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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

#301

Post by andymal »

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…

Curious what you mean by "There literally isn't enough electricity in the world."?

BTC uses the same amount of energy to produce an empty block as it uses to produce a full block.

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

#302

Post by oculusthrift »

zaroth wrote: post #281
notyourday wrote: post #280

Earlier quoted context omitted.

I keep reading about these magical places. Say that I have a 1000 BTC. What is the exchange that would allow me to sell 500 BTC and wire money to my account in: a) Chase Manhattan Bank in New York City ( USD ) b) National Westminster Bank in London ( GBP ) c) HSBC ( Paris ), account in Euros. The wire must show up live in 72 business hours and post to the account within 72 * 2 hours.

Presumably GDAX...? I’m sure it wouldn’t be as smooth as pushing buttons and they would likely want something stating where you got the coins.

yeah they only let most people withdraw 10k a day. some guy owed millions on taxes but couldn’t withdraw it fast enough to pay..

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

#303

Post by bb88 »

conanbatt wrote: post #295
zerostar07 wrote: post #274

Earlier quoted context omitted.

dumb question but how is it minted? Every time someone wants to buy one, they print one? they have a limit?

They are probably holding Tether reserves in BTC, in a way gambling with the storage moeny. Figure that 2 billion dollars in sitting money generates very little interest, in comparison to 2 billion dollars in btc that might jump 10% in one week. This bet however, inflates the price of btc alone, since its like someone selling a btc doesnt take any btc from the market (as a btc is traded for another btc concealed). Th…

So, it's better to sell BTC when the market is higher, and convert BTC back to paper currency. Then USDT could in fact be solvent and possibly earn a profit with the a jump in BTC price. If they have billions of dollars in BTC, it might not be infeasible then to print USDT because their profit would guarantee people would get their money.

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

#304

Post by zik »

mancerayder wrote: post #277

What bothers me more than anything in this isn't the existence of Tether and the suspicious behavior of Tether/Bitfinex players... It's that Bittrex and others are attempting to become mainstream and they've accepted these USDT since forever, and they continue to accept them well after the suspicions were public. This is a black stain on the exchanges. It also personally makes me cynical of the entire space. I moved…

Don't ever keep coins on an exchange. Use a hardware wallet. If you don't have them in your possession they're not really your coins and you can get "Goxed" - ie. the world's largest exchange at the time, Mt Gox, disappeared with most of the user funds.

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

#305

Post by bb88 »

0wing wrote: post #294
mancerayder wrote: post #277

What bothers me more than anything in this isn't the existence of Tether and the suspicious behavior of Tether/Bitfinex players... It's that Bittrex and others are attempting to become mainstream and they've accepted these USDT since forever, and they continue to accept them well after the suspicions were public. This is a black stain on the exchanges. It also personally makes me cynical of the entire space. I moved…

If Tether is a "scam" backed by nothing, why would other Cryptocurrencies be more valid? It's just software.

It's price fixed at the US Dollar.

So if I own USDT, I should be able to convert USDT to BTC (e.g.) or paper money. If everyone converts their USDT to paper money, the organization that backs USDT has to refund USDT to dollars. If there aren't enough dollars to cover the price of USDT selling, then the USDT market goes belly up.

BTC is buy/sell driven through some kind of exchange so the price can float.

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

#306

Post by rocqua »

notyourday wrote: post #280
0wing wrote: post #263

Earlier quoted context omitted.

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.

I keep reading about these magical places. Say that I have a 1000 BTC. What is the exchange that would allow me to sell 500 BTC and wire money to my account in: a) Chase Manhattan Bank in New York City ( USD ) b) National Westminster Bank in London ( GBP ) c) HSBC ( Paris ), account in Euros. The wire must show up live in 72 business hours and post to the account within 72 * 2 hours.

For my small ventures ( Not sure how this works for non dutch citizens. Presumably a dutch bank-account suffices. They don't seem to be an exchange though. Instead they are essentially market making, keeping their own supply. You don't have an account there. Instead, when selling they present you an address to send to, and when buying you give them the address to send to, Moving 500 BTC there in a single trade would probably exhaust their supply. At the moment they report 250BTC+, I've seen ~150BTC the last few times I checked.

Still, it seems to be an actual functional on/off ramp for BTC - EUR.

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

#307

Post by zik »

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?

