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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

#391

Post by runeks »

bobjordan wrote: post #375
JumpCrisscross wrote: post #320

Earlier quoted context omitted.

> A foreign bank can hold USD without any US oversight If they hold it as hard cash, practically, sure. If they want to be allowed to send or receive wires and generally not get sanctioned by the United States, no. The U.S. Treasury claims international jurisdiction over U.S. dollars [1]. [1] https://cblr.columbia.edu/the-u-s-jurisdiction-over-transfer...

Definitely have suprising powers. I once sent a wire payment in USD from my Hong Kong company’s HSBC business bank account directly to my China company’s bank inside China, where my bank in China would convert it to renminbi. I was shocked to find out the bank wire was somehow held up in NYC! Blew my mind. Nothing to do with the USA in this transaction, except the USD. The reason the wire was held up? I had wrote the…

There is no such thing as a non-US bank holding electronic USD. All non-US banks hold USD via a US “correspondent bank”, and a USD transfer from one non-US bank to another amounts to the sender telling their correspondent US bank to transfer to the other bank’s correspondent (US) bank, and credit the account of the receiver.

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

#392

Post by h1d »

drcode wrote: post #24

Summary for newbs: Bitfinex is a crypto exchange kinda based in Hong Kong and kind of based in Taiwan (this seems to change depending on convenience.) Taiwan recently started becoming more rigorous about monitoring international USD wires, and lots of Bitfinex users had their money stranded in Taiwan. Bitfinex stopped supporting US customers because of these difficulties (AFAIK most customers did eventually get their…

And for those who want to know more. (Just a third party blog.)

https://medium.com/@bitfinexed

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

#393

Post by runeks »

seppel wrote: post #177
ebbv wrote: post #31

Earlier quoted context omitted.

You're skipping a key bit here; billions of Tethers magically appeared on the market in the last month and were used to buy BTC in suspiciously regular fashion, in 100 million USDT amounts, and with no clear evidence that it was actually purchased by anyone using real USD.

Ok, so they printed billions of Tethers and bought BTC with them, I get this part. What I don't get is: This means somebody sold BTC for billions of USDT (instead USD!). Who is doing this? Why would you sell for USDT instead USD? Maybe there some daytraders on the exchanges that go in and out the Tether every day, yeah. But that should not account for that much. Who is hodling that giant pile of USDT? And why?

> This means somebody sold BTC for billions of USDT (instead USD!). Who is doing this?

Bitfinex themselves? There’s no reason to assume that all the people buying USDT aren’t affiliated with the issuer(s) in some way.

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

#394

Post by swiley »

bobjordan wrote: post #375
JumpCrisscross wrote: post #320

Earlier quoted context omitted.

> A foreign bank can hold USD without any US oversight If they hold it as hard cash, practically, sure. If they want to be allowed to send or receive wires and generally not get sanctioned by the United States, no. The U.S. Treasury claims international jurisdiction over U.S. dollars [1]. [1] https://cblr.columbia.edu/the-u-s-jurisdiction-over-transfer...

Definitely have suprising powers. I once sent a wire payment in USD from my Hong Kong company’s HSBC business bank account directly to my China company’s bank inside China, where my bank in China would convert it to renminbi. I was shocked to find out the bank wire was somehow held up in NYC! Blew my mind. Nothing to do with the USA in this transaction, except the USD. The reason the wire was held up? I had wrote the…

I was under the impression that all of those transfers at some point ended up on an FTP server at the federal reserve before they were cleared.

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

#395

Post by TeMPOraL »

darawk wrote: post #291
thebiglebrewski wrote: post #276

Earlier quoted context omitted.

I love how much you're defending and willing to go to bat for something you haven't tested yourself nor seen any real world examples of. Why?!

I'm not going to bat for them. I'm explaining the way i've reasoned about the situation. If you disagree with my reasoning, feel free to explain why. Here's the chain: 1. Bitfinex claims to offer wires to Taiwanese accounts. 2. Bitfinex does redeem Tether 1:1 for USD (nominally, within your Bitfinex account). 3. Bitfinex claims to wire that redeemed USD to any Taiwanese account without delay or haircut. Now, given th…

Fair enough.

I'm buying this reasoning as evidence towards the hypothesis that they indeed redeem some amounts of USD.

All the other things I've read so far suggests this will turn into a game of musical chairs - some amount of people who make the wire orders first will get redeemed, and the rest will be out of luck.

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

#396

Post by TeMPOraL »

rmrm wrote: post #260
paulmd wrote: post #232

Earlier quoted context omitted.

