Tether says its cryptocurrency is worth $2B–but its audit failed • Hacker News Board

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#111

Post by dictum » Tue, Feb 06, 2018, 3:09 PM UTC

arisAlexis wrote: post #108

Sangermaine wrote: post #66

Earlier quoted context omitted.

You're bizarrely reversing the burden of proof here. If they're solvent, it should be a simple matter to prove it. If "insider knowledge" has the answer, they should easily be able to assuage all doubts.

they have huge incentive not to disclose exactly where their accounts are offshore due to potential government crackdowns on crypto. that is why their previous audit was difficult, attested the amounts but ultimately was cancelled. you can see the amount of panic and fanatism by the downvotes on my previous comment. be sure to bookmark this chat for the future :)

The simpler answer is that counting on the other party to do right when you have absolute information asymmetry has always been a sucker's game.

Yes, this time it may be different. But even the classic Nigerian scam is based on the premise that you cannot verify the claims – you cannot involve the government, the police or any other third-party, you just have to trust the relative of the disgraced kleptocrat to receive your millions.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#112

Post by conanbatt » Tue, Feb 06, 2018, 4:16 PM UTC

Sangermaine wrote: post #106

conanbatt wrote: post #93

Earlier quoted context omitted.

mtGOX was insolvent because they lost all their assets, thats not the case for bitfinex as far as we know. That is independent from tether itself, it can happen to all exchanges.

>as far as we know Yes, precisely the sort of information an audit would reveal. Curious, then, that despite their repeated pledges for robust auditing they first declared they'd engaged a firm to do those audits that didn't actually do audits, then terminated their relationship with the second, legitimate auditor.

An audit of tether would not show you if bitfinex is solvent or not. Even if tether as a project is a total failure, bitfinex could pay at length for its shortcomings.

Plus, they made most of the money on the play itself.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#113

Post by arisAlexis » Tue, Feb 06, 2018, 5:37 PM UTC

dictum wrote: post #111

arisAlexis wrote: post #108

Earlier quoted context omitted.

they have huge incentive not to disclose exactly where their accounts are offshore due to potential government crackdowns on crypto. that is why their previous audit was difficult, attested the amounts but ultimately was cancelled. you can see the amount of panic and fanatism by the downvotes on my previous comment. be sure to bookmark this chat for the future :)

The simpler answer is that counting on the other party to do right when you have absolute information asymmetry has always been a sucker's game. Yes, this time it may be different. But even the classic Nigerian scam is based on the premise that you cannot verify the claims – you cannot involve the government, the police or any other third-party, you just have to trust the relative of the disgraced kleptocrat to recei…

comparing the biggest crypto exchange by volume to a nigerian scam is kind of extreme imo. The tech is there and they have always delivered. Yes they don't have an audit and I hope they produce it but govs do crack down lately.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#114

Post by wglb » Tue, Feb 06, 2018, 6:53 PM UTC

jobigoud wrote: post #26

aviv wrote: post #6

Earlier quoted context omitted.

We also don't usually see a private company literally print money.

Banks are private companies and they create money all the time when they make loans.

No, the money existed and they transfer that money to the person taking out the loan.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#115

Post by arisAlexis » Tue, Feb 06, 2018, 11:57 PM UTC

arisAlexis wrote: post #113

dictum wrote: post #111

Earlier quoted context omitted.

The simpler answer is that counting on the other party to do right when you have absolute information asymmetry has always been a sucker's game. Yes, this time it may be different. But even the classic Nigerian scam is based on the premise that you cannot verify the claims – you cannot involve the government, the police or any other third-party, you just have to trust the relative of the disgraced kleptocrat to recei…

comparing the biggest crypto exchange by volume to a nigerian scam is kind of extreme imo. The tech is there and they have always delivered. Yes they don't have an audit and I hope they produce it but govs do crack down lately.

you can even see the fanatism of downvotes to such a simple comment I made

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#116

Post by bradleyjg » Thu, Feb 08, 2018, 3:08 AM UTC

JumpCrisscross wrote: post #99

Ajedi32 wrote: post #96

Earlier quoted context omitted.

