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Tether Fined $41M for Lying About Reserves

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Re: Tether Fined $41M for Lying About Reserves

#181

Post by matheusmoreira »

rzwitserloot wrote: post #56
OneLeggedCat wrote: post #41

Earlier quoted context omitted.

> crypto ecosystem still ended up It's decades from its final form.

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…

> when is it going to deliver on its first actually useful to humanity milestone

Technologically speaking, most cryptocurrencies are utterly useless. Bitcoin included. There are some good projects though.

Monero, for example. It allows people to transact without anybody knowing anything about the details of the transaction. Where the money came from, where it's going, how much money was moved. Everything is obfuscated. Block chain analysis is at the very least hard and inconclusive, if not impossible. So it essentially works like digital cash.

This is an invaluable achievement that allows people to reclaim their financial privacy in a world where governments think it's acceptable to surveil everyone.

Re: Tether Fined $41M for Lying About Reserves

#182

Post by exdsq »

lottin wrote: post #154
bonestamp2 wrote: post #59

Earlier quoted context omitted.

> 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.

Or those without decent banking access

Re: Tether Fined $41M for Lying About Reserves

#183

Post by oillio »

sdhfjgjh wrote: post #86
gammarator wrote: post #52

Earlier quoted context omitted.

Basic question: why doesn't this affect the currency pair exchange rate? If lending rates reflect the (realistic!) idea that holding 1 USDT is less valuable than holding 1 USD, how does 1 USDT trade at par?

If the price is under $1, the backer can purchase the coins with reserves and pocket the difference. The price will only depart from the peg if selling forces the market price down and the backer doesn't have enough reserves to purchase tokens sold beneath the peg. This scenario is similar to a bank run and would require high selling volume to set if off. The lending rates are determined by a separate mechanism and r…

The rumor is the backer is using the reserves to trade crypto. You won't ever see an attack on Teather during a crypto bull run as the reserves will be strong.

In the depths of a crash, the potential is definitely there. Last time Bitfinex bailed out Teather when its reserves came up short. So to really see Teather fail, we probably need a crypto crash and a weakened Bitfinex.

This is why people still use Teather. Even though it is risky, the current market dynamics make a failure unlikely.

IMHO failure due to embezzlement (Teather reserves stolen by an inside man) is a real possibility. The management team has already proven to be very shady...

Re: Tether Fined $41M for Lying About Reserves

#184

Post by FireBeyond »

gws wrote: post #128
tootie wrote: post #118

Earlier quoted context omitted.

I think the difference is this is Tether's entire reason for existence. It's equivalent to Bernie Madoff.

Still there have been zero redemption issues in getting USD back from USDT

Haha, what? Maybe if you're an institutional investor or whale (or another exchange is doing something for you), but for several years the closest thing Tether had to a redemption "policy" (beyond the fine print that said they had zero obligation to redeem) was:

* Only for holdings of over $30,000

* 90-180 day waiting period

* non-US nationals

It was so bad, that people put out bounties for anyone who could prove that Tether or Bitfinex (whatever, they're the same) had redeemed USDT. I believe one bounty was in the order of $5,000.

The ones I found were unclaimed.

Re: Tether Fined $41M for Lying About Reserves

#185

Post by matheusmoreira »

jakeinspace wrote: post #179
matheusmoreira wrote: post #172

Earlier quoted context omitted.

Banks do the same thing. How do banks work without anybody panicking? Liquidity injections. The government will literally print money and give it to banks so they can fulfill withdrawals during bank runs. If the governments didn't bail them out, they'd be insolvent. They should just do the same for Tether.

Banks do not have enough cash on hand to meet their liabilities (deposits), but they are for the most part net-positive over all assets and liabilities. They aren't just burning depositor's money, they're putting it into mortgages and riskier loans. So while they cannot afford a quick payout above 10% of total deposits, the assets are there in the form of loans and securities.

The effect is the same: people want to cash out and they can't. The solution is the same: bail out the banks in order to avoid even worse economic impact. I don't see why banks deserve this royal treatment while Tether doesn't.

Whether Tether was or wasn't responsible with the money is another matter entirely. I fully support any efforts to hold them accountable for their actions there.

Re: Tether Fined $41M for Lying About Reserves

#186

Post by oillio »

ur-whale wrote: post #54
paulgb wrote: post #20

Earlier quoted context omitted.

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.

>I'm more surprised that anyone still holds Tether, The price BTC shooting up right now (it is around $61k as I write this) is probably because lots of USDT holders are starting to realize what a bad idea that is. If you were in their shoes ... what would you be doing right now?

If Tether holders were fleeing, they would be going into other stablecoins like USDC, not BTC.

Re: Tether Fined $41M for Lying About Reserves

#187

Post by FireBeyond »

Marciplan wrote: post #169
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-...

Why aren’t you against both big banks and Tether doing it?

Big banks operate under regulation and oversight, not from financial havens, don't have CEOs (sorry deputy CEOs) who give interviews from gaming chairs and who aren't aware on what banking license their bank holds (actual quote: "There are actually two banking licenses here, one is... I forget the name, but that's the one I think we have. The other is the one everyone is talking about. We might also have that, too."

Re: Tether Fined $41M for Lying About Reserves

#188

Post by Retric »

AnthonyMouse wrote: post #180
Retric wrote: post #159

Earlier quoted context omitted.

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.

The steel mill was probably going to want dollars instead of Bitcoin regardless, so the only difference is that they do the trade for dollars on a black market exchange. This is likely to get folded into the money laundering process anyway -- the Bitcoin goes to unspecified offshore location to get turned into dollars that come back as a clean payment for "consulting services" or what have you. There is no need for a…

Do you expect the guy laundering money to accept bitcoins without charging extra? Because if the guy selling bitcoins takes ~10% from the AK-47 buyer and the guy laundering money also takes his ~10% cut for using bitcoins on top of his X% cut for laundering money, suddenly it’s starting to look really unappealing.

The real appeal of bitcoin for illegal purposes is it’s effectively a poor but really cheap way to launder money. Try and deposit even 1 million in cold hard cash and the banking system throws up red flags, liquidate 1 million in bitcoin and that looks significantly more legit at least on the surface. It doesn’t help if you’re under investigation, but then again it’s cheap.

Re: Tether Fined $41M for Lying About Reserves

#189

Post by mkr-hn »

matheusmoreira wrote: post #172
system2 wrote: post #136

I am blown away. 61.5 million dollars for $68,536,825,819 (68 billion dollars.) Maybe not the same in 2017 but damn, how does this even work without anyone panicking?

Banks do the same thing. How do banks work without anybody panicking? Liquidity injections. The government will literally print money and give it to banks so they can fulfill withdrawals during bank runs. If the governments didn't bail them out, they'd be insolvent. They should just do the same for Tether.

Banks (in the US) pay fees to the FDIC to insure deposits well past what most people have and are subject to reserve requirements.

Re: Tether Fined $41M for Lying About Reserves

#190

Post by zhoujianfu »

tootie wrote: post #118
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-...

I think the difference is this is Tether's entire reason for existence. It's equivalent to Bernie Madoff.

I had a thought… what if Satoshi Nakamoto was… Bernie Madoff?

Maybe Bernie Madoff and Hal Finney working together?

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