Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

ag.ny.gov

Post reply on HN
Print view View original

461–470 of 517 posts

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

#461

Post by hmcdona1 »

eightysixfour wrote: post #418
hmcdona1 wrote: post #382

I'm so confused why everyone just blindly believes Tether is this whole big conspiracy. I am by no means defending the organization but let's just take a step back here: > Where does the funding come from to print tether? When they mint 1 Tether they sell it on an exchange for $1. They don't need anyone to upfront lock up $1 and then also sell it for $1... Are stablecoins not just essentially an interest free loan to…

> When they mint 1 Tether they sell it on an exchange for $1. They don't need anyone to upfront lock up $1 and then also sell it for $1... According to the argument against Tether, your first principal here is wrong. In this argument, Tether mints a USDT and trades with someone who has bitcoin or other crypto and wants a stablecoin. What the trader believes they are getting is a coin which is 1:1 backed by USD. In th…

I think that does help clarify, but I'd say it also aligns with the point I was trying to make in some important ways. They are trading one USDT for $1 of value. If they keep that capitol invested in BTC and do hold only 1:1 in collatoral...no shit, that's is pretty damn reckless BUT they are making the promise that they have the capitol to back it. Given the exponential rise in BTC again this last year I'd be inclined to agree with them for now.

Claims that this process inflates the process of BTC seem far to exaggerated. It's reallocating value that was already there. Firstly, someone has to sell the BTC in order to buy the Tether with it so that argument is somewhat of a moot point. And if they are selling the BTC for USD or other fiat it's actually increasing the sell pressure of BTC against said fiat. It might open the opportunity for trades/swaps which could drive the price either direction faster...but it doesn't make value out of thin air.

I'm not saying Tether is not responsible for poorly investing or protecting the collateral that backs their coin. I'm just saying I can't compute the claims that this is some sort of manipulation scheme. The concept is exactly the same as decentralized stable coins like DAI except the backer is a centralized entity and not a contract. Does me minting DAI magically pump the value of ETH because that is the coin I put up as collateral? No that's a ridiculous claim. I can however feel comfortable holding DAI knowing that the contract will enforce the value of the token no matter the price of the ETH backing it.

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

#462

Post by quentinadam »

tylersmith wrote: post #439
jonplackett wrote: post #437

Earlier quoted context omitted.

Why does USDC and USDT need to exist for this? What’s the benefit of not just having USD in your Coinbase/bitfinex acc if they’re meant to be pegged anyway?

Sending USDT is cheaper, faster and easier than sending actual USD.

I don't fully agree with that. - Cheaper: Well most decent banks I have been working with don't charge on USD wires, or they charge something like $20 flat, which happens to be on par or cheaper than the ethereum blockchain fees nowadays - Faster: In my experience (in sending hundreds of wires every month), the actual "sending time" of USD wires via Fed wire or SWIFT is literally minutes, so that's on par with blockchains. Most of the time the funds are just stuck somewhere in the compliance department. The same would hold if you withdraw/deposit USDT/USDC to an exchange. Funds can still get stuck waiting for compliance approval. - Easier: That's debatable. I guess some banking UIs are better than others. And blockchain is not particularly known to be UI/UX friendly either. One definite advantage I could think of is that when you hold USDT/USDC in your wallet, then you have full control over them, but I bet 99% of the USDT/USDC is held on exchange, and exchanges are more and more starting to act like banks (with all the slowness that that entails).

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

#463

Post by ac29 »

jonplackett wrote: post #437
vmception wrote: post #428

Earlier quoted context omitted.

Nice this is how Coinbase functions with USDC too Likely they all piggyback off of each other’s implementations in the face of evolving regulatory guidance

Why does USDC and USDT need to exist for this? What’s the benefit of not just having USD in your Coinbase/bitfinex acc if they’re meant to be pegged anyway?

