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

Tether executives said to face criminal probe into bank fraud

bloomberg.com

Post reply on HN
Print view View original

41–50 of 303 posts

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

#41

Post by maverick-iceman »

Ok so basically the accusation is that they said to the bank they were consultants/service company and did not disclose crypto

Back in the days banks would have meant they were in the cryptography sector or something.

Also why is this US business?

The US should be careful not to weaponize the USD, SWIFT DTCC or the correspondent banks network.

The world entrusted the US with said institutions (as well as the UN, World Bank, IMF) because the US never weaponized them, and never went after thought crimes.

The US can't stand Tether, more specifically it can't stand Crypto....so it is trying the same thing which pulled off with Microsoft in 2000 and with Standard Oil back in the days...only this time the population won't be onboard with it because there is no richer than god man in the high castle to point at .

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

#42

Post by gruez »

jasonlaramburu wrote: post #14

Edit: Isn't it a huge red flag that Tether doesn't make any money off transaction fees? Their daily volume is almost 2x that of BTC. They could fully support the company with a tiny transaction fee and avoid all the regulatory uncertainty/FUD. How does tether make money (aside from potential fraud)? Is there a transaction fee that supports the people and cost of running tether (the company)?

If I were running it as a 100% legal/safe operation I'd invest the balance in short term treasuries. If you multiply tether's liabilities ($61.9B) by the current 1 year treasury rate (0.09%), you get $55.7M, which seems like plenty of money to run such an operation.

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

#43

Post by deepvibrations »

spookthesunset wrote: post #30
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.

We don't truly know the severity of it yet, but we do know that money has been moving over to other stablecoins such as USDC over the past year or so and so risk is slowly decreasing. There is a huge amount of innovation in the space and i think to gloss over it as a 'house of cards' is a bit naive - there is no denying it is a volatile market, but it is here to stay, so best to embrace it and see if there are actually projects that resonate with you.

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

#44

Post by phpnode »

runbathtime wrote: post #33

What if Tether the company just throws in the towel? Take the reserves and run? What incentive do they have not too?

I don't think there really are any (or many) reserves. I think they just printed a bunch of tokens, used the tokens to buy BTC and to inflate the value of the crypto they hold in Bitfinex (Bitfinex and Tether are approximately the same company). If they throw in the towel they lose their ability to influence the crypto market which is where their actual gains come from.

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

#45

Post by deepvibrations »

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.

It certainly would, as currently USDT is used as collateral throughout the system, but I don't think Tether would just 'go down'. Regulators aren't stupid and the worst case imo is that there is a time period where people are told to redeem tether to USD or other stablecoins such as USDC/DAI. The space has been through worse things and always recovered, I do hope Tether is properly investigated so that we can have confidence in them or remove them from the space and use other stablecoins.

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

#46

Post by vmception »

rich_sasha wrote: post #25
machinecontrol wrote: post #8

Earlier quoted context omitted.

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 yourse…

Additionally, major regulators (feds + ny) are in a habit of not creating monopolies by not sanctioning a company or its executives into dissolution.

To them its worse to be responsible for reducing competition, which is a fascinating prisoner’s dilemma.

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

#47

Post by lottin »

jasonlaramburu wrote: post #14

Edit: Isn't it a huge red flag that Tether doesn't make any money off transaction fees? Their daily volume is almost 2x that of BTC. They could fully support the company with a tiny transaction fee and avoid all the regulatory uncertainty/FUD. How does tether make money (aside from potential fraud)? Is there a transaction fee that supports the people and cost of running tether (the company)?

They make a lot of money (potentially). They sell USDT tokens which cost nothing to produce for dollars. Then they take these dollars and invest them in various places. Holders of USDT tokens have no claim on the profits (unlike investors in money market funds) so the profits are all Tether's.

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

#48

Post by phpnode »

deepvibrations wrote: post #45
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.

It certainly would, as currently USDT is used as collateral throughout the system, but I don't think Tether would just 'go down'. Regulators aren't stupid and the worst case imo is that there is a time period where people are told to redeem tether to USD or other stablecoins such as USDC/DAI. The space has been through worse things and always recovered, I do hope Tether is properly investigated so that we can have co…

Where would these real USD come from if USDT is worthless? Why would a holder of USDC or DAI accept USDT in return if USDT is worthless?

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

#49

Post by [deleted] »

spookthesunset wrote: post #31
gammarator wrote: post #28

Earlier quoted context omitted.

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...

Or more likely tether isn’t backed by anything at all. The auditor they hired quit before completing their audit. Seems legit to me. These dudes are a complete scam but as long as BTC goes to the moon nobody seems to care.

[deleted]

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

#50

Post by h2odragon »

jellicle wrote: post #40

What Tether is doing is replaying the banking scams from the 1800s. A bank would open up, issue an unlimited amount of its paper currency, collect deposits in other, valuable currency, and operate for a while. Eventually it would collapse and the owners would walk away rich, having fleeced the public of a great deal of their money. https://en.wikipedia.org/wiki/Wildcat_banking US banking regulation is nearly weak eno…

Recall E-gold? Them folks were at least honestly nuts... I think they're all out of jail now.
Post reply on HN