So does this mean Bearer Deposit Notes[1] are illegal? [1]: https://www.tdsecurities.com/tds/pdfs/Manulife_Bank.pdf

Bearer bonds [1] are intriguing, mechanically and historically. You will note, under the Restrictions section of your Manulife memorandum [2], that its sale outside Canada or to Americans is prohibited. This is because the issuance of such instruments was practically banned in the United States in 1982 [3]. Bearer instruments are, while prevalent, in decline [4]. It is an active area of global financial regulation [5…

I looked into the law that banned bearer bonds, TEFRA, and I think maybe the relevant provisions wouldn't apply to instruments that mature immediately (which is certainly less than 183 days) and pay not interest (including in the way zero coupon bonds pay interest).

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#117

Post by ric2b » Thu, Feb 08, 2018, 3:03 PM UTC

wglb wrote: post #114

jobigoud wrote: post #26

Earlier quoted context omitted.

Banks are private companies and they create money all the time when they make loans.

No, the money existed and they transfer that money to the person taking out the loan.

You should look up what fractional reverse banking is.

You deposit $100 and they lend it out to 10 different people (or more, depends on the legislation limits), effectively creating $900 extra dollars while those 10 loans remain open.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#118

Post by tim333 » Sun, Feb 11, 2018, 7:17 AM UTC

gst wrote: post #72

stult wrote: post #44

Earlier quoted context omitted.

I think you're right that this is a mess, my only uncertainty is whether it's garden variety incompetence or active bad faith. For an auditor to fire you, either you have to not be paying your bills for a long time or you have to be deeply uncooperative or insanely demanding. That said, the consensus I've heard from my audit colleagues (I work in public accounting) is that no one has the slightest freaking clue how t…

> That said, the consensus I've heard from my audit colleagues (I work in public accounting) is that no one has the slightest freaking clue how to audit crypto. Shouldn't the crypto part be trivial for Tether? You'd just need to check how many Tethers were issued on the blockchain. The hard part ensuring that those Tethers are backed by real Dollars - and that should be a regular accounting task that doesn't have any…

The whole thing should be fairly trivial if the Tether folks would let the auditors or even the public see their accounts and balances. I suspect they won't because they are not what they are supposed to be.

Though that could be for reasons other than the money being missing - maybe when Tether couldn't open an account directly they opened one through a shell company and don't want the bankers to know or something along those lines. My guess is that when they couldn't hold usd they held btc instead and then tried to prop that up.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#119

Post by tim333 » Sun, Feb 11, 2018, 7:26 AM UTC

panarky wrote: post #43

simias wrote: post #21

Earlier quoted context omitted.

What surprises me most is that despite all these red flags USDT still holds its peg mostly well. Right now it trades less than a cent below the dollar on kraken for instance. It seems like cryptocurrency traders are paradoxically pretty trusting.

I agree that the audit failure makes Tether look super shady. But when traders continue to buy and sell within 1% of parity, that's a signal that maybe there's more going on here. I don't buy the concept that Bitfinex can somehow rig the price on other exchanges. If traders are all selling Tether, while simultaneously new Tethers are getting printed, then the price should tank. When the price doesn't tank, that shoul…

Tether presumably maintain the price by buying and selling USDT within 1% of parity, probably automatically using software, and probably mostly by trading BTC/USDT rather than USD/USDT given the difficulty of moving actual USD.

It's not really rigging the price in a bad way - it's kind of how the thing is supposed to work.

Re: Tether says its cryptocurrency is worth $2B–but its audit failed

#120

Post by tim333 » Sun, Feb 11, 2018, 7:39 AM UTC

DennisP wrote: post #59

conanbatt wrote: post #28

Earlier quoted context omitted.

I think bitfinex is holding the peg on where you can see it (kraken). Nobody else can buy /sell tether. Even a guy saying tether probably has the money on twitter was only willing to buy at 45% premium. Now, bitfinex looks super solvent though, so its not like the exchange can dissolve like mtgox.

How is Bitfinex involved with Kraken?

I don't think Bitfinex is directly involved with Kraken. Bitfinex is a shady offshore operation [1] and Kraken is a fully US regulated company with their main office in SF.

Kraken is however about the only place you can actually trade USDT for real USD. Or indeed short the things.

[1] >[people] have attempted to visit the company’s registered address in Hong Kong only to find an accounting company which served as a registration agent for the company

>most of the executive team is distributed across the globe.https://medium.com/@cadammitchell/bitfinex-has-a-true-workin...