Because many exchanges are in no way capable of holding a banking relationship with a legitimate bank that transacts in USD.

edit: Perhaps that was overly snarky - the issue is that the US requires legitmate banks to take certain efforts to identify their customers (KYC), and prevent money laundering (AML). Meatspace banks aren't perfect in this regard either, but many crypto exchanges are either unable or unwilling to do this, or are already proven to be engaged in fraud or other financial crimes.

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

#464

Post by ac29 »

vkou wrote: post #443
vmception wrote: post #290

Earlier quoted context omitted.

Almost all fiat deposits into Bitfinex create USDT. Thats an additional fact that the amount is in line with the amounts that would be deposited into any big exchange. If Coinbase minted USDC whenever someone deposited, you would see the same kind of growth. The basis of your entire post is assuming impropriety based on pretty normal behavior with the addition of the business quirk of when USDT is created. The abilit…

> Almost all fiat deposits into Bitfinex create USDT. Which is insane. Those are customer funds, that Bitfinex owes to their customers, if they choose to withdraw from their ecosystem. They aren't a personal piggybank for them to dip into as they please. This is not at all like fractional reserve banking, where a financial liability (customer deposts) are used to print dollars (in the form of loans), because customer…

This case stops short of proving exactly what percent they are currently backed at - there is almost certain some level of "legit" deposits (Tether has value in evading capital controls). The weight of evidence is strongly in favor of past financial crime, and the imposed transparency requirements suggest NYAG suspects these issues are ongoing. I dont suspect they will ever provide satisfactory evidence of legitimacy, and the DOJ is almost certainly investigating them by now.

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

#465

Post by ac29 »

bitcoinmoney wrote: post #440
vmception wrote: post #290

Earlier quoted context omitted.

Almost all fiat deposits into Bitfinex create USDT. Thats an additional fact that the amount is in line with the amounts that would be deposited into any big exchange. If Coinbase minted USDC whenever someone deposited, you would see the same kind of growth. The basis of your entire post is assuming impropriety based on pretty normal behavior with the addition of the business quirk of when USDT is created. The abilit…

so bitfinex customers deposited 30B US$ since last year? hard to believe.

I think Tether is mostly a fraud, but the market for escaping capital controls (aka money laundering) is almost certainly $30B/year or more.

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

#466

Post by ac29 »

dcolkitt wrote: post #406
tutfbhuf wrote: post #305

Earlier quoted context omitted.

> There is an easy way. Swap USDT to USDC on Curve. Deposit USDC on Coinbase. Convert USDC to USD on Coinbase. Withdraw USD. Then what is your explanation for why it is not possible to directly exchange USDT for USD, there must be a reason that no exchange wants to do that. > that most of the market doesn't perceive a risk. That is absolutely no indicator for safety.

> That is absolutely no indicator for safety. Currently, several billion in value is locked into Defi-based liquidity pools with USDT. If USDT collapses tomorrow, the stakers will lose nearly all of their principal. (Fast traders will quickly swap worthless USDT for all the USDC in the pool, before hardly anyone has time to remove liquidity.) The largest of these pool, currently pays about 2.6%.[1] Even if all of tha…

> If you really disagree, you can even short USDT, by borrowing USDT on Compound at 4.2%. Then use that to buy USDC and supply it on Compound at 4.9%.[2] If USDT collapses, you'll make nearly 100% as you'll only have to buy back now worthless USDC. In fact the market will even pay you take this position, with the only risk being if USDC collapses relative to USDT.

This trade involves risk, and not just the direct USDT risk. If it didn't, there's no particular reason multi-billion dollar hedge funds wouldn't buy this down to the yield of an equivalent US treasury or similar.

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

#467

Post by lazide »

gh55 wrote: post #459
lazide wrote: post #376

Earlier quoted context omitted.

