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Tether executives said to face criminal probe into bank fraud

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Re: Tether executives said to face criminal probe into bank fraud

#21

Post by pwned1 »

mikeblackson wrote: post #13
pwned1 wrote: post #10

An interesting primer on Tether, and whether it is a scam: https://www.zerohedge.com/crypto/what-effect-would-tether-be... (Yes, I know it's zerohedge, but this is a decent article) Tether usually has 2-3x the volume of bitcoin in any given day. And no one seems to know anything about how it works. So in my estimation, it probably is a scam...

Some people being ignorant about how it works makes it (probably) a scam? That ZH article's ifs, possiblies, and maybes are doing a lot of heavy lifting. Is the Bitcoin price up? Queue the Tether FUD.

Just look at the tether terms of service. A whole section on your representations and warranties as user. The reps and warranties that tether makes? "Tether makes no representations, warranties, or guarantees to you of any kind."

Re: Tether executives said to face criminal probe into bank fraud

#22

Post by gjsman-1000 »

Tenoke wrote: post #19
pwned1 wrote: post #10

An interesting primer on Tether, and whether it is a scam: https://www.zerohedge.com/crypto/what-effect-would-tether-be... (Yes, I know it's zerohedge, but this is a decent article) Tether usually has 2-3x the volume of bitcoin in any given day. And no one seems to know anything about how it works. So in my estimation, it probably is a scam...

>Tether usually has 2-3x the volume of bitcoin in any given day. And no one seems to know anything about how it works. I think these are both bad arguments. If the most used stablecoin is used for most BTC volume as well as other crypto trades, you'd expect it to be more. >. And no one seems to know anything about how it works What? People do know how it works, or at least as much as with many other projects.

Nobody knows where the USD supposedly backing it goes. Most of it is in “commercial paper” they said, but the investors who work in that industry say they’ve never heard of them.

This seems impossible because at their scale, that would make them, like, the 5th largest commercial paper investor on Wall Street. How could commercial paper investors not heard of them?

Re: Tether executives said to face criminal probe into bank fraud

#24

Post by phpnode »

fergie wrote: post #12

Some smart crypto people are saying that if Tether goes down it will take a whole load of other crypto down with it.

Any rational person can see that Tether poses an existential risk to the crypto economy - but the market is highly irrational. There was an interview with tether's CTO and GC the other day that was an absolute car crash[0] and should be sounding deafening warning bells for anyone invested in crypto, but instead we see the BTC price shoot up by 15% in the days since it aired. It is utter madness.

[0] https://www.youtube.com/watch?v=ZBEqyiO35cQ

Re: Tether executives said to face criminal probe into bank fraud

#25

Post by rich_sasha »

machinecontrol wrote: post #8
jstx1 wrote: post #4

> In February, Bitfinex and several Tether affiliates agreed to pay $18.5 million to settle claims from New York Attorney General Letitia James that the firms hid losses and lied that each token was supported by one U.S. dollar. Can anyone explain this because I'm not familiar with the legal framework here - they paid to settle with NYAG? So you pay and then having potentially broken a law isn't a problem anymore? Ho…

This is very common in the US, especially for banks and financial institutions. They settle without admitting any wrongdoing, and agree to pay a fine and promise to change their procedures to avoid doing this in the future. It is exceedingly rare for financial executives to go to jail for crimes committed by a corporation.

There’s a weird game-theoretic angle to it too. US regulators tend to mostly hammer down when they are confident they can win, they don’t like fighting and losing. So in a way, being told to pay a fine is seen as “pay the fine or else we’re going to court and winning”. It saves the regulators the hassle of actually proving they are right.

But of course there is then a second-order effect. If you are defending yourself against the regulators, right or wrong it is assumed the case is very strong, by all parties.

Ultimately it’s an agency problem too: regulators want (are incentivised to maintain) “clean” markets, not to send people to jail. In the short term, if their civil fine achieves it, their job is done and there is no need to drag themselves through the courts.

