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

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

#261

Post by ryanchoi »

seppel wrote: post #248
achompas wrote: post #182

Earlier quoted context omitted.

> Who is doing this? Why would you sell for USDT instead USD? On many international exchanges, USDT are the easiest way to convert BTC to a (supposedly) USD-backed asset.

> On many international exchanges, USDT are the easiest way to convert BTC to a (supposedly) USD-backed asset. I'm sorry, but I cannot follow. Let's say you want to sell a BTC, current worth about 10k. So you go to a shady exchange, click sell and 10k of USDT appear in your account. Good, but what is the next step? The next thing you will notice that there is nothing that you can buy for your USDT. You cannot buy a h…

There's a reason to temporarily move from say BTC to USDT: If you think bitcoin/crypto currency is going to trend downwards for a bit and your exchanges don't have fiat balances (so the vast majority of them?) you sell your cryptos for USDT, wait for cryptocurrency prices to fall, then re-trade your USDT for more BITCOIN or whatever. Then you have accumulated more bitcoin (the premise is that you think it'll go up again). Edit: ninja'd.

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

#262

Post by ShorsHammer »

jonknee wrote: post #53
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…

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.

So you are saying instead of cashing out the btc into usd holdings they simply held onto bitcoin? Wouldn't that make them filthy rich?

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

#263

Post by 0wing »

oculusthrift wrote: post #242
jpatokal wrote: post #170

Earlier quoted context omitted.

In the long term, perhaps, but in the short term there's going to be MtGox-or-worse level carnage in the markets if Bitfinex/USDT is exposed as a scam and people start panic selling to cash out.

if they sell their usdt for btc, the btc price could actually rise. it just depends if they try to withdraw all together and the money leaves the crypto market

You're assuming the severity of this news would not cause Tether to devalue while BTC holders exit into real USD or fiat instead of Tether.

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

#264

Post by relaxed »

ffffffffff_ wrote: post #111

A points and a question: Point: USDT is used as a holding point for people wanting to stay in crypto but not be subject to price movement of other coins. This could be used to not trigger a taxable event (even though recently, crypto to crypto transactions were deemed taxable by the IRS). When buying crypto in general, it's much easier/faster to start a transfer from another crypto as opposed to having to move fiat i…

The ability to trade it in for actual currency is important. Even though their TOS says they aren't required to give you USD for tether they actually did at some point. (some say still do)

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

#265

Post by notahacker »

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.

Think it's probably easier to argue to the public that this thing which the company said was a convenient digital way of converting other digital assets to dollars but lied about the dollars suckered innocent people than most bog-standard "we've found a totally legitimate way of earning 100% weekly returns but we're really struggling to get the finance for it so we'll even pay your referral bonuses on top for promoting it" Ponzi scams.

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

#266

Post by 0wing »

nsp wrote: post #251
sxates wrote: post #99

I'm not saying that there's nothing worth investigating in the Crypto space, but I wish the SEC spent half the time it spends chasing down shady ICOs looking into fraud at Goldman Sachs and other Wall St. banks. You know, the institutions that whose scale dwarfs crypto and actually has enormous economic repercussions?

There are no indications that the SEC spends remotely near half the time they spend investing big banks/the traditional financial sector on crypto currencies. I’d be shocked if even 10% of sec resources were devoted to cryptocurrencies.

The SEC has a dedicated "Cyber" unit which targets Cryptocurrencies

https://www.sec.gov/news/press-release/2017-176

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

#267

Post by seppel »

hvasishth wrote: post #257
seppel wrote: post #248

Earlier quoted context omitted.

> On many international exchanges, USDT are the easiest way to convert BTC to a (supposedly) USD-backed asset. I'm sorry, but I cannot follow. Let's say you want to sell a BTC, current worth about 10k. So you go to a shady exchange, click sell and 10k of USDT appear in your account. Good, but what is the next step? The next thing you will notice that there is nothing that you can buy for your USDT. You cannot buy a h…

You sell BTC to USDT if you are not looking to cash out of BTC. Instead, if you think that BTC is at a peak in the short term and you simply want to sell at the peak and get back in once it drops, selling to USDT is just fine. That way you can buy back BTC once price drops. When you do want to cash out to real fiat, you have to sell to USD. USDT allows a large number of exchanges to allow you to sell BTC and hold in…

> Instead, if you think that BTC is at a peak in the short term and you simply want to sell at the peak and get back in once it drops, selling to USDT is just fine. That way you can buy back BTC once price drops.

Yes, I get that. But as you mentioned this is "short term". How does it explain that Tether is printing more and more Tethers? Do you think more and more people are selling BTC for USDT for a "short term"? We are talking about billions here.

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

#268

Post by seppel »

ryanchoi wrote: post #261
seppel wrote: post #248

Earlier quoted context omitted.

> On many international exchanges, USDT are the easiest way to convert BTC to a (supposedly) USD-backed asset. I'm sorry, but I cannot follow. Let's say you want to sell a BTC, current worth about 10k. So you go to a shady exchange, click sell and 10k of USDT appear in your account. Good, but what is the next step? The next thing you will notice that there is nothing that you can buy for your USDT. You cannot buy a h…

There's a reason to temporarily move from say BTC to USDT: If you think bitcoin/crypto currency is going to trend downwards for a bit and your exchanges don't have fiat balances (so the vast majority of them?) you sell your cryptos for USDT, wait for cryptocurrency prices to fall, then re-trade your USDT for more BITCOIN or whatever. Then you have accumulated more bitcoin (the premise is that you think it'll go up ag…

> There's a reason to temporarily move from say BTC to USDT

But what we are seeing does not look like a temporary move. All the printed USDT are "somewhere", and I want to understand where and why.

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

#269

Post by notyourday »

hvasishth wrote: post #257
seppel wrote: post #248

Earlier quoted context omitted.

> On many international exchanges, USDT are the easiest way to convert BTC to a (supposedly) USD-backed asset. I'm sorry, but I cannot follow. Let's say you want to sell a BTC, current worth about 10k. So you go to a shady exchange, click sell and 10k of USDT appear in your account. Good, but what is the next step? The next thing you will notice that there is nothing that you can buy for your USDT. You cannot buy a h…

You sell BTC to USDT if you are not looking to cash out of BTC. Instead, if you think that BTC is at a peak in the short term and you simply want to sell at the peak and get back in once it drops, selling to USDT is just fine. That way you can buy back BTC once price drops. When you do want to cash out to real fiat, you have to sell to USD. USDT allows a large number of exchanges to allow you to sell BTC and hold in…

If one cannot easily cash out USDT to USD or EUR or GBP or whatever else then USDT is also a garbage sea shell currency - you may as well sell for sea shells directly.

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

#270

Post by koheripbal »

jonknee wrote: post #40
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".)

They claim to have the USD in a bank somewhere which means the US can come after them. This is why Wells Fargo dumped them (which is saying something!).

No. A foreign bank can hold USD without any US oversight.
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