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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

#141

Post by user-the-name »

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.

They can redeem, but not necessarily in dollars. The terms of service specifically give Tether the option of redeeming in basically whatever they want.

Also, I say "they can", but we have zero proof of this ever happening.

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

#142

Post by user-the-name »

santamex wrote: post #79

This one explains the Tether scam quite nice: https://youtu.be/-whuXHSL1Pg Edit: summary: 8 people founding the tether company, 7 of them with a criminal background. Lying and denying and then admitting after they have no other option. Yeah, seems like a nice company…

Tether's business at this point is basically manufacturing red flags.

It is incredible the mental gymnastics people in the cryptocurrency business go through to defend this group of crooks.

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

#143

Post by user-the-name »

scsilver wrote: post #116
gjsman-1000 wrote: post #22

Earlier quoted context omitted.

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?

I dont think it matters to people who really use tether. If you cant buy usd due to capital controls, usdt is your other accissible option. As such its seemed to retain its user's opinion that it continues to track the dollar, even when its not backed directly and or backed insufficiently by other assets. Its a tool that has value, beyond its intrinsic value.

The thing is, it does not matter only to those who use it. Basically all trading of Bitcoin is not actually in USD, it is in Tethers. The polite fiction is that this is the same thing, but there are a million red flags saying that this is not the case.

Once Tether implodes, it takes the entire bitcoin market with it.

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

#144

Post by graeme »

BLanen wrote: post #140
graeme wrote: post #82

Earlier quoted context omitted.

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.

I think they only had two big ones. One was around the time they had no banking, the other was when Phil Potter left.

My point wasn’t that the redemptions routinely happen. My point was that it does matter if no one can redeem, because eventually that will cause the peg to break and USDT to become worthless.

I wasn’t arguing redemptions will be honoured en masse.

Though interestingly Tether supply has gone very slightly down since June.

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

#145

Post by defaultprimate »

dcolkitt wrote: post #94
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.

People said the same thing about Mt. Gox. Tether only represents 4% of the market cap in crypto. About the same fraction of the US stock market represented by Amazon.

It's not about "market cap", which is a myth in the crypto space anyway: I made 1 billion of my proprietary tokens, and sold .001 to myself in another wallet for $1. Therefore my token's market cap is $1 trillion. I'm sure banks will let me buy a hundred million dollar mansion now since my net worth is verfiably gigantic.

It's about cash "equivalent" in flow and out flow that tether/stable coins make up. Currently they're responsible for over 80% of this volume[0], which mean virtually no "real money" exists in the crypto space, it's just imaginary "totally-backed-bux" and wash trading.

[0]https://coinlib.io/

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

#146

Post by user-the-name »

mikeblackson wrote: post #73
Majromax wrote: post #66

Earlier quoted context omitted.

> How would you shutdown Tether temporarily (2-3 months) if a bank ends a relationship? By refusing to take deposits for new Tether, and by shutting down redemptions if necessary while the banking relationship is sorted out. Tether doesn't exist ex nihilo; it requires active management to issue and redeem coins. If it ever cannot live up to its "fully backed" claim, then continuing to operate under a pretense is frau…

>By refusing to take deposits for new Tether, and by shutting down redemptions if necessary while the banking relationship is sorted out. I agree and expect that is the lesson the $18M fine taught them. The key point is, they had a legitimate reason for under-collateralizing during the biggest bull run in crypto history at that point. 2014-2017 was the perfect period to begin fraudulent activity if they were really i…

Why do you see clear evidence that the company directly lied and acted fraudulently, and immediately assume that this must be the one single time they have ever done so?

When I see that a company founded by criminals has lied, I tend to assume that they will be lying again. I think that is a fairly safe bet.

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

#148

Post by [deleted] »

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

#149

Post by scsilver »

user-the-name wrote: post #143
scsilver wrote: post #116

Earlier quoted context omitted.

I dont think it matters to people who really use tether. If you cant buy usd due to capital controls, usdt is your other accissible option. As such its seemed to retain its user's opinion that it continues to track the dollar, even when its not backed directly and or backed insufficiently by other assets. Its a tool that has value, beyond its intrinsic value.

The thing is, it does not matter only to those who use it. Basically all trading of Bitcoin is not actually in USD, it is in Tethers. The polite fiction is that this is the same thing, but there are a million red flags saying that this is not the case. Once Tether implodes, it takes the entire bitcoin market with it.

I was looking at the usdc, vs tether, vs dai market caps over the last few weeks. Tether seemed to have stopped printing as usdc has continued to grow.

https://coinmarketcap.com/currencies/tether/

https://coinmarketcap.com/currencies/usd-coin/

https://coinmarketcap.com/currencies/multi-collateral-dai/

Tether is at 60billion market cap compared to Usdc 30 billion and dai around 5 billion. Should probably look at volumes aswell.

I think we would get a major crash if tether fails, but I also think it will recover with usdc and other stable coins that have more legitimacy.

For now, its a house of cards that no one can really afford to remove their stake from. Those who have to use tether, are in a very precarious position.

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

#150

Post by rchaud »

nostrademons wrote: post #126
ketzo wrote: post #102

Earlier quoted context omitted.

And yet if I walk into a grocery store, I can buy milk with USD. Weird — it’s almost like there is something backing it, and it’s not just strictly gold/silver!

So does that mean that if Amazon [1], Paypal [2], Square [2], and Visa [3] start accepting Bitcoin, it's now backed by the U.S. economy? [1] https://gizmodo.com/amazon-to-accept-bitcoin-by-end-of-2021-... [2] https://www.barrons.com/articles/bitcoin-goes-mainstream-as-... [3] https://www.cnbc.com/2021/07/07/visa-says-crypto-linked-card...

No, because it still isn't legal tender, and lacks credibility as a medium of exchange. The simplest example of this is loyalty programs that offer 'points' that can be redeemed for goods and services. Since the points are useless on their own, the vendor creates agreements with other businesses so that they accept the points.

That's what gives the rewards program credibility. Real currency still changes hands in the background, but the customer only spends 'points'. Currencies, although unbacked by gold, are still credible because they are legal tender and widely accepted in ways that rewards points are not.

Amazon and other private businesses can refuse to accept BTC whenever they want. Earlier this year, Tesla 'accepted BTC for payments', and then changed their mind a month later.

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