Re: Tether executives said to face criminal probe into bank fraud

#26

Post by jonahbenton »

jstx1 wrote: post #4

> In February, Bitfinex and several Tether affiliates agreed to pay $18.5 million to settle claims from New York Attorney General Letitia James that the firms hid losses and lied that each token was supported by one U.S. dollar. Can anyone explain this because I'm not familiar with the legal framework here - they paid to settle with NYAG? So you pay and then having potentially broken a law isn't a problem anymore? Ho…

The reason this happens is that the bar for proving criminal intent on the part of a corporation- which would lead to jail for executives and could lead to dissolution of the corp- is very very high. Getting the evidence related to "mindset" and linking it to action and doing so in a way that sufficiently resists various defense strategies is almost impossible, and extremely expensive and time consuming to litigate.

The result is a Nash equilibrium where companies, in a world where prosecutors had infinite time and resources, could be convicted of criminal acts, instead make a deal with prosecutors- whose investigations cost companies money to support and whose work is often public which can damage reputation. The size of the deal and other aspects of behavior/policy change will all be negotiated.

A company can never "admit wrongdoing" as doing so would have so many downsteam impacts as to make it impossible to stay in business. For instance, a company that "admitted wrongdoing" would be in violation of any terms of financing and of many employment contracts.

Re: Tether executives said to face criminal probe into bank fraud

#27

Post by onepointsixC »

mikeblackson wrote: post #13
pwned1 wrote: post #10

An interesting primer on Tether, and whether it is a scam: https://www.zerohedge.com/crypto/what-effect-would-tether-be... (Yes, I know it's zerohedge, but this is a decent article) Tether usually has 2-3x the volume of bitcoin in any given day. And no one seems to know anything about how it works. So in my estimation, it probably is a scam...

Some people being ignorant about how it works makes it (probably) a scam? That ZH article's ifs, possiblies, and maybes are doing a lot of heavy lifting. Is the Bitcoin price up? Queue the Tether FUD.

Unlike Bitcoin, Eth, and other coins, Tether was always claimed to be backed by something which ensured it's stable value. Tether the company claims that their tether coins are each worth $1.

There are now >$60Bn worth of Tether coin issued. With that much money they'd be a very serious private financial institution, and yet they only have 13 employee's. They have never been audited by any independent third party. They have repetitively lied about who owns the company (the same people who own Binance, the world's largest crypto exchange own Tether, and yet did not disclose that until it was found out). They have receptively changed their story on what backs Tether coin (originally each coin had $1 in a bank account to back it, now it's majoritively unspecified "commercial paper").

There is nothing which proves that Tether actually is backed by anything and the billions in new Tether coin which are minted could very well be worthless.

Re: Tether executives said to face criminal probe into bank fraud

#28

Post by gammarator »

graeme wrote: post #2

> But the Justice Department investigation is focused on conduct that occurred years ago, when Tether was in its more nascent stages. Specifically, federal prosecutors are scrutinizing whether Tether concealed from banks that transactions were linked to crypto, said three people with direct knowledge of the matter who asked not to be named because the probe is confidential. Notably this is for events some time ago. I…

This thread speculates that Tether’s commercial paper may be in Chinese real estate, which is currently suffering huge losses…

https://twitter.com/TheLastBearSta1/status/14183024655571107...

Re: Tether executives said to face criminal probe into bank fraud

#30

Post by spookthesunset »

pwned1 wrote: post #10

An interesting primer on Tether, and whether it is a scam: https://www.zerohedge.com/crypto/what-effect-would-tether-be... (Yes, I know it's zerohedge, but this is a decent article) Tether usually has 2-3x the volume of bitcoin in any given day. And no one seems to know anything about how it works. So in my estimation, it probably is a scam...

And yet people are so bought into crypto hype they look the other way. These dudes have been running this scam in plain sight for years now.

It always amazes me that the whole house of cards continues to stand and hasn’t completely blown up.

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