What you are pointing to is expressly pointing out that 1) it is illegal, 2) it is illegal for a very good reason, 3) if anyone finds out the illegal things going on, it will likely result in catastrophic (or at least very, very expensive) consequences. The pretending part that Tether and Bitfinex were doing was fundamentally different than the walling happening within financial institutions, where it has to be disjo…

USDT, USDC and DAI each have their own set of counterparty risks. USDT is regulated somewhere sunny, USDC somewhere that could be hostile if given enough power, and DAI is backed by digital assets such as custodied Ethereum. The sooner there are more solid options in more jurisdictions, and more certainty around USD stablecoin regulation, the better. I will be very glad to see Tethers go away.

I can’t find where Tether is ACTUALLY regulated, but I can find a lot of misinformation about where it is regulated and how, even in their own legal pages. For instance, they claim they are regulated by FinCEN. However, they appear to only be registered with FinCEN for the purpose of reporting crimes and the like (money laundering), which does not (quite explicitly) give them the right to claim FinCEN in any way is regulated or overseeing them in the traditional sense.

If someone runs across Tether (somehow?) explicitly committing money laundering in a jurisdiction that FinCEN controls, yeah they could go after them - but since they don’t have an address near as I can tell, that’s not easy to do, and all they say on the matter is they are ‘incorporated in Hong Kong’ [https://tether.to/contact-us/]

Also, their ‘proof of funds’ is kinda ridiculous from any sort of auditing or compliance perspective and crazy out of date [https://tether.to/wp-content/uploads/2018/06/FSS1JUN18-Accou...]

If you have any more accurate information, please post!

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

#468

Post by ac29 »

bbfnfkvkfk wrote: post #350
dudus wrote: post #272

I've been following Tether for quite a long time. I have no absolute proof it is a scam but the writing is on the wall. Here are some facts. - The current Market Cap of USDT is 34 Billion Dollars. It was 4B this time last year. Since the value is pegged this means there has been an influx of cash of 30 B into this shady company in the last year alone. Who invested this money? We have no idea since Tether doesn't disc…

What will happen to NY AG which investigated Tether for 2 years, went through 2.5 mil pages of documentation, yet missed such an obvious scam that a lot of people, including on this forum, can clearly see? If Tether implodes, is this proof that NY AG is incompetent or even worse, somehow implicated in this giant scam by covering it up? In the NY AG settlement PDF it clearly states that they will not indict Tether in…

Doesn't mean the DOJ or any other State AG can't bring action. NY also doesnt remove themselves from prosecuting over any future action, like being unable to provide the agreed upon transparency reports.

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

#469

Post by ac29 »

samizdis wrote: post #286
devoutsalsa wrote: post #206

Earlier quoted context omitted.

I'm mostly kidding... Buy forever stamps from USPS. As they raise the price of postage, your stamps will go up in value, and then you can sell them for a profit! This is probably a terrible idea, but it makes me giggle. Now I'm imaging some sort of push on r/wallstreetbets to YOLO on stamps, posting insane strategies on how to predict when the price of postage will go up, by how much, and how liquid the market is for…

There's a quaint and quirky thing in the UK called a premium bond, which you can buy and which the government guarantees to buy back from you at its initial fixed value (1 bond costs 1 British pound). Every month, a lottery system pays out prizes to holders of bond numbers, as chosen by "ERNIE" - "Electronic Random Number Indicator Equipment". https://en.wikipedia.org/wiki/Premium_Bond

Would be interesting to see something like that in place of state lotteries her in the US. Neither is a good investment, but the longer term nature of the prize-bond system makes it less likely to attract desperate short term gamblers.

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

#470

Post by hackcasual »

ac29 wrote: post #465
bitcoinmoney wrote: post #440

Earlier quoted context omitted.

so bitfinex customers deposited 30B US$ since last year? hard to believe.

I think Tether is mostly a fraud, but the market for escaping capital controls (aka money laundering) is almost certainly $30B/year or more.

If this was for money laundering, why such a high balance?
Post reply on HN