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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

#211

Post by anonymousab »

jonahbenton wrote: post #26
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.…

> A company can never "admit wrongdoing" as doing so would have so many downsteam impacts as to make it impossible to stay in business.

If anything that sounds like making it a requirement to admit wrongdoing should be step 1.

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

#212

Post by cycrutchfield »

gjsman-1000 wrote: post #179
jfrunyon wrote: post #164

Earlier quoted context omitted.

'Cause it's commercial paper from the exchanges? We know they've made "loans" to Bitfinex, after all.

They have adamantly declared that these are not loans to exchanges. That's one of the few things we know.

With the track record these guys have, the more adamantly they declare something the more you may be justified in suspecting that it is false or at least only superficially true.

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

#214

Post by JumpCrisscross »

csomar wrote: post #204
legutierr wrote: post #169

One thing from the article that people should probably pay more attention to: > A hallmark of Tether is that its creators have said each token is backed by one U.S. dollar, either through actual money or holdings that include commercial paper, corporate bonds and precious metals. That has triggered concerns that if lots of traders sold stable coins all at once, there could be a run on assets backstopping the tokens.…

Tether has a $60bn market cap. That's a drop in the ocean for the international markets.

> Tether has a $60bn market cap. That's a drop in the ocean for the international markets.

Market cap here is more meaningless than usual as we don't care about Tether's liabilities but its assets. (Given their history, there is no reason to assume one strictly relates to the other.)

If Tether has its $60bn in short-dated Treasuries, great, no problem. If they have $5bn in receivables financing to a homebuilder, fast liquidation could very well crater that market. While that happens, other holders could be forced to sell, thereby transmitting risk from crypto to the mainline.

This happened when several money market funds "broke the buck" in '08, and led to a flurry of reforms that effectively banned maturity transformation in fund products. (Less jargon: you can't promise fixed-price redemption if you're buying securities.)

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

#215

Post by xenadu02 »

gruez wrote: post #42
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.

> 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.

If we're playing that game I'd do the same but invest in tax-free municipal bonds and the like which can currently earn 3-5%. That would earn you $1.86 billion on the low end. Keep staff & expenses low, pay everyone insane salaries (eg 5m per year is less than 100m given their staffing levels), and coast until acquisition. Everyone gets rich now and again later when you sell.

That's what is so ridiculous about Tether... they have plenty of ways to go legit if they wanted to do so. Heck even if they were only spending half of every $ they took in to actually back the Tethers (and pocketed the other half) they could have invested in the US Stock market over the past four years to make up the difference, then presented public financials this year proving they have enough currency, bonds, stocks, and paper to fully back every Tether. They'd have pulled the same trick lots of big time crooks did and gone fully legit. The fact that they aren't doing that indicates they're either really stupid, really greedy, or both.

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

#216

Post by JumpCrisscross »

jpmattia wrote: post #201
JumpCrisscross wrote: post #183

Earlier quoted context omitted.

> let investors continue to be defrauded She is the Attorney General of New York. Tether is banned from New York. No need to launch a criminal probe against an overseas firm led by overseas founders harming out-of-state residents. > let the Fed AGs to get the credit This isn't a case with obvious political upside. Tether getting blown out will cost millions of Americans on both sides of the aisle. There isn't a sympa…

> No need to launch a criminal probe against an overseas firm led by overseas founders harming out-of-state residents. There is definite need to launch a criminal probe against an overseas firm that defrauded NY state residents, which she did not do.

> There is definite need to launch a criminal probe against an overseas firm that defrauded NY state residents, which she did not do

That's not your or my decision to make. It's the prosecutor's.

And on this one, I'm with her. Everyone "defrauded" by Tether is and was a willing participant. The wound has been cauterized by banning Tether from New York. Damages can settle themselves through the courts using the injured parties' own resources. (Not taking into account that many of the presumed "injured" would object to that designation in the first place.)

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

#217

Post by fleddr »

rvz wrote: post #71
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...

> So in my estimation, it probably is a scam... It IS a scam and it is backed by nothing. Only to pump the BTC price artificially. The unveiling of this scam was seen and covered a mile away and was a long time coming. To Downvoters: I'm sorry BTC maximalists, but this scandal was waiting to be cracked down and no, it is not FUD, or whatever denial spiral you are going through. Just read: https://twitter.com/smdiehl/…

Whilst crypto maximalists can be annoying, there's also anti-crypto maximalists such as the source you're linking to.

It is legitimate to raise the Tether concern yet he confidently drops into very binary conclusions driven by his pure hate for crypto.

For example, his claim that it's 100% a scam whilst this fact isn't established.

Or calling any trade in crypto "shady". This one shows his true colors. A huge amount of people just deposit dollars on a KYC exchange, then buy and sell whatever crypto they fancy.

None of this is shady. It's fully legal, taxes are paid, it's like stocks. Yet according to him, any trade in crypto is shady.

Or, the claim that the 800 billion market cap of Bitcoin is solely based on Tether. That's an absurd statement.

As said, maximalists can be extreme, but so can anti-maximalists. He deeply hates any and all crypto, has zero nuance, and is not open to any type of discussion.

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

#218

Post by JumpCrisscross »

ulzeraj wrote: post #174
scsilver wrote: post #149

Earlier quoted context omitted.

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 volum…

I think there is a possibility of things going the other way around of what grand parent is expecting. Once USDT implodes there will be a bank run to sell those tokens for fiat, bitcoin, Ethereum or even other stable coins. That until exchanges cease accepting those or doing trades at all. Some might become insolvent. In the end people who leave their funds at exchanges will be the one with the short end of the stick…

> Some might become insolvent.

Why should an exchange go broke because something they trade falls in value?

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

#219

Post by boc »

xenadu02 wrote: post #209
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.

Game theory predicts that market participants who discover Tether is a scam would publicly praise it while simultaneously moving away from it slowly and quietly to avoid spooking the market - leave some other sucker holding the bag. We also know people can be irrational so those who depend on Tether to operate simply cannot acknowledge it is a scam.

Yeah it's actually quite clever. Once you realize you've been trapped in a scam, the only way out is by hyping bitcoin so much that enough liquidity enters Bitfinex and allows you to liquidate your holdings. If you blow the whistle you get nothing out. If you ask for your money immediately, the exchange tells you they can't honor that request currently, but could if the price rises enough from new entrants.

It's basically like a pyramid scheme where you can buy your way out by shilling hard enough for Bitcoin.

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

#220

Post by [deleted] »

xenadu02 wrote: post #209
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.

Game theory predicts that market participants who discover Tether is a scam would publicly praise it while simultaneously moving away from it slowly and quietly to avoid spooking the market - leave some other sucker holding the bag. We also know people can be irrational so those who depend on Tether to operate simply cannot acknowledge it is a scam.

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