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

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

#201

Post by enolan » Tue, Jan 30, 2018, 9:05 PM UTC

vkou wrote: post #114

machinecontrol wrote: post #11

Earlier quoted context omitted.

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

How is not having to deal with fiat currency an advantage for traders ? They still need to do cost-basis accounting for taxes, and this just shifts their risk of to . I understand how this benefits exchanges (Because they can claim they don't need to follow KYC), but how does it benefit their users ? They'll also eventually need to convert USDT into USD - which they can withdraw. If you have an exchange that you can…

Token transfers are much faster than wires/ACH and have less regulatory overhead. It benefits you to sell your bitcoins for USDT on one exchange and send the tether to another one. This is much faster and cheaper than selling for real USD and wiring the money to the second exchange.

Or hypothetically you could pay for stuff that's priced in dollars without the friction and fees of the traditional banking system. I don't think anybody actually does that though.

It's a way of combine the advantages of cryptocurrency - speed, fees, lack of regulation - with the stability of fiat currencies.

Not very stable if the issuer is insolvent though.

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

#202

Post by PeterisP » Tue, Jan 30, 2018, 9:07 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".)

There are two parts - one is the authority to request something (issue a subpoena) and the second is the ability to enforce penalties if the request is not satisfied.

They have the authority to issue a subpoena because Bitfinex had US-based customers.

The ability to enforce it is a bit trickier, but there are two things - first, it's plausible that they can get cooperation from local authorities; and second, they are able to seize USD transfers to/from them.

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

#203

Post by nopriorarrests » Tue, Jan 30, 2018, 9:07 PM UTC

ttul wrote: post #148

arez wrote: post #79

Earlier quoted context omitted.

yes that's true. You can even see the tether printer and the sends of tether on the omni network. The omni network is a layer on top of bitcoin and is totally transparent

Can you show us where we can find these transactions?

this handy twitter bot sends a message every time new tethers are issued -- https://twitter.com/tetherprinter

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

#204

Post by 0wing » Tue, Jan 30, 2018, 9:08 PM UTC

jandrese wrote: post #161

krapp wrote: post #131

Earlier quoted context omitted.

The assumption has always been that cryptocurrency driven markets would emerge completely decoupled from states and their systems of financial regulation, and so conversion would be neither necessary, nor desired. Everything you could possibly want to buy, legal or illegal, would be payable through the crypto market. Cryptocurrencies were supposed to undermine fiat, or at least render it unnecessary, barring taxes, n…

It took a serious tin hat warrior to actually believe that line. "If everybody in the world instantly switches over to my new currency overnight everything will be awesome!" That's so far divorced from reality only pure mathematicians could love it. Not to mention it would never work, the blockchain has way too much overhead (many many orders of magnitude) to support an entire world's worth of exchanges every day. Th…

Also consider nearly all of Bitcoin and other cryptocurrencies are "premined" in the sense that only a few early adopters control more then half the supply due to how the work readjustment algorithms are skewed to generate all the coins very easy for a few users but later new users don't have equal access to produce coins as easily or cheaply as those other users.

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

#205

Post by darawk » Tue, Jan 30, 2018, 9:10 PM UTC

alistproducer2 wrote: post #196

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 didn't mention the $50K minimum, which obviously weeds out most people who would want to claim USDT->USD: For the time being, we will only process requests above $50,000 in size. We believe that by the time we are able to get to the smaller withdrawals, other, less cumbersome

That only applies to the special withdrawal provision for US customers. Taiwanese domestic wires of all sizes have been flowing unimpeded this whole time.

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

#206

Post by spookthesunset » Tue, Jan 30, 2018, 9:10 PM UTC

thinkmoore wrote: post #166

darawk wrote: post #134

Earlier quoted context omitted.

No, you can convert USDT directly to USD. However, Bitfinex can only wire you that USD to a Taiwanese bank account. I can't verify that they actually will wire it, but this is what they claim. And I assume if they were refusing to make these wires to people who had Taiwanese bank accounts, people would be pointing it out.

