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Tether Fined $41M for Lying About Reserves

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Re: Tether Fined $41M for Lying About Reserves

#151

Post by majormajor »

heurisko wrote: post #95
dragonwriter wrote: post #83

Earlier quoted context omitted.

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I understand, private banks extend loans, which while not being printing money, the loans being deposits (which can be withdrawn) the effect of creating currency is the same.

Private banks can only extend loans so much as they have the money already.

Yes, it's a juggling act: Person A still has $1000 on the ledger in their deposit even if the bank lends $800 of that to Person B, so if the people with deposits want to cash out all at the same time, and the bank can't pull back what they've lended out fast enough, you have big problems!

But they aren't just adding numbers to a cell in a spreadsheet without having the money to back it - a loan that can't be used to pay someone or to be turned into cash is useless. You can't just start a bank and issue yourself a thousand dollars into your own account and expect to be able to use it for anything. This would be closer to the credit card model - short term credit without taking deposits, making money on the repayment - but again, good luck issuing yourself your own credit card to buy a bunch of stuff with to "create money."

And they also aren't doing anything that couldn't be done with crypto!

Re: Tether Fined $41M for Lying About Reserves

#152

Post by rgrieselhuber »

DennisP wrote: post #16
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.

Play centralized games, win centralized prizes.

Exactly.

Re: Tether Fined $41M for Lying About Reserves

#153

Post by ceph_ »

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.

> 442 million

Current market cap is up to 70 billion! 90% of which has been printed in the last 2 years, and wasn't even covered by the report. Looks like they're going on a last ditch printing spree

Re: Tether Fined $41M for Lying About Reserves

#154

Post by lottin »

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.

If cryptocurrencies were a better solution, they would have been widely adopted. Instead, they have been adopted by people who can't use real money for one reason or another, e.g. criminals. Which tells us they are a poor substitute for real money.

Re: Tether Fined $41M for Lying About Reserves

#156

Post by mindslight »

orthecreedence wrote: post #147
35fbe7d3d5b9 wrote: post #100

Earlier quoted context omitted.

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 genera…

This is really interesting. I've long thought of as the US' empire being a primarily financial one (as opposed to military, like many other past empires) and I didn't even realize OFAC existed until reading your comment, much less the types of activities they engage in. This certainly cements my suspicions even more about the financial empire of the US and how they exercise that power. Thanks for the post.

What is the difference between a financial empire, a military empire, and a resource empire (eg petrodollar) ? Each aspect reinforces the others. If the US didn't have the military, it couldn't enforce financial laws outside of its borders. If the US didn't have energy, it couldn't run its military. If the US didn't have a reserve currency, then it wouldn't be able to obtain as many resources.

Re: Tether Fined $41M for Lying About Reserves

#157

Post by xtracto »

gws wrote: post #110

Don’t really get you guys saying Tether should be shut down… the big banks get routinely fined with much bigger fines for much bigger crimes, are we gonna shut them all down then? At least Tether did not steal from nor defraud anyone. Just as a random example: https://www.justice.gov/opa/pr/jpmorgan-chase-co-agrees-pay-...

Right, in my view HSBC laundering scandal was 100 times worse and they are still operating all over the world.

Re: Tether Fined $41M for Lying About Reserves

#158

Post by Nasrudith »

paulgb wrote: post #20
tdeck wrote: post #4

I don't understand why this is something they can settle rather than something that gets them completely shut down.

I'm more surprised that anyone still holds Tether, unless they're stuck with it. The company has been caught in lies several times before, it's not as if a $41M fine will turn them honest.

Really any large reserve of stagnant cash is a flat out attractive nuisance for fraud and theft - while also failing to invest it properly. Of course their whole shtick is warmed over gold-bug fallacies.

Re: Tether Fined $41M for Lying About Reserves

#159

Post by Retric »

AnthonyMouse wrote: post #140
clusterfish wrote: post #134

Earlier quoted context omitted.

You can't uninvent Bitcoin but you can certainly make it illegal, making it all but useless for drug trade or money laundering. Nobody needs a currency that you can't exchange for, you know, real currency that you can buy real things with. So although the government doesn't have the power to eliminate Bitcoin, they do have the power to make it useless. I don't think they will though, because guess who is using it for…

Making it illegal doesn't affect its utility for illegal activity. Criminals already break the law. It would cause a one-time decline in value but that only matters to speculators. The value would still be non-zero because it's global and there exist places where it isn't illegal. Even if it was somehow illegal everywhere, the value still wouldn't be zero because of black markets. The drug user uses it to buy drugs,…

Making it illegal makes it vastly less useful for illegal purposes. Legitimate transactions provide cover, it’s like the difference between a sniper in a forest or an empty parking lot. If your factory selling a truck full of AK-47’s you want to actually be able to buy steel to make more AK-47’s. If bitcoin’s illegal you now need to find a buyer for the guns and another buyer for the bitcoins.

Re: Tether Fined $41M for Lying About Reserves

#160

Post by roenxi »

itsoktocry wrote: post #141
bko wrote: post #88

Earlier quoted context omitted.

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

> The difference is I can choose not to hold Tether. Removing my exposure to dollars as a US citizen is a lot harder. Did you miss the part about them lying? "I have a right to choose to buy something" for whom the value is deceptively obfuscated is quite the argument.

If the US Fed lies, do they get fined?

Pretty sure the answer is no, because they have so much power they don't need to lie. They do what they like then change the rules so they can do the same thing legally.

The argument here isn't that what Tether is going is good (it isn't). It is that if the government did it, it would come with "and all you plebs have to join in because bankers making money is good for us all".

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