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Tether Fined $41M for Lying About Reserves

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Re: Tether Fined $41M for Lying About Reserves

#91

Post by [deleted] »

flipbrad wrote: post #75
rzwitserloot wrote: post #56

Earlier quoted context omitted.

Perhaps. But we're, what? 10 years in and so far crypto has enabled 'I encrypted your data!' scams, caused political instability, been a vehicle for highly volatile investment (but the world wasn't hurting for such opportunities...), and served as a fine buzzword for dev teams around the world to get a sack of cash to update some systems. That's a pretty poor result for 10 years of this much investment and focus. The…

Don't forget the environmental catastrophe of all that wasted electricity generation, and driving up prices of GPUs.

[deleted]

Re: Tether Fined $41M for Lying About Reserves

#92

Post by Hamuko »

nickff wrote: post #44
tdeck wrote: post #42

Earlier quoted context omitted.

It would be better to confiscate Tether's entire reserve, force them to allow tether holders to cash out (for fractional amounts), and punish the execs directly.

That would make sense to me, though it may be possible (and less disruptive) to allow tether to continue under new management.

This sounds a lot like letting Bernard L. Madoff Investment Securities LLC to "continue under new management" in order to be less disruptive.

Re: Tether Fined $41M for Lying About Reserves

#93

Post by spywaregorilla »

bko wrote: post #88
pfisherman wrote: post #13

Earlier quoted context omitted.

fiat debasing the currency. What I find ironic is that the crypto ecosystem still ended up with something like central banks, only in this case their mandate is make money for its owners, and they have no accountability or obligation to serve the general public.

The difference is I can choose not to hold Tether. Removing my exposure to dollars as a US citizen is a lot harder. Not to mention people that are on a fixed income like my parents. So debasing fiat is a lot worse

That is part of being part of the society, yes.

Re: Tether Fined $41M for Lying About Reserves

#94

Post by SkyPuncher »

zomglings wrote: post #68
FireBeyond wrote: post #50

Earlier quoted context omitted.

Hah. At one point Tether was claiming, during the days where they were holding on to the "1:1 backing!" that they were banking $2 billion A WEEK. And yet the cryptofans were telling us we were curmudgeons for not buying into the hype (or in this case, the bullshit).

There has always been a healthy amount of skepticism about Tether in the crypto community. Your cryptofans narrative does not accurately reflect reality.

Yea, I'm on the edge of crypto and I knew that Tether has always been viewed is questionnable.

Re: Tether Fined $41M for Lying About Reserves

#95

Post by heurisko »

dragonwriter wrote: post #83
dylan604 wrote: post #58

Earlier quoted context omitted.

> their mandate is make money for its owners, Isn't this pretty much the description of every company? I understand feduciary responsibilities blah blah, but if the company didn't think they could do both then they wouldn't be running the legitimate buisness. If it was started to intentionally dupe people that's an entirely different thing.

> Isn't this pretty much the description of every company? Which is why we don't let private companies create currency willy-nilly anymore.

> Which is why we don't let private companies create currency willy-nilly anymore.

As I understand, private banks extend loans, which while not being printing money, the loans being deposits (which can be withdrawn) the effect of creating currency is the same.

Re: Tether Fined $41M for Lying About Reserves

#96

Post by nickff »

Hamuko wrote: post #92
nickff wrote: post #44

Earlier quoted context omitted.

That would make sense to me, though it may be possible (and less disruptive) to allow tether to continue under new management.

This sounds a lot like letting Bernard L. Madoff Investment Securities LLC to "continue under new management" in order to be less disruptive.

Madoff’s fund was insolvent; I am not sure whether the same is true of Tether. There’s no need to liquidate a solvent entity.

Re: Tether Fined $41M for Lying About Reserves

#97

Post by sneak »

danuker wrote: post #11

> there was never more than $61.5 million backing Tether, even as more 442 million coins were circulating at one point. Ah, pulling the classic "fractional reserve" I see.

I'm sure that the 68.5 billion-with-a-b tethers they have out there now must be backed, though, right?

Surely they learned their lesson when they only had 442 million tethers issued and only 61.5 million dollars in the bank.

Re: Tether Fined $41M for Lying About Reserves

#99

Post by varjag »

bonestamp2 wrote: post #59
rzwitserloot wrote: post #56

Earlier quoted context omitted.

Perhaps. But we're, what? 10 years in and so far crypto has enabled 'I encrypted your data!' scams, caused political instability, been a vehicle for highly volatile investment (but the world wasn't hurting for such opportunities...), and served as a fine buzzword for dev teams around the world to get a sack of cash to update some systems. That's a pretty poor result for 10 years of this much investment and focus. The…

> so far crypto has enabled 'I encrypted your data!' scams These scams existed long before crypto. But, crypto currencies are a better solution to international money transfers so of course they became the preferred currencies for these scams.

It took crypto to make them Web scale.

Re: Tether Fined $41M for Lying About Reserves

#100

Post by 35fbe7d3d5b9 »

35fbe7d3d5b9 wrote: post #85
AlexanderTheGr8 wrote: post #79

Earlier quoted context omitted.

Tether is not a US-based company. So does US have the authority to shut them down?

There is an entire branch of the Department of Treasury designed to enforce stiff sanctions and financial penalties against people, companies, and even countries that defy US regulations. If the federal government decides Tether needs shut down, it won't be a struggle.

Since I didn't really talk through this before, a bit of an effort post.

OFAC sanctioned Suex, a crypto exchange based in the Czech Republic, less than a month ago[1]. As far as I can tell it is gone from the face of the earth. Here's why:

> As a result of today’s designation, all property and interests in property of the designated target that are subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. Additionally, any entities 50% or more owned by one or more designated persons are also blocked. In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action.

    suex.io.  676 IN SOA ns-648.awsdns-17.net. awsdns-hostmaster.amazon.com. 1 7200 900 1209600 86400
suex.io's hosting is gone due to OFAC's ruling: Amazon is barred from providing them service.

They used to take Visa & Mastercard[2] – even if they were online today, they wouldn't find a payment processor in the world willing to touch them: that would expose the payment processor to OFAC sanctions which is as close to "existential risk" as you can get in finance.

Suex was listed on the SDN list[3]. As a result no US based exchange can touch any crypto from those addresses. If, say, you wanted to cash out that crypto by sending it to Coinbase, they'd be legally required to freeze it and deny you access to it: otherwise, they're at risk of OFAC sanctions.

Every bank in the US monitors the OFAC SDN list, and as a result, they will be monitoring transactions. If Suex attempted to move their money into a bank account controlled by the US, they'd be blocked. But most likely their accounts are already frozen, because OFAC jurisdiction attaches when funds pass through any US financial institution or any foreign financial institution owned by a US person.

OFAC has recently decided that the mere presence of US dollars in a financial transaction is sufficient to establish jurisdiction: if Suex had their entirely foreign owned bank process any transactions in dollars, this would cause a US counterparty to indirectly provide financial services to an SDN. This risks sanctions at their foreign-owned bank.

At the end of the day, most global financial institutions assume a US nexus is present and deny any service to targets of US sanctions – the risk is much lower.

To wrap this up, OFAC has published an interesting guide[4] to sanctions that directly relate to cryptocurrency, and it's well worth a read.

[1]: https://home.treasury.gov/news/press-releases/jy0364

[2]: https://web.archive.org/web/20210414074952/https://suex.io/

[3]: https://home.treasury.gov/policy-issues/financial-sanctions/...

[4]: https://home.treasury.gov/system/files/126/virtual_currency_...

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