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Crypto Market Roiled by New Allegations Against Tether, Bitfinex

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Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#191

Post by geofft »

panarky wrote: post #126
Felz wrote: post #29

Earlier quoted context omitted.

Which does make it rather curious that the music's kept playing, so far. Is "common knowledge" that it's probably a complete fraud (like this filing should give) required to pop the tether bubble? Or will even this not be enough?

People have been yelling that Tether is a ponzi fraud since it launched in 2015. And yet it still trades 1:1 to USD today, after the court filing was released. So is there some magic force that keeps the fraud running, and prevents market participants from cashing out their Tether in the mother of all bank runs? If you hold Tether why wouldn't you sell? Or is there more to the story than just "Tether is an obvious fr…

I don't understand cryptocurrency markets at all, but, could there be something where the only people participating in the USDT market are those who are at least somewhat confident that USDT is what it claims to be and therefore are pricing it at $1?

What do you get out of participating in the market if you expect Tether to be fraudulent? You'd personally price it at zero, then, right? Can you profitably short it, or does everything just break down if you're right?

That is, if you hold USDT and want to sell it for cheap, who is going to buy it for cheap-but-nonzero?

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#192

Post by aijoe »

bitreality wrote: post #190
h1d wrote: post #183

Earlier quoted context omitted.

Bad news is that so many exchanges use it as it is such a useful instrument for users who wish to get out of crypto temporarily when their exchanges don't support fiat trading. https://coinmarketcap.com/currencies/tether/#markets People will use it until it gets burnt and crashed.

Tether is currently being traded around 99 cents. The market, so far, has assigned a 1% devaluation, despite this report showing that they basically lost $850M. From what I can see on Coinmarketcap, there is $2.83 Billion Tether in circulation. So it would appear Tether has lost at least 30% of its assets (cash converted to Crypto Capital debt, which = toilet paper). I am shocked that people aren't taking this more s…

1% fluctuation is normal. Tethering is stabilized through arbitrage.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#193

Post by JaleDarvis »

jeremyjh wrote: post #112
gruez wrote: post #97

Earlier quoted context omitted.

Wait, what's so foolish about buying debts for a discount? There's an entire industry (collections) devoted to that. Sure, that time they lost, but hindsight is 20/20.

That is right, it is an industry. It has established risk models. It has norms and remedies. Most importantly, it has the triumvirate of debt worthiness (aka credit bureaus) at it's beck and call.

It had to start somewhere didn't it?

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#194

Post by willmadden »

peterlk wrote: post #8

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?

I'm not sure that your assertion that regulated financial institutions are somehow safer checks out with recent history.

Remember the Bernie Madoff ponzi? Bernie Madoff was literally the chairman of the NASD.

The 2008 financial crisis occurred inside of heavily regulated markets, and it was so bad it nearly brought down the world economy.

The effectiveness of regulation vs. the friction it imposes is what matters, along with how (and if) it is enforced.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#195

Post by Complexicate »

omarchowdhury wrote: post #188
will_brown wrote: post #148

Earlier quoted context omitted.

I don’t disagree, but it could have the reverse effect. Everything from just a ton of media attention and some adoption, to maybe something really positive like coins getting deposited to charity wallets (pineapple foundation seemed to get a lot of attention/vitality for donating their bitcoin). And it would be pretty ironic if it the coins moved and price of bitcoin crashed and actually became a peer to peer electro…

> And it would be pretty ironic if it the coins moved and price of bitcoin crashed and actually became a peer to peer electronic currency for the masses. The price of Bitcoin isn't what is preventing it from becoming a bonafide peer to peer electronic currency. Scalability and UX issues are.

I agree with UX, but scalability has a working solution in the Lightning Network. However, that needs major UX development...

Bitcoin also needs fungibility:

"Fungibility is the only property of sound money that is missing from Bitcoin & Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy. I am now focused on making Litecoin more fungible by adding Confidential Transactions." -Charlie Lee

https://twitter.com/SatoshiLite/status/1089935081337085952

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#196

Post by ceejayoz »

nonbel wrote: post #84
nlh wrote: post #70

Earlier quoted context omitted.

There's a huge difference: Yes, the bank only holds $0.10 in cash, but at least in the US, the F.D.I.C. backs up every dollar in your bank account up to $250,000. That's a major reason the reserve banking system functions. 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).

The FDIC is more a feel-good measure: >"Currently, the Deposit Insurance Fund (DIF), which is a fund set aside to cover the insurance obligations of the FDIC, has a required reserve ratio of only 1.35%. And that is only after a decision was made in October of 2015 to raise it, from its original level of 1.15%. Even more daunting, the DIF has until 2020 to reach this new 1.35% required reserve level. This means that,…

> the DIF is only required by law to have $3375 on hand for every $250,000 it is currently insuring

This is a silly thing to complain about.

Surely you don't think your car/home insurance company keeps the cash value of all the property they insure on hand? They keep a tiny fraction of what they've insured, to cover the tiny fraction that gets claimed as a loss in an average year.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#197

Post by milquetoastaf »

atomical wrote: post #159
themagician wrote: post #71

Earlier quoted context omitted.

The lesson will never be learned. The Ponzi scheme is as old as money itself. It’s never gone away. The one thing that crypto currency truly has revolutionized is the Ponzi scheme. You can do it any number of ways, add any number of twists, and do it over and over again. With crypto you don’t even have to be subtle. When the pot gets big enough you just outright steal it. It’s possible that Satoshi himself will try t…

It's safe to say Satoshi is dead. https://en.wikipedia.org/wiki/Hal_Finney_(computer_scientist...

he's not dead just in cryo!!

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#198

Post by Zarath »

peterlk wrote: post #8

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?

Nope. If you don't like it, you don't have to deal with it and it isn't your problem. I, for one, like being able to spend my money as I please, even if it entails higher risk. I don't need to be coddled.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#199

Post by Zarath »

6nf wrote: post #140
csomar wrote: post #7

I think the news was out for some time and only now the rumor started to confirm. Tether is trading at exactly $1/$1 on Kraken. It had touched $0.85/$1 on October 2018 though. It was discounted for the last quarter of the last year. The discount lasted for several months suggesting lack of liquidity and possibly lack of funds. The Tether discount suddenly disappeared. And suddenly a discount/premium appeared on Bitfi…

Why would you hold significant amounts of Tether? There's no upside and all of the downside. Why do you do it?

Best liquidity, most pairs, and can be bought at a discount.
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