent in that scenario, sure, because they committed fraud. That's the great thing about fraud, getting rich off of it.

Their assets equal liabilities in either case (whether selling USDT directly for USD, or cyclling them through BTC). Call it what you will, but in neither scenario is anyone rich. Tether if backed by USD at the end of the day is revenue neutral. What am I missing?

Tether being printed out of thin air if they're not backed by USD?

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

#177

Post by seppel »

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.

Ok, so they printed billions of Tethers and bought BTC with them, I get this part.

What I don't get is: This means somebody sold BTC for billions of USDT (instead USD!). Who is doing this? Why would you sell for USDT instead USD?

Maybe there some daytraders on the exchanges that go in and out the Tether every day, yeah. But that should not account for that much. Who is hodling that giant pile of USDT? And why?

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

#178

Post by AgentME »

HockeyPlayer wrote: post #81

How trustworthy is Kraken? Tether looks like a good short since if it is a fraud it will go way down and if it isn't a fraud it will stay right where it is. I'm in the US and would like to short Tether. But I want to get paid if I'm right.

I've had good enough experiences with inter-cryptocurrency trading on Kraken, but I've never actually been able to get their site to let me wire USD in or out of it to a bank account. Always just site errors when I try to do that.

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

#179

Post by FireBeyond »

gruez wrote: post #127
ceejayoz wrote: post #56

Earlier quoted context omitted.

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…

>they believe (IMO wrongly, but hey) exempts them from know-your-customer laws. but you need to be verified on bitfinex to withdraw both tether and (real) USD.

KYC comes into effect on account opening, not withdrawal.

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

#180

Post by dkasper »

sxates wrote: post #135
jhwang5 wrote: post #118

Earlier quoted context omitted.

They do go after Wall St. banks - what makes you think SEC doesn't?

Just looking at the last 6 months of press releases, I can't find a big bank anywhere. https://www.sec.gov/news/pressreleases Then there was that time back in 2008 when all these banks crashed our economy and a single guy was prosecuted and went to jail. 1 guy. But in the last month I can remember at least 3 press releases from the SEC about crypto concerns and investigations.

Banks likely comply with regulations 99.9% of the time (doesn't mean the regulations work well enough though). They have teams of lawyers and have worked with the SEC for years.

Contrast that with crypto where fraud is commonplace, and people constantly flaunt regulations, claim they aren't securities or banks so regulations don't apply, etc. Crypto is a new ballgame and the SEC is trying to figure out how to regulate it appropriately so of course there's a lot of activity there.

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