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Tether: The Story So Far

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Re: Tether: The Story So Far

#171

Post by nullc »

vkou wrote: post #164
nullc wrote: post #119

Earlier quoted context omitted.

Still missing the context on that, because AFAICT the reports seem to show that it was at one point 100% backed. It's very possible that I'm missing something, since this isn't something I've paid a lot of attention to (as it always seemed obvious that it would eventually end up in this state).

Suppose that you became a bank. I create an account, and deposit $100 into you. You take that $100, keep $20, and then lend the other $80 to a heroin-addled homeless person. He swears he'll give it back next year, plus interest. And gives you a receipt and everything. Now, suppose that you are dragged up into a courtroom, over your mishandling of customer funds. You point out that no funds were mishandled - you have…

I agree they weren't fully capitalized after they lent funds out, but the poster I was responding to was claiming that their filings prove they never were fully capitalized as they had long claimed.

It appears to me that instead, their filings are strong evidence against the poster prior claims-- suggesting instead that they were at one point fully capitalized (and are not any longer, of course).

Re: Tether: The Story So Far

#173

Post by nostrademons »

api wrote: post #121
djinnandtonic wrote: post #104

I am rapidly developing the opinion that there is no such thing as fintech, just corporate and criminal entities using the slow pace and poor understanding of regulators to skirt laws.

Throw in creative ways to extract fees without them looking like fees and I think you've accounted for most of it. One of the things I've learned by watching the cryptocurrency saga is that money and finance belong to the class of things you want to be unbelievably boring. Other members of this class include governments, infrastructure, and the legal system. Interesting finance is probably a scam. Interesting infrast…

"May you live in interesting times" -- likely apocryphal Chinese curse

Re: Tether: The Story So Far

#174

Post by Havoc »

Tether continues to amaze me. How on earth does it remain stable despite such obvious questionable aspects?

Are there that many true believers keeping this stable?

Re: Tether: The Story So Far

#176

Post by ALittleLight »

rafaelm wrote: post #151
skywhopper wrote: post #83

Earlier quoted context omitted.

Cryptocurrencies aren't anonymous. They also don't eliminate payment processor risk: fraudulent exchanges, hackers, and your own mistakes can all lose or lock you out of your money. And generally there's far less legal recourse when that happens with crypto. I'm skeptical how many people in Venezuela saved their fortunes via Bitcoin et al, but if you have some data on that, I'd be curious to hear about it. In particu…

This is of course anecdata, but I've personally used BTC to send remittances in Venezuela. I'm not sure how many people here use BTC as a means of preserving the value of their money since most people would rather hold USD, but for sending remittances, it cannot be beat. As another interesting anecdote, my sister is in Argentina and a bunch of friends started asking her how to buy BTC before the election yesterday. S…

How do the people receiving your remittances cash them out to something usable? Is there a Venezuelan local bitcoins thing?

Re: Tether: The Story So Far

#177

Post by jcranmer »

tptacek wrote: post #120

The story, summarized, as I understand it from this article: 1. It's difficult to bank cryptocurrency because traditional finance has KYC/AML procedures and cryptocurrency exchanges (generally) don't. 2. For awhile, the largest exchange was Bitfinex. 3. Bitfinex suffered a breakin and lost $70MM worth of Bitcoin, and became insolvent. 4. Bitfinex took 36% of all clients deposits/balances to make up for the loss, and…

You're missing this little bit: Tether is not asking questions (of a KYC/AML nature) at a scale where they are required to be asking those questions, and the only people who would agree to work with them turned out to be criminals (for not asking those questions), who skimmed off money from Tether in the process. But don't worry, because the government will totally make them whole because there is no way that innocent little Tether could have known of all the illegal shenanigans going on… breaks down in riotous laughter

Re: Tether: The Story So Far

#178

Post by vkou »

nullc wrote: post #171
vkou wrote: post #164

Earlier quoted context omitted.

Suppose that you became a bank. I create an account, and deposit $100 into you. You take that $100, keep $20, and then lend the other $80 to a heroin-addled homeless person. He swears he'll give it back next year, plus interest. And gives you a receipt and everything. Now, suppose that you are dragged up into a courtroom, over your mishandling of customer funds. You point out that no funds were mishandled - you have…

I agree they weren't fully capitalized after they lent funds out, but the poster I was responding to was claiming that their filings prove they never were fully capitalized as they had long claimed. It appears to me that instead, their filings are strong evidence against the poster prior claims-- suggesting instead that they were at one point fully capitalized (and are not any longer, of course).

The thing with a Schrodinger's scam is that it really doesn't matter whether or not the scam was fully capitalized.

When you issue a full reserve currency, without any of the necessary oversight required to run one (Like... An independent auditor...) you're committed to operating in a manner indistinguishable from a scammer.

It's possible that they were fully capitalized for the first twenty minutes of Tether's launch. It is possible they were fully capitalized for the first twenty days. Or the first twenty months. Without any kind of proper bookkeeping - which was a deliberate decision on their part[1], we have no idea. And it doesn't matter. [3]

[1] The most charitable interpretation of why they made that decision was that their long-term plan for keeping Tether running would be under-the-table money laundering through Crypto Capital, or its ilk.[2]

[2] [3] Mind you, this means that the entire implementation of Tether is unsustainable! It doesn't matter that they are sitting on a multi-billion-dollar, 100% capitalized reserve if their customers can't ever redeem Tether for USD! Such a situation is indistinguishable from having a 0% capitalized 'reserve'.

Re: Tether: The Story So Far

#179

Post by vageli »

kbenson wrote: post #124
lawn wrote: post #84

Earlier quoted context omitted.

And all the U.S. had to do is make drugs illegal, and it would disappear. (Or not.) > other than the anonymous money flows Are you saying that anonymous money is immoral and should be made illegal, and in the process dismissing all use cases that benefit from anonymity? And no, cryptocurrencies are perfectly legal in most of the world.

> And all the U.S. had to do is make drugs illegal, and it would disappear. (Or not.) Well, yeah. Making drugs illegal makes them disappear. From legal sources. The illegal sources share a similar set of problems as noted. Am I going to get what I paid for? Will I get all of what I paid for? Will there be repercussions? How safe is this? The drug market being illegal means that for the vast majority of people it's on…

> > And all the U.S. had to do is make drugs illegal, and it would disappear. (Or not.)

> Well, yeah. Making drugs illegal makes them disappear. From legal sources. The illegal sources share a similar set of problems as noted. Am I going to get what I paid for? Will I get all of what I paid for? Will there be repercussions? How safe is this?

It has been fascinating to me to see how important brand and reputation are in the underground, otherwise struggling-to-be-anynomous markets. But then, even in the chans there were tripcodes.

Re: Tether: The Story So Far

#180

Post by wp381640 »

ALittleLight wrote: post #176
rafaelm wrote: post #151

Earlier quoted context omitted.

This is of course anecdata, but I've personally used BTC to send remittances in Venezuela. I'm not sure how many people here use BTC as a means of preserving the value of their money since most people would rather hold USD, but for sending remittances, it cannot be beat. As another interesting anecdote, my sister is in Argentina and a bunch of friends started asking her how to buy BTC before the election yesterday. S…

How do the people receiving your remittances cash them out to something usable? Is there a Venezuelan local bitcoins thing?

Yes there is, sometimes they don't even remit but rather use btc. I send $10 a month to ~5 people in Venezuela and it's one of the only ways now to help out and/or live there
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