Bitfinex and Tether required to end all trading activity with New Yorkers • Hacker News Board

Re: Bitfinex and Tether required to end all trading activity with New Yorkers

#181

Post by mannykannot » Tue, Feb 23, 2021, 3:02 PM UTC

eMGm4D0zgUAVXc7 wrote: post #112

pavlov wrote: post #79

Earlier quoted context omitted.

> (probably is now) This kind of argumentation makes cryptocurrency proponents so insufferable. There’s no evidence Tether is backed, but somehow we can just assume in a parenthesis that they probably are, and then go on a tangential rant about banks or fiat or digital gold or something.

> makes cryptocurrency proponents so insufferable Tether is not a cryptocurrency. It's a cargo cult: A plain old centralized system which got the word "cryptocurrency" slapped onto it to attract dumb money.

That is beside the point: "(probably now)" is an entirely fanciful and blatantly self-serving attempt by a cryptocoin proponent to avoid the very real problem Tether poses for Bitcoin.

Re: Bitfinex and Tether required to end all trading activity with New Yorkers

#182

Post by easymodex » Tue, Feb 23, 2021, 3:03 PM UTC

ROARosen wrote: post #158

PragmaticPulp wrote: post #31

Earlier quoted context omitted.

Cryptocurrency isn’t the only way to escape USD inflation. Investors have been investing to avoid inflation long before Bitcoin was invented. Investing in virtually any asset other than cash will, almost by definition, shield you from inflation. Inflation is an increase in asset prices, resulted in reduced buying power. You only need to invest in assets (stocks for example) and minimize holdings in cash if your goal…

While your point is correct, I live in NY and true, it's heartening to see that someone is looking out for obvs fraud. But it's really annoying that I can't (straightforwardly) open an account at most crypto exchanges, and I'm banned from investing according to my choosing and to my knowledge. If I decide to hedge inflation with some obscure or even mainstream "coin" that should be my choice why should gov be able to…

So much for freedom right?

Re: Bitfinex and Tether required to end all trading activity with New Yorkers

#183

Post by PragmaticPulp » Tue, Feb 23, 2021, 3:04 PM UTC

redblacktree wrote: post #152

erwan wrote: post #133

Earlier quoted context omitted.

You can inflate the money supply and still be "deflationary" if the convenience yield of holding the money (tokens, UTXOs, or whatnot) exceeds or neutralize that inflation rate. You make an excellent point, Bitcoin doesn't have to overtake gold or become a global-reserve to change the world. It just has to be a plausible alternative that enables people to opt-in or out of the system. It has largely already achieved t…

> I'm hopeful for a future of monetary pluralism. My big concern about monetary pluralism is what happens to US citizens, when their day-to-day currency stops being used as the reserve currency for the world? I have trouble imagining any way in which that turns out good for me, as someone living and working in the US. Anything you can do to assuage my fears, since you seem to be educated on the matter?

As much as we hear about things like M1 money supply, the vast majority of wealth doesn’t exist in the form of cash. Investors hold companies, stocks, real estate, and so on. Fluctuations in money supply (or demand for currency) have exaggerated significance in online crypto discussions because crypto proponents find that angle more favorable to their “buy crypto” argument, not because it’s the full picture.

The global reserve currency issue is worth watching, but remember that it isn’t a binary on/off switch where everyone changes overnight. Likewise, it’s not really true that USD is the global reserve currency so much as one of the most trusted. Again, crypto proponents like to suggest the collapse of the US currency is imminent, but the global market believes otherwise. Likewise, crypto proponents want you to believe that Bitcoin is the logical alternative, but again that’s missing the point that part of the reserve currency math depends on things like stability, resistance to manipulation, and backing of a powerful government.

Re: Bitfinex and Tether required to end all trading activity with New Yorkers

#184

Post by [deleted] » Tue, Feb 23, 2021, 3:08 PM UTC

PragmaticPulp wrote: post #20

raiyu wrote: post #9

Is this the first official ruling on tether that shows it isn’t backed 1:1 by the US dollar? That has long been speculated, but if this is the first official verification how does that affect the Market. Especially the self dealing of Bitfinex.

Tether themselves essentially admitted that it wasn’t fully backed in 2019: https://www.coindesk.com/tether-lawyer-confirms-stablecoin-7... The strangest part of the Tether story is how much of it was obvious or even out in the open. Cryptocurrency proponents were happy to look the other way as long as prices were only going up. I suspect cryptocurrency proponents and Bitfinex are working hard to spin this as a win f…

[deleted]

Re: Bitfinex and Tether required to end all trading activity with New Yorkers

#185

Post by BenoitEssiambre » Tue, Feb 23, 2021, 3:08 PM UTC

deanmoriarty wrote: post #178

devoutsalsa wrote: post #147

Earlier quoted context omitted.

Stocks prices get negatively impacted by rising interest rates. With interest rates at ~0%, there's little money to be made in bonds, savings accounts, or anything that pays interest income, so people put money into stocks w/ the hope the stocks will go up. When interest rates go up to fight inflation, there's more incentive to put money into bond markets, which means there's not as much money going into stocks, whic…

What’s your recommendation for least-worse inflation hedge?

Buy all the non perishables, non obsoletables you're going to need for the next decade. Buy them in discounted bulk for and extra return. Bonus: capital gains tax free!

Re: Bitfinex and Tether required to end all trading activity with New Yorkers

#186

Post by CarelessExpert » Tue, Feb 23, 2021, 3:09 PM UTC

ForHackernews wrote: post #153

CarelessExpert wrote: post #129

Earlier quoted context omitted.

