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

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

#221

Post by simias » Tue, Jan 30, 2018, 9:17 PM UTC

darawk wrote: post #181

s73ver_ wrote: post #175

Earlier quoted context omitted.

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

Yes, but you know that in reality, you can go do it right now, right?

Unless a significant portion of the tether are converted to real dollars it wouldn't prove much. I'm sure bitfinex/tether are not completely broke and can afford to pay a few million of dollars easily. The only way we'll know for sure if they have the money is if somebody manages to get hold of their real financial info or if there's a bank run and they end up having to redeem a significant portion of the USDT they've emitted.

As far as I understand the current conditions for retrieving the real dollars from tether/bitfinex are dissuasive enough that most people won't bother doing that, so they just need to have enough liquidity to pay the small portion that will.

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

#222

Post by PeterisP » Tue, Jan 30, 2018, 9:17 PM UTC

darawk wrote: post #208

0wing wrote: post #193

Earlier quoted context omitted.

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.

Why aren't we hearing from any Taiwanese Bitfinex customers with examples that they have successfully done so?

Are there even meaningful numbers of Taiwanese customers? Has it been marketed in Taiwan?

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

#223

Post by [deleted] » Tue, Jan 30, 2018, 9:19 PM UTC

[deleted]

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

#224

Post by [deleted] » Tue, Jan 30, 2018, 9:19 PM UTC

product50 wrote: post #28

machinecontrol wrote: post #3

If this is a grand jury subpoena, things could get ugly fast in the crypto space. Despite all talk of decentralization, the major exchanges pose a systemic risk.

Well, Bitfinex and Tether is how legacy exchanges operate. Bitfinex is completely centralized and issues Tether (a stable coin) as a feature to enable traders to do "cash out" from the volatility of crypto when they feel like. Going forward though there will be dexes and decentralized stable coins (such as Basecoin). Those would be extremely difficult to track down and have strong incentive structures to maintain the…

[deleted]

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

#225

Post by treve » Tue, Jan 30, 2018, 9:25 PM UTC

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.

There are plenty of examples of cryptocurrency related scams that present themselves as a legitimate investment.

Aside from that, I think an argument could be made that bitcoin itself is a form of pyramid scheme. I'm not sure if I 100% agree with that, but I understand the line of reasoning.

I'm glad regulators are looking into this and asking these questions.

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

#226

Post by PeterisP » Tue, Jan 30, 2018, 9:25 PM UTC

krapp wrote: post #131

jandrese wrote: post #85

Earlier quoted context omitted.

What use is a currency (or commodity!) that you can't convert into a good or service? It seems like a fundamental problem if the theoretical advantages of a currency are lost the instant you try to use it to buy something. Otherwise we're just wasting gigawatts of electricity to print Monopoly money.

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…

A majority of "everything you could possibly want to buy" includes physical goods and physical services.

Markets cannot be completely decoupled from states as long as they trade in real goods and services - as long as you're not trading solely in virtual goods, the other part of the transaction still requires you to interact with the real world under the jurisdiction of some state, and thus the whole transaction, including the cryptocurrency (and the source of that cryptocurrency) is subject to those rules.

If you sell some virtual services for cryptocurrency and later want to buy a car with the proceeds, then not only the car purchase, but also your sale of these virtual services must have been done "cooperating" with all the rules of fiat - states can and will forbid using the proceeds made in markets completely decoupled from their systems of financial regulation; they will use their hold over the physical markets to try and regulate the virtual markets also as much as possible. In the long run, if cryptocurrencies won't cooperate, then they'll be ostracized - there's nothing stopping the gov't from passing a law that simply prohibits any legitimate merchant to accept bitcoin, greatly limiting the range of things that you can actually buy.

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

#227

Post by AlexCoventry » Tue, Jan 30, 2018, 9:26 PM UTC

jboggan wrote: post #87

bhouston wrote: post #69

Earlier quoted context omitted.

Exactly. There is some circumstantial evidence that Tether printing may be inflating bitcoin prices: http://www.tetherreport.com/ 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 launde…

That would be the SEC's domain. If CFTC is getting involved it's probably because they are potentially manipulating the price on a regulated futures contract.

But bitcoin futures didn't start until Dec 17, and the subpoena was sent Dec 6, so that would imply they're messing in futures based on some other commodity.

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

#228

Post by rhino369 » Tue, Jan 30, 2018, 9:27 PM UTC

drcode wrote: post #60

ebbv wrote: post #47

Earlier quoted context omitted.

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?

That wouldn't be fraud (as long as they quickly converted from BTC to USD), but why would anyone do that?

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

#229

Post by paulmd » Tue, Jan 30, 2018, 9:28 PM UTC

spookthesunset wrote: post #206

thinkmoore wrote: post #166

Earlier quoted context omitted.

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 Toke…

The catch is now "you must be a verified customer", and registration is conveniently closed for the time being. Users who got in before registration closed report it taking months to get verified. Also, no US citizens allowed.

They're doing their best to put up a good face here but good luck actually getting them to hand over cash. The thing is blatantly scammy, they obviously don't have $2.3 billion in cash reserves on hand and never did.

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

#230

Post by andrewla » Tue, Jan 30, 2018, 9:28 PM UTC

spookthesunset wrote: post #212

andrewla wrote: post #122

Earlier quoted context omitted.

As a US citizen, I can no longer access Bitfinex. My personal experience, when I could, is that you are never exposed to USDT on the site at all except as an option to transfer your deposited USD to another exchange via tether. They may have changed that, but I don’t know. As for withdrawing, you can’t withdraw to the US any more, but you can still make international USD wires to banks in other jurisdictions, specifi…

> My personal experience, when I could, is that you are never exposed to USDT on the site at all except as an option to transfer your deposited USD to another exchange via tether. One exciting "feature" of all this is that most tickers that price out crypto currency values treat USD and USDT as one and the same. I've yet to see Bitfinex, for example, show up on a ticker as "BTC / USDT" (which is what, in fact, the pa…

There are exchanges (a lot of them, actually) that list USDT as part of a trading pair. Bitfinex, as I understand it, allows withdrawals in USD (modulo the restrictions above). From an end-user perspective, the only time you ever deal with tether is when you make a tether transfer. They are correct in not treating the on-exchange trading pair as BTC/USDT.

Just as when you deposit on any exchange, for example, Kraken, you don't have "USD" per se, you just have "Kraken USD credits" which you can withdraw, subject to their limitations, via wire transfer. Also, when you deposit your USD in Chase Bank, you don't have USD, you have "Chase USD credits" which you can withdraw, subject to their limitations, on demand.

In all cases you are dependent on the solvency of the institution, which is what is in question here. But Bitfinex is correct in not saying that you are buying or selling USDT -- you are trading with USD, regardless of what internal accounting practices they use to ensure that they are solvent.