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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

#331

Post by conanbatt »

bb88 wrote: post #303
conanbatt wrote: post #295

Earlier quoted context omitted.

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.

Thats like saying you can make a loan for the bank, and buy the bank's stock saying that the bank is making more profits on loans now.

It may work in an incredible bull market (which we have) but it has immense risk exposure. Also bear that the monet that Tether sells their btc, they depreciate their own reserves.

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

#332

Post by dingo_bat »

andrewla wrote: post #309
spookthesunset wrote: post #243

Earlier quoted context omitted.

> 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 n…

I don't know about where you live but I have withdrawn ₹50 lakh (about $80k) from a bank account and the only way it was different from withdrawing smaller amounts is the time they took to count the notes. And they don't ask questions, it's literally your money.

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

#333

Post by dingo_bat »

The more I read about USDT, more it looks like money laundering. These guys take your USD and issue you equivalent tokens you can trade with. As long as a lot of people don't try to encash their tokens everything will be fine.

Also note that if holding USD is the only problem this is supposed to solve, why not just hold USD? Except if you want to bypass your local laws. I buy USDT in country A. Trade BTC for it, then sell BTC for USD in another exchange in country B. This is the only utility and this itself seems illegal.

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

#334

Post by dingo_bat »

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…

But why can't you just move from BTC to actual USD in this case? And hold USD until you think BTC is cheap enough to buy again.

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

#335

Post by dawhizkid »

dingo_bat wrote: post #333

The more I read about USDT, more it looks like money laundering. These guys take your USD and issue you equivalent tokens you can trade with. As long as a lot of people don't try to encash their tokens everything will be fine. Also note that if holding USD is the only problem this is supposed to solve, why not just hold USD? Except if you want to bypass your local laws. I buy USDT in country A. Trade BTC for it, then…

Most cryptoexchanges don't actually support crytofiat transfers, so USDT offers a substitute in situations where you don't want to "cash out" (per se) but want to hold some of your balance in something that is supposed to be equivalent to fiat.

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

#336

Post by adbachman »

Feniks wrote: post #328
rspeer wrote: post #317

Earlier quoted context omitted.

Do you want Tether to be audited and regulated like the fractional reserves of a bank? I'd sure find it entertaining while it lasts. This is also moving the goalposts, because they claim that Tether is fully backed, not fractionally. Changing their story there would involve admitting to a billion-plus-dollar fraud.

Fully backed, has anyone been able to independently audit their reserves?

The auditing firm they hired to do that audit last year just (in the last two weeks) erased all trace of the relationship from their website.

No audit is expected at this point, we're getting close to the "exit" phase of the scam.

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

#337

Post by jnbiche »

dingo_bat wrote: post #333

The more I read about USDT, more it looks like money laundering. These guys take your USD and issue you equivalent tokens you can trade with. As long as a lot of people don't try to encash their tokens everything will be fine. Also note that if holding USD is the only problem this is supposed to solve, why not just hold USD? Except if you want to bypass your local laws. I buy USDT in country A. Trade BTC for it, then…

> These guys take your USD and issue you equivalent tokens you can trade with.

Nope. That's how it was until about a year ago, when all their banking accounts were closed (probably due to the issue you describe).

For the past year, they just randomly printed millions of "US-Backed" tokens, and people trade them as if they were actually backed by dollars, even though they are not the result (since a year ago) of any USD deposits, and even though you can exchange them for actual USD. It's bizarre.

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

#338

Post by dingo_bat »

dawhizkid wrote: post #335
dingo_bat wrote: post #333

The more I read about USDT, more it looks like money laundering. These guys take your USD and issue you equivalent tokens you can trade with. As long as a lot of people don't try to encash their tokens everything will be fine. Also note that if holding USD is the only problem this is supposed to solve, why not just hold USD? Except if you want to bypass your local laws. I buy USDT in country A. Trade BTC for it, then…

Most cryptoexchanges don't actually support cryto fiat transfers, so USDT offers a substitute in situations where you don't want to "cash out" (per se) but want to hold some of your balance in something that is supposed to be equivalent to fiat.

Makes sense, so instead of holding BTC which can go +-30% in a few hours, you hold in USDT which is pegged to the dollar.

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

#339

Post by dustingetz »

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".)

no snark: if you wanna get into YC, and a YC partner calls you up and says Good news, You're in! Oh but we'll need you to cut ties with that local accelerator, theyre suing us and we don't want you to testify but no big deal now right? you're part of the YC family now!
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