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Tether Fined $41M for Lying About Reserves

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221–230 of 267 posts

Re: Tether Fined $41M for Lying About Reserves

#221

Earlier quoted context omitted.

The problem is worse than that. They also use their BTC holdings as part of their assets they hold, which allows them to pump the BTC/USDT rate (print USDT, use it to buy BTC, see prices of BTC going up because of artificial demand, say "BTC is up, our holdings have increased in value and we can print more", rinse and repeat.

Isn't that just a pump and dump?

No. "Pump[ing]" by buying something is entirely legal. And the price should come down just as much when you are trying to cash in, so the mechanism doesn't really work, or anyone with enough money could just do it repeatedly using whatever traded asset they want.

"Pump and dump" refers to promoting some investment by other means, usually spreading some false news.

Re: Tether Fined $41M for Lying About Reserves

#222

Earlier quoted context omitted.

> Central banks are not companies Actually... it's complicated. The Bank of England, for example, was nationalized only in 1946, and it remains technically a company which is owned by the state, not actually part of the government. In the US, the Fed is... well, it's not a company, but it's also not not a company... or group of companies... See https://en.wikipedia.org/wiki/Federal_Reserve_Bank

Yeah, the Bank of England even used to offer account services to employees after it was nationalized. Which would be scandalous if we found it in some dubious ex-Soviet republic today, albeit there maybe they're lending the Bank's President $10M with no real security and the Bank of England was offering employees mortgages and similar modest run-of-the-mill secured loans. The UK owns a whole bunch of banks and entiti…

See also: Bank of America

But they can't issue banknotes, unlike BoS and RBoS.

Re: Tether Fined $41M for Lying About Reserves

#223
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?

For the past 3-4 years, this has happened time and time again whenever tether is in the news in bad light. It's beginning to sound like a broken record at this point "this event is finally going to do tether in!" Nothing will happen like it did before, cryptocurrency doesn't operate the same way international law expects it to abide by. It's all rigged.

Re: Tether Fined $41M for Lying About Reserves

#225

Earlier quoted context omitted.

Isn't that just a pump and dump?

No. "Pump[ing]" by buying something is entirely legal. And the price should come down just as much when you are trying to cash in, so the mechanism doesn't really work, or anyone with enough money could just do it repeatedly using whatever traded asset they want. "Pump and dump" refers to promoting some investment by other means, usually spreading some false news.

It can be still pump and dump because rising price induces fomo.

Re: Tether Fined $41M for Lying About Reserves

#226

Earlier quoted context omitted.

I think if you got a few beers in even the most adamant crypto advocate, you'd discover their thinking is more along the lines of, "The house of cards is out in the open with crypto, vs. hidden behind bureaucracy and obfuscation in traditional banking". With crypto, the "average" person gets to feel "in on it" in a way usually reserved for coked up Goldman associates. That is possibly not a good thing, as you're poin…

It's a misunderstanding of what the house of cards is about, though. One of the first empires to use fiat currency was the Yuan dynasty, and it worked, because if your currency is backed by the mongols, you're absolutely going to act as if it makes sense, even if it seems crazy to you. The backing of money is not precious metals, nor currency, but rather force - a state can demand tax in it, and exact retribution if…

I prefer beanie babies as an analogy vs tulips.

Re: Tether Fined $41M for Lying About Reserves

#227
post #224

Is it possible to short tether effectively to profit when the whole scam collapses?

Sure, if you'd like to collect your winnings in bottle caps and IOUs.

And if the exchange you are shorting it on doesn't wipe your position out through a margin call, in one of those strange moments where due to a mysterious glitch, tether breaks the USD peg for a few seconds.

If you're looking for easier money, I'd recommend card-counting at a speak-easy ran by the mob, before I'd recommend getting into this business.

Re: Tether Fined $41M for Lying About Reserves

#228

Earlier quoted context omitted.

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 genera…

Thank you for such a detailed comment (do you work in finance?). I never realized how easily US can control/destroy "bad" financial properties.

Among the points you mentioned, the most significant one is Visa and Mastercard. These are effectively the only 2 payment processors out there today, and if they deny you service, you are dead. AWS can be replaced and you don't need an intermediary exchange if you can find a payment processor.

Re: Tether Fined $41M for Lying About Reserves

#229
post #127

Earlier quoted context omitted.

You are right, they lied, and people could have been harmed if there were a “bank run” on Tether. But in practice there was not and nobody suffered any damage, zero, nada, nicht. While big banks got fined for