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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

#201

Post by mikeyouse »

jamoes wrote: post #141
vkou wrote: post #101

Earlier quoted context omitted.

The accusations were quite substantiated, his defense was about as laughable as 'my baby brother did it'.

Ulbricht never presented a defense for the murder-for-hire charge because the charge was dropped and never went to trial. Ulbricht has been sentenced to double-life in prison for all non-violent charges.

This isn't right - his attempted hits directly led to a longer prison sentence and he could have refuted the factual allegations if he had a defense for them.

See page 3/4 and then page 27:

  https://s3.amazonaws.com/s3.documentcloud.org/documents/1391926/gov-uscourts-nysd-422824-142-0.pdf

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

#202

Post by Mengkudulangsat »

vkou wrote: post #156
Mengkudulangsat wrote: post #122

Earlier quoted context omitted.

Skimming through this I've come to some conclusions:- A reliable banking partner is prerequisite to run a fiat-crypto exchange. Loss of banking partner is fatal to an exchange, and should immediately trigger a wind-down. On the flip-side, the banking partner should in good faith, continue to process withdrawals until the wind-down is complete. Bitfinex's refusal to wind-down after the Wells Fargo decision is irrespon…

> Multiple fiat-currency crypto exchanges are not sustainable due to this dynamic. And yet, multiple-fiat-currency exchanges are, for some reason, sustainable.

Very few examples... Coinbase / Bitstamp / Kraken?

People don't realize just how much of a tightrope they are walking on [1]. Serving crypto requires a deliberate business pivot [2], and not many are keen. This IMO is the largest hurdle crypto is facing for adoption.

[1] https://diar.co/volume-2-issue-23/#2 [2] https://www.sec.gov/Archives/edgar/data/1312109/000119312518...

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

#203

Post by WrtCdEvrydy »

omarchowdhury wrote: post #150
lamontcg wrote: post #117

Earlier quoted context omitted.

It is that last bit where it gets sticky. If you tank the market and create systemic insolvency then you might hold $1B of short contracts at an exchange where the operators have packed up and fled to anonymous sandy beaches, and for all your cleverness those contracts and $10 might buy you lunch tomorrow.

> It is that last bit where it gets sticky. I understand we're doing thought experiments here, but I'd say the really tricky part is breaking the private key.

> the really tricky part is breaking the private key

That's the interesting thing, you can try to brute force keys in general by just throwing enough money at the problem. Technology always advances and makes cryptography less secure.

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

#204

Post by chimpburger »

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?

It's used for margin trading at exchanges that do not accept fiat

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

#205

Post by orthecreedence »

Semaphor wrote: post #182
bb88 wrote: post #47

Earlier quoted context omitted.

Let's not think of it as a bubble. Let's think of it as Wyle E Coyote running off a cliff and forgetting to look down, because that seems to be the modus operandi of the average HODL.

But HODLers don't really care about tether, do they? Isn't tether mainly used for traders who want to temporarily move out of crypto and use tether for that?

It's been suggested that a large percentage of the crypto market cap is based on tethers which have been used to prop up prices but also used to hedge against falling BTC prices. Essentially, bitfinex prints tether whenever the price of BTC drops, and in the meantime, people use these printed tethers to hedge against BTC (and buy back in when the price trends upward again).

So there are many iterations of compounded phantom value folded into the market cap of BTC. If tether is found insolvent, essentially 80% of the value of BTC disappears overnight.

The entire value of the crypto market depends on people's belief that one tether is worth 1USD. Or so the theory goes.

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

#206

Post by LandoCalrissian »

MadSudaca wrote: post #69
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?

As long as there's value in a 1-to-1 USD-backed crypto, more tethers will created. The barriers of entry are relatively low and someone is bound to get it right eventually.

They are literally making those tethers out of thin air, you know that right? It's not backed 1 to 1 at all and this report clearly calls it out.

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

#208

Post by asenna »

hendzen wrote: post #114
ronsor wrote: post #30

Cryptocurrency exchanges seem to be full of fraud and deception.

Speaking as someone who was deeply interested in bitcoin in ~2013, cryptocurrency today is a wretched hive of scum and villainy. When someone tells me today that they are working on something related to crypto I make a mental note to never work with them or take anything they do seriously.

This quite an ignorant comment. I've been working with Blockchain tech (Crypto by extension) for a while now and there's a lot of experimenting, genuine projects being built right now. A lot of smart people are in this space building solutions. Major companies like Samsung / Facebook have teams working on PoCs.

Unfair to imply that everyone in Crypto is selling snake oil.

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

#209

Post by xmly »

nonbel wrote: post #184
wmf wrote: post #87

Earlier quoted context omitted.

This was rumored pretty heavily when Bitfinex said "Divulging [bank account] info could damage not just yourself and Bitfinex but the entire digital token ecosystem … you are cautioned that there may be serious negative effects with this information becoming public." LOL https://news.bitcoin.com/bitfinex-introduces-top-secret-bank...

> "The New York Attorney General’s court filings were written in bad faith and are riddled with false assertions, including as to a purported $850 million “loss” at Crypto Capital. On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded. We are and have been actively working to exercise our rights and remedies and get those funds released. S…

So they admit that the money was once lost, just they recovered part of it? Of course, they forgot to disclose.

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

#210

Post by LandoCalrissian »

ShorsHammer wrote: post #67

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.

I'm pretty sure most people here understand how fractional banking works. Tether isn't a bank, it's claiming to be a currency, and not only that but one that is fully backed by the reserves of their US dollars.

This is like a government claiming they lost their most sovereign currency and have no idea where it went.

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