My understanding is that their terms of service say that they have no legal obligation to do so, regardless of where you have a bank account...

Actually, it looks like sometime in the past few weeks Tether changed their terms to say they do let you redeem your USDT:

"About Tether Tokens; General Restrictions: Tether issues and redeems Tether Tokens. Tether Tokens may be used, kept, or exchanged online wherever parties are willing to accept Tether Tokens. Tether Tokens are fully backed by the currency or property used to purchase them at issuance. Tether Tokens are denominated in a range of currencies. For example, if you purchase EURT, your Tethers are fully backed by Euros. If you cause to be issued EURT 100.00, Tether holds €100.00 to back those Tether Tokens. The range of currencies available to denominate Tether Tokens is within the sole control and at the sole and absolute discretion of Tether. Tether Tokens are backed by money, but they are not money themselves. Tether will not issue Tether Tokens for consideration that is other Digital Tokens (for example, bitcoin), and will not redeem Tether Tokens for other Digital Tokens; only money will be accepted upon issuance, and only money will be provided upon redemption.In order to cause Tether Tokens to be issued or redeemed by Tether, you must be a verified customer of Tether. No exceptions will be made to this provision. "

(all typos and spacing are theirs. This change looks very hastily put together and quite sketchy)

https://tether.to/legal/

It used to say some stuff about how USDT isn't actually redeemable, etc...

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

#207

Post by M2Ys4U » Tue, Jan 30, 2018, 9:11 PM UTC

Crespyl wrote: post #191

21 wrote: post #102

Earlier quoted context omitted.

If you don't integrate with fiat, all you have is "mobile game gems" or "WoW gold". Fiat is and always will be tightly monitored and controlled. If cryptos want to replace fiat, they will have to do the same.

That's assuming you can't find anyone to trade goods and services for crypto directly.

At which point _they_ will have to interface with the world of fiat, if for nothing else than to pay tax.

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

#208

Post by darawk » Tue, Jan 30, 2018, 9:11 PM UTC

0wing wrote: post #193

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

Which account holders? No one has provided proof of withdraw from Bitfinex USD or Tether since they've gotten kicked out of their banks. Recent wires from Bitfinex have been associated with a rural bank in Poland which is normally only used only by farmers. https://www.trustnodes.com/2017/11/22/bitfinex-reveals-new-p...

Indeed nobody has provided proof. However, Bitfinex claims to issue Taiwanese domestic wires unimpeded. I assume that, if that weren't the case, we'd be hearing from Taiwanese Bitfinex customers about it.

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

#209

Post by TeMPOraL » Tue, Jan 30, 2018, 9:12 PM UTC

JumpCrisscross wrote: post #190

TeMPOraL wrote: post #57

Earlier quoted context omitted.

> 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…

> It's becoming a public issue Pardon me, I didn't mean to say it isn't something regulators should go after. I was merely commenting on their incentives. If you're an ambitious regulator, an easy-to-explain high-profile bust is worth its career weight in gold. "I got Martin Shkreli convicted of securities fraud" is potent and messageable. "This cryptocurrency scheme...what's are cryptocurrencies?..anyway, this schem…

> This cryptocurrency scheme...what's are cryptocurrencies?

"Remember that fake computer money used to buy hard drugs and order assasinations on the Dark Web? Those ones. Also, they're currently being used to scam people by megadollars. And I'm about to bust some of them."

Maybe not Shkreli-level in media applause, but close enough, I think.

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

#210

Post by simias » Tue, Jan 30, 2018, 9:12 PM UTC

Crespyl wrote: post #191

21 wrote: post #102

Earlier quoted context omitted.

If you don't integrate with fiat, all you have is "mobile game gems" or "WoW gold". Fiat is and always will be tightly monitored and controlled. If cryptos want to replace fiat, they will have to do the same.

That's assuming you can't find anyone to trade goods and services for crypto directly.

Which just pushes the problem a little further away since eventually somebody will have to pay taxes in fiat so if your cryptocurrency is not convertible it's going to be a problem.