Because Tether obviously does not have $2.3 billion in cash reserves on hand, there probably isn't 1/10th that volume of fiat in the entire cryptocurrency ecosystem (not market caps, liquid cash that could be withdrawn). They're writing checks they cannot cash, plain and simple. It's called "lying" and "fraud", your "but what if they did have the cash" is irrelevant, because they don't, and you're getting downvoted b…

Actually, you are the only one who has brought this up, that the liquidity dictates that they couldnt have sold BTC for USD. If that is true, then youve answered my question of what I was missing. I didnt aggressively fail to address this, it quite literally wasnt brought up. Thanks. EDIT: This apparently is no longer a site to ask questions or to challenge assumptions in good faith to get at an understanding. Its a…

I might be getting lost in the discussion, but I still feel you miss the core point - it's not about liquidity. Even if they could sell BTC for USD without affecting the crypto market, they still seem to have printed out USDT out of thin air and - as I understand - proceeded to buy BTC with them. That is, you could say they literally stole those BTC.

Going from USDT to USD in a roundabout way through BTC doesn't change anything if USDT themselves are bullshit.

RE your EDIT: it is, but deep downthread like this, it's always luck what you get. Also don't worry about the downvotes, everyone gets their share of them here :).

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

#397

Post by makomk »

dragonwriter wrote: post #389
seppel wrote: post #386

Earlier quoted context omitted.

> It's also possible that There's are being used fraudulently to pump BTC. My point is: How can you pump BTC with USDT? You need somebody to buy your USDT if you want to sell USDT. In fact, you need somebody to buy an enormous amout of USDT if you want to pump BTC. Pumping BTC is not a one sided thing, and I fail to understand the other side. What I get from this thread is that that nobody really knows who is buying…

> How can you pump BTC with USDT? Get people to believe it's backed 1:1 by USD when it's not, so that it is viewed as equivalent to USD but less problematic in regulatory terms, and then print a bunch of unbacked USDT and use them to buy BTC. To the market, the effect is as if a whole lot more actual USD were chasing BTC, effectively looking like higher demand.

I'm not sure how effective that would be in practice. Total Tether issued as of the end of 2017 was about 1.3 billion. Coinbase booked over $1 billion in revenue in 2017; the amount of money going into them was presumably much bigger than that. (There's also weak evidence from price differences etc between exchanges that the bulk of the demand has been coming from Coinbase/GDAX.)

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

#398

Post by sireat »

darawk wrote: post #291
thebiglebrewski wrote: post #276

Earlier quoted context omitted.

I love how much you're defending and willing to go to bat for something you haven't tested yourself nor seen any real world examples of. Why?!

I'm not going to bat for them. I'm explaining the way i've reasoned about the situation. If you disagree with my reasoning, feel free to explain why. Here's the chain: 1. Bitfinex claims to offer wires to Taiwanese accounts. 2. Bitfinex does redeem Tether 1:1 for USD (nominally, within your Bitfinex account). 3. Bitfinex claims to wire that redeemed USD to any Taiwanese account without delay or haircut. Now, given th…

Even IF ( a big IF) your explanation is true, it is of little help to most of people holding USDT.

So in the best case scenario to redeem USDT for USD:

  1. You have to have a Taiwanese bank account.
  2. You have to gain verified status at Bitfinex's discretion.
  3. You have to have a balance over 50k USDT.
Bitfinex/Tether backers know that it is near impossible to trigger a serious run on their USD balances with such rules.

Thus it logically follows, they have very little incentive to actually keep 2.3B in USD EVEN if they received 2.3B in USD.

I can buy the explanation that originally Tether planned to have 1:1 USD for each USDT.

However the massive regular printing of Tether really strains the 1:1 claim.

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

#399

Post by stephen_g »

JetSpiegel wrote: post #388
stephen_g wrote: post #378

Earlier quoted context omitted.

Not at all. First of all, banks do have to balance their books. The 'fractional reserve' model taught in school is actually not how banks work in reality, and violates accounting rules. Every single deposit in the bank does need to be backed by something - if banks just stored deposits then they would have to either have the full reserve backing, or other assets (cash, investments, etc.) backing every dollar. Lending…

And yet, Lehmann Brothers went tits up.

Well, of course banks can become insolvent (i.e if enough people default on their loans), which is why many governments now insure people’s deposits (up to a certain limit).

But Lehman Brothers wasn’t a commercial (retail) bank, which is what I was describing. They were an investment bank, which generally don’t take deposits or directly offer loans.

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

#400

Post by throwaway90887 »

seppel wrote: post #286
spookthesunset wrote: post #105

Earlier quoted context omitted.

> You can exchange USDT for fiat, on demand, for exactly 1 USD/USDT, but only at Bitfinex My understanding is this isn't the case. My understanding is Bitfinex will take your USD and convert to USDT which you can then use to buy crypto. But it won't take your USDT and turn it back into dollars. In fact, my understanding is the only way to turn USDT back into USD is either directly through Kraken or indirectly through…

> My understanding is Bitfinex will take your USD and convert to USDT which you can then use to buy crypto. So, who is selling BTC for USDT and why? Who is selling so many BTCs for USDT that they have to print 100 million USDT every other week? I'd really like to understand that (see also my parallel discussion).

To safely "park" your crypto assets when it tanks in price. Many exchanges offer tether as a trading currency instead of fiat, to avoid regulatory hurdles.
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