> This is only true if we accept your unstated premise that BTC itself isn't a big ole Ponzi scheme. Let's be clear, here: There's a substantial difference between Bitfinex engaging in outright financial fraud vs a bunch of people buying into the value of a virtual currency for reasons no one can understand. BTC is not a ponzi. It's just a long-running speculative bubble. A collective delusion. You can disagree with…

Sort of. There are many many people hyping Bitcoin (and various bitcoin-adjacent projects: mining rigs, wallets, dodgy unregulated exchanges, etc.), and most of them have a vested financial interest in it. BTC didn't get to the price it is today on the backs of a few cypherpunks experimenting with decentralized digital currency technology.

> Sort of. There are many many people hyping Bitcoin (and various bitcoin-adjacent projects: mining rigs, wallets, dodgy unregulated exchanges, etc.), and most of them have a vested financial interest in it.

You've basically described commerce.

Pick a random asset class--stocks, real estate, commodities, etc--and ask yourself: are there people who are hyping that asset who have a vested financial interest in it?

The answer is almost certainly "yes" in every case.

Re: Bitfinex and Tether required to end all trading activity with New Yorkers

#187

Post by safog » Tue, Feb 23, 2021, 3:15 PM UTC

CapmCrackaWaka wrote: post #162

safog wrote: post #148

Earlier quoted context omitted.

You'd need to do better than that. How exactly does printing USDT lead to BTC price inflation? I haven't heard anything convincing yet. Most of the vol doesn't come from the BTC USDT pair. Exchanges don't seem to be doing anything shady like manipulating the price upwards by themselves.

The story is that Tether has been printing tethers and buying Bitcoins. However, they haven't released any concrete holdings or submitted to an audit AFAIK, so there's a lot of speculation on how big of a problem this actually is.

I don't think there are any claims that Tether the organization itself is doing anything like that. They just print USDT and send it to people who are interested in buying USDT like exchanges.

The two problems as I see them are:

- Is USDT actually backed 1:1 by USD / cash equivalents as Tether claims? w/o independent audits we have no idea. So technically, if you hold USDT on an exchange and use it to trade alts and evade the taxman, then if this whole thing falls apart your USDT might be worthless.

- The owners of Bitfinex and the people who run tether are the same set of people. So theoretically it's possible that

   + Bitfinex generates artificial demand for USDT somehow 
   + Finds a way to swap actual USD for USDT (customer 
     deposits? 19bn worth of customer deposits? Unlikely) 
   + In turn goes around and buys BTC with that USD for some 
     reason 
   + Does it w/ enough vol that all the arbitrage bots won't 
     be able to arbitrage it away.

These are a lot of ifs and I'm just not seeing the incentives here as best case Finex gets stuck with a bunch of BTC they inflated themselves which isn't in their interest.

I'm not a finance guru, so I'd love it if someone more informed than me can comment on how someone can pull this off.

Re: Bitfinex and Tether required to end all trading activity with New Yorkers

#188

Post by silexia » Tue, Feb 23, 2021, 3:15 PM UTC

PragmaticPulp wrote: post #87

mumblemumble wrote: post #52

Earlier quoted context omitted.

Even if we assume only Bitcoin, it's not currently expected to stop printing money until (assuming Ray Kurzweil wasn't right all along) long after we're all dead. The Bitcoin inflation story is more political than simply economic. Right now, it's not really possible for it to be narrowly about whether printing money is OK. But one could easily mount an argument about whether humans should be able to twiddle with the…

It is supremely ironic that we’re supposed to believe that the best way to escape money printing is to buy a cryptocurrency that was invented out of thin air, which is continuously mined (during most of our lifetimes) out of thin air by doing useless calculations. Or even worse, a basket of multiple crypto currencies, where the number of available crypto currencies and crypto assets grows larger every day.

I saw a great comment earlier, "Buying bitcoin to hedge against inflation is like buying lotto tickets to hedge against Apple stock declines."

Re: Bitfinex and Tether required to end all trading activity with New Yorkers

#189

Post by dec0dedab0de » Tue, Feb 23, 2021, 3:17 PM UTC

BenoitEssiambre wrote: post #185

deanmoriarty wrote: post #178

Earlier quoted context omitted.

What’s your recommendation for least-worse inflation hedge?

Buy all the non perishables, non obsoletables you're going to need for the next decade. Buy them in discounted bulk for and extra return. Bonus: capital gains tax free!

So invest in toilet paper?

Re: Bitfinex and Tether required to end all trading activity with New Yorkers

#190

Post by olalonde » Tue, Feb 23, 2021, 3:19 PM UTC

aplummer wrote: post #177

olalonde wrote: post #174

The hypocrisy. Tether was pushed to the "darkest corners of the financial system" *because* of regulators. It seems they tried their best to remain solvent and didn't steal cash reserves. But regulators made their life hard at every turn. If you care about protecting USDT holders, maybe stop interfering with their operations and stop seizing their funds? And now, they have to submit regular reports to the NY regulato…

From the article: > Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” said Attorney General James. “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie Are you claiming this is false and they paid the 18.5m penalty for not lying about USD reserves?

Part of their USD reserves were frozen by regulators in Poland and Portugal. It is debatable whether having funds frozen by regulators can be de accurately described as sustaining "massive financial losses". Sure, they could have been more transparent about what was going on. But so far, it seems that all their issues originate from regulators making it impossible for them to run a legitimate business, not fraudulent intentions (which is what they are often accused of).