Tether executives said to face criminal probe into bank fraud • Hacker News Board

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

#131

Post by [deleted] » Mon, Jul 26, 2021, 4:47 PM UTC

jpmattia wrote: post #101

spookthesunset wrote: post #31

Earlier quoted context omitted.

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.

> Or more likely tether isn’t backed by anything at all. In order to believe this, you have to believe that Leticia James got the data from the NYAG subpoenas, and then ignored the fact that Tether has no backing. So no, not "more likely".

[deleted]

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

#132

Post by nostrademons » Mon, Jul 26, 2021, 4:49 PM UTC

phpnode wrote: post #24

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.youtu…

BTC shot up (by about 250%) the last time Tether was nearly shut down as well, as the NY AG was investigating them from Apr - Jun 2019.

It makes sense when you consider that the population holding cryptocurrencies generally considers the USD worthless (you see that in some of the other posts here). USD are not an option. If Tether goes under, the next most stable reserve currency of the crypto economy is Bitcoin, so money flies out of Tether and into Bitcoin, pumping the price up.

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

#133

Post by ceejayoz » Mon, Jul 26, 2021, 4:50 PM UTC

graeme wrote: post #117

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…

Update. Tether has replied here. This site is down, but this tweet has it: https://mobile.twitter.com/bitcoinsguide/status/141969423526... URL for if their site comes back online: https://tether.to/tether-responds-to-bloomberg-article/

"Open dialogue with law enforcement agencies" is a pretty funny way of describing that relationship.

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

#134

Post by wjohnsto » Mon, Jul 26, 2021, 5:05 PM UTC

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…

DAI is backed by USDC, and USDC is a competing stablecoin. Why would a competing stablecoin want to use their own reserves to redeem USDT for you? I don't mean to be antagonistic here, but there is no safe and steady off ramp for holders of USDT if it is found to be a scam. The value of USDT will collapse, and anyone holding it will have to take a 100% loss. The only way to remedy that would be in the form of some sort of bailout from some other entity, but I don't know how or why that would happen.

I do agree that crypto has been through some issues in the past and has recovered, and I'm sure in the long run it will recover from a Tether collapse as well. In the short term the market will take a significant hit, and many of the exchanges that deal heavily in USDT could collapse because of a lack of liquidity.

EDIT: DAI is backed by USDC not USDT, terribly typo :( https://share.streamlit.io/tadzz/maker_dai_collateralization...

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

#135

Post by NicoJuicy » Mon, Jul 26, 2021, 5:08 PM UTC

deepvibrations wrote: post #43

spookthesunset wrote: post #30

Earlier quoted context omitted.

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 actual…

Calling it innovation seems pretty naive.

- defi: images hosted on url's that can disappear

- eth sites: exists since 1970?

- eth auth: a step back, lose keys, lose account. No recovery possible.

...

Can you say what exactly was "innovated"?

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

#136

Post by timpez » Mon, Jul 26, 2021, 5:10 PM UTC

The minting amount of Tether is absurd and does have the free reign to mint how much they want. This issue was already exposed a long time ago, yet as the BTC price went up, they suddenly put up this Tether FUD news. There are some other alternative stable coins vs. USDT, and I think if you weigh in the pros and cons and with the issue of Tether right now, surely USDC and other stable coins would win.

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

#137

Post by jonahbenton » Mon, Jul 26, 2021, 5:14 PM UTC

tannhauser23 wrote: post #109

jonahbenton wrote: post #26

Earlier quoted context omitted.

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.…

Want to offer a clarification to what you said here. Government doesn't have to prove that the corporation acted with criminal intent - that's impossible since corporations don't have minds. To hold a corporation criminally liable, government must prove that an employee/agent of the company violated the law while acting within the scope of the employment. So, if you can prove that a Tether executive committed bank fr…

Thanks, appreciate the clarification. Am not a lawyer so the aspects of a person that a corporation can be vs cannot be is fuzzy to me lol.

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

#138

Post by rubyist5eva » Mon, Jul 26, 2021, 5:15 PM UTC

Cryptocurrency pegged to fiat is quite possibly the dumbest possible use of a cryptocurrency I can think of, except for Tether which was an obvious scam from the get go.

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

#139

Post by zozin » Mon, Jul 26, 2021, 5:16 PM UTC

Oh, gee, another excessively dramatic article about crypto/Tether (see “… a potential criminal case that would have broad implications for the cryptocurrency market.”)

My gut tells me that the Tether team did break some laws when trying to find a bank to hold their hundreds of millions/billions of dollars, but I don’t think Tether is a scam, since I think they do have the cash reserves to back the stable coin.

Their problem was too much success: they literally had too much money and banks didn’t want to touch it, so Tether was forced to become “creative” because you can’t exactly store hundreds of millions of dollars under mattresses. I don’t see how Bitfinex/Tether making money hand over fist from collecting usurious trading fees will bring down crypto markets. Just because some bank executive is found guilty of breaking banking laws doesn’t mean it will have broad implications for the entire banking system.

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

#140

Post by BLanen » Mon, Jul 26, 2021, 5:17 PM UTC

graeme wrote: post #82

spywaregorilla wrote: post #75

Earlier quoted context omitted.

Given that you're not allowed to redeem tether for dollars I never quite understood why it mattered. edit: Note the difference between "trade" for dollars and "redeem" for dollars

The whales can redeem, in minimum chunks of $100,000. Mostly these are exchanges. Thus the peg is supported by the reserves in a roundabout way. If Tether can’t redeem, and trades break the peg, then ultimately either exchanges go insolves or anyone holding tether has to write off their holdings. Or both.

> The whales can redeem

Show me the burns.