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

ag.ny.gov

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

#471

Post by mastermojo »

tim333 wrote: post #415
mastermojo wrote: post #405

Earlier quoted context omitted.

This is the confusing part to me. Everything I read online talks about Tether being fraudulent. Shouldn't the price of Tether reflect a discount based on that? If it doesn't, does that mean the market is okay with a Tether being 1 USD even if it is not backed by anything?

Not necessarily because Tether the company will use the USD or similar that they have to buy tethers on the market if the price falls below $0.995 or so. The worry is if there are say 30bn tethers out there and they only have $20bn cash and enough people redeem the the price will stay about $1 until the $20bn runs out and then suddenly drop to not much. It's actually possible that rather than just holding US$ against…

So the consensus here seems to be that Tether the company is doing some sort of fractional reserve banking? I'm assuming no one on hacker news is holding Tether ...

To the point of actions speaking louder than words, why are there people who trust Tether enough to hold it? If there is no trust there wouldn't everyone redeem and create a bank run?

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

#472

Post by dfjklgj45985 »

New Yorkers haven't been allowed to trade on Bitfinex since 2017. That's when they updated their terms to discriminate against US entities. If US persons are illegally and fraudulently trading on Bitfinex, that does not give any US authority jurisdiction over Bitfinex. How grandiose.

https://www.bitfinex.com/posts/227

https://www.bitfinex.com/legal/exchange/terms

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

#473

Post by CryptoPunk »

Absolutely absurd. The degree to which the people of New York are being infantilized, when the state is telling outside parties to not allow them to trade their digital assets, is a textbook example of why the philosophical underpinnning of the modern regulatory system are illiberal.

How trustworthy Tether is is completely incidental to my comment on the New York regulator.

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

#474

Post by cbhl »

quentinadam wrote: post #462
tylersmith wrote: post #439

Earlier quoted context omitted.

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 blockc…

Sure, if you are in the developed world and have access to traditional or online banks, and a relatively stable local currency.

Then there's, like, the other 4+ billion people in the world.

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

#475

Post by jrl »

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…

Even the 70% backing number is too high. According to the findings of the NYAG:

"Because of Tether’s inability to conduct significant banking activity during this time, it could not itself hold dollars sufficient to back the hundreds of millions of new tethers that had entered the market. Until September 15, 2017, the only U.S. dollars held by Tether ostensibly backing the approximately 442 million tethers in circulation was the approximately $61 million on deposit at the Bank of Montreal."

https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...

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

#477

Post by eightysixfour »

hmcdona1 wrote: post #461
eightysixfour wrote: post #418

Earlier quoted context omitted.

> 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 incli…

> but it doesn't make value out of thin air

You are right, but it can drive the price. Imagine you have an infinite supply of USDT and are deeply in debt, people currently believe the USDT are backed by $1. You are incentivized to create USDT, trade for Bitcoin/crypto and then, since you are also an exchange, create fake trading volume with yourself to drive the price up (it costs you nothing, just some fake $0 USDT!), which drives people to get in with real money.

Do you not see how the incentives here are for Bitfinex and Tether to behave terribly?

I think it is worth noting that I am pro-cryptocurrency and want alternatives to government backed fiat to exist, but to do that the whole industry needs to operate on solid, transparent foundations. People choosing to trust companies that have lied to them repeatedly is an enabling behavior that will result in more scammers and, eventually, regulators.

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

#478

Post by freeAgent »

futevolei wrote: post #449

Lots of dead bodies in this camp going back years. I used to be one myself. At this point if the ny ag can’t outright bring this supposed scam down then you have to admit it’s not a scam and move on.

What!? NYAG’s jurisdiction is New York. Tether and Bitfinex are barred from doing any business in New York or with New York entities. They went almost as far as they could go without criminal charges against the executives personally. The US justice system is not necessarily done with them.

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

#479

Post by alasdair_ »

vmception wrote: post #374
jdemaeyer wrote: post #368

Earlier quoted context omitted.

If fiat deposits into Bitfinex create USDT, shouldn't fiat withdrawals from Bitfinex burn USDT? I'm having trouble to find comprehensive data on USDT burns but https://coinmarketcap.com/headlines/news/tether-just-burned-... seems to suggest that one billion is extraordinary (and those weren't removed from circulation but swapped to another chain), and Tether finds it Twitter-worthy when they burn 100 million: https:/…

I agree and have always found this interesting. But it is similar behavior in more transparent stablecoins. Only Gemini’s GUSD has seemed to completely burned to nothing at one point. But USDC and DAI have growth so similar to Tether during bear markets that I cant put the lack of burns squarely on Bitfinex. Either there is a broader accounting issue with minting and burning methodologies or people/entities really do…

> If Tether is worth $1.02 then you can mint a new tether by depositing on Bitfinex and selling that Tether for a 2% premium.

Sure, but what if Tether is at $0.98 - how do you get dollars back?

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

#480

Post by freeAgent »

qertoip wrote: post #421

According to the agreement with NYAG Tether admitted no wrongdoing. The statement: https://tether.to/tether-and-bitfinex-reach-settlement-with-...

They also don’t deny wrongdoing. That’s frequently how settlements work even though it’s clear to anyone who reads the settlement findings that there was wrongdoing on Tether’s part.
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