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Predictably, the BTC/USDT market (on Binance) is showing an inflated price for BTC as people try and bail out. Elsewhere the price of BTC is falling. It's impossible to tell the real price anymore because, for the moment, both actions are cancelling each other out.
Earlier quoted context omitted.
This is riveting. I find myself wanting to give you pull quotes but honestly just scroll down, especially to the points where they quote chats that Bitfinex showed them under subpoena.
The only way it could get even more interesting (though probably unlikely) is if the same people behind Bitfinex and Tether (who are indeed the same people - Tether offered a Line of Credit to Tether, and the same two people signed the documents for both sides - wasn't that another of their lies, that they had no relation to each other??), are also behind Crypto Capital?
"As explained to OAG attorneys by Respondents' counsel. Bitfinex and Tether have also used a number of other third party payment processors to handle client withdrawal requests, including various companies owned by Bitfinex/Tether executives, as well as other 'friends' of Bitfinex - meaning, human being friends of Bitfinex employees that were willing to use their bank accounts to transfer money to Bitfinex clients who had requested withdrawals."
Earlier quoted context omitted.
To repeat the other reply: The primary suspicion about tether was lack of solvency, and the [edit: CFTC] subpoena went out in late 2017. It would not have taken more than some weeks to determine if the assets were not present. It's pretty hard to imagine the AG sat on tether insolvency for 18 months.
> The primary suspicion about tether was lack of solvency, and the subpoena went out in late 2017 Per the court filing, the investigation of Bitfinex and Tether began in 2018 and the subpoena went out on November 27, 2018.
CFTC subpoenaed Tether back in 2017: See eg https://webcache.googleusercontent.com/search?q=cache:4hW_8L...
So why hasn't the bottom fallen out of Tether yet?
To actually exit Tether, most of these people would have to buy Bitcoins or another cryptocurrency accepted by most exchanges, register for the account verification processes there (every exchange that handles fiat money has the same KYC procedures as banks, i.e. take a picture of yourself and your driver's license and wait a couple days while an employee manually verifies it), transfer your Bitcoin to the other exchange, sell it to USD, and then move it out to a bank account. That takes time and a lot of hassle. We'd expect to see a rise in the price of BTC at USDT-based exchanges as Tether holders need to convert to Bitcoin to get out, along with a fall in BTC at fiat exchanges as they sell that Bitcoin. To some extent this is happening (Coinbase Pro's BTC price is almost $100 less than Tether-only exchanges like Binance or Bitfinex), but it's less severe than I would expect from a true run on the bank. Most Tether holders probably figure they'll take their chances because the hassle of getting out is worse than the possibility of losing their investment.
Reserve currencies can go a long time before people finally run for the exits. The US dollar hasn't been backed by anything since 1971 and is still ticking strong.
Predictably, the BTC/USDT market (on Binance) is showing an inflated price for BTC as people try and bail out. Elsewhere the price of BTC is falling. It's impossible to tell the real price anymore because, for the moment, both actions are cancelling each other out.
>"OAG does not seek lo enjoin or interfere with the orderly operation of Bitfinex or Tether' s legitimate businesses. if any. including orders by legitimate traders on the Bitfinex platform, or legitimate tether holders, to redeem their tethers for dollars. Indeed. protecting legitimate traders using the Bitfinex platform. and legitimate holders of tether. primarily those residing in New York, is why a preliminary injunction is necessary now to preserve the status quo pending the completion of OAG's investigation." https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet...
The delicious irony in it all is that the money in your bank is backed by about $0.10 for every dollar they owe savers.
I hope for the day when people expect the same of the banking system that underpins the whole economy.
Cryptocurrency exchanges seem to be full of fraud and deception.
It's almost like unregulated financial institutions have a tendency to screw over their customers... No one could have predicted this in the consistently solvent, regulated, and trustworthy cryptocurrency market. It's too bad bitfinex got ripped off by a surely unrelated entity. /s Have we learned our lesson yet?
Everyone agree's that tether should have a 1-to-1 backing. The delicious irony in it all is that the money in your bank is backed by about $0.10 for every dollar they owe savers. I hope for the day when people expect the same of the banking system that underpins the whole economy.
If there were an F.D.I.C. for tether then I'm sure people would have different expectations (and likewise, if there were no F.D.I.C. for the US banking system).