Actually I've yet to find anyone who has successfully done it. I suspect that they pretend to do it but don't actually do it in practice.

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

#308

Post by rocqua »

simias wrote: post #210
Crespyl wrote: post #191

Earlier quoted context omitted.

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.

Originally, 'fiat' had the same link to gold as crypto has to fiat. True, for taxes fiat is needed, but it is possible to have a thriving economy without needing access to fiat.

The moment people can start to pay rent and groceries in crypto, it makes sense to accept crypto even if you can't turn it into fiat. As long as taxes are paid in fiat, you need some of it, but that wouldn't make crypto useless.

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

#309

Post by andrewla »

spookthesunset wrote: post #243
andrewla wrote: post #230

Earlier quoted context omitted.

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,…

> 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. No, I have USD in my account when I deposit to Chase. I can go to Chase and say "give me my fucking money" and they'll give me sweet cold, hard dirty fiat dollars with, in general, no questions asked. I deposited in dollars, my account balance is denoted in…

You try it - try to get more than 10,000 USD cash out of your bank, and then tell me how sweet that fiat money is (much less doing this without any questions asked). This is not to send out the ridiculous trope of “fractional reserve banking is a fraud” or anything; Chase, for the moment, is solvent, and recent events have made it clear that the Federal Reserve will sooner barbecue children than let a bank customer not have access to their funds, regardless of the solvency of the bank.

If you look in the Bitfinex subreddit, you’ll see tons of posts complaining about slow withdrawals, but the older posts all say that the situation was resolved. It might be that they’re just oiling the squeaky wheels, but on the whole it looks like things are working, just slow.

You say that “Bitfinex Credit” is backed by USDT, not USD. Why do you think that? And even if they do this as an internal accounting trick, it is only problematic if Bitfinex is insolvent. USDT seems like a red herring here - either Bitfinex has the money to back their customer deposits or they don’t.

The last time they were insolvent they managed to issue funny money to recover, and, inexplicably, kept their position as the market leaders.

The allegations of market manipulation are concerning, but the crux of it is that if Bitfinex is printing unbacked USDT and using them to drive the price up, that simply means that they are insolvent. Because there are essentially no operating credit markets in the cryptocurrency space, the ripple effects of a run on Bitfinex would be limited by that; not to say they’d be nonexistent, but other market centers trade huge volumes now indepently of Bitfinex.

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

#310

Post by rmrm »

rhino369 wrote: post #299
rmrm wrote: post #287

Earlier quoted context omitted.

Because its exactly equivalent to selling Tether for USD, which we know they do. There are arguments that they couldnt have liquidated so much BTC, but I don't see any specific argument that leads on to assume that they wouldnt have. Unless one puts fraud as the entire goal. Which can't be discounted, but its just not obvious, to me.

It's somewhat equvalent but more complicated and more expensive (Transaction costs at each step). It also has one huge downside, which accounts for why you wouldn't do it. You'd be flooding the market Tethers nobody is asking for, which risks crashing the value of Tethers. They could buy back the tethers for dollars to stablize the price, but that would make the whole transaction useless. There is also volitity risk.…

True on volatility and transactions, I shouldnt have said exactly. But volatility speaks to why you would want to exit BTC as quickly as possible, if trying to avoid. One could argue it should net out to nothing over time.

I dont see it as flooding the market with anything, the Tethers are created in effect by people exiting cryptos into Tether on all these exchanges that only deal with Tether rather than USD (potentially!).

Lets step back to Tether creation. There are zero out there. Someone gives Tether $10 million for 10 million USDT. Those matriculate out in the universe, and are being exchanged back and forth for cryptos. Someone somewhere always holds those 10 million Tether. The price of cryptos rises and rises. Now all of a sudden the demand for USDT has increased, as people who exit crypto on those exchanges need more units than before, rather than 8500 USDT per BTC its 20000 USDT per BTC. No one has given Tether anymore USD directly for USDT. What would happen in this scenario is the price of USDT would rise. One way, not the only way, but one way for Tether to bring the price back under control, would be to buy BTC for USDT, issuing new shares, to bring the price back down. Which at $1 means equillibrium.

Is that how things work, I certainly dont know. But that mechanism is one way it could work. And it could explain why USDT are created on down days. Its the demand of people getting out of BTC driving it.

Now they could totally take that money and spend it on hookers and yachts for all I know...but thats at the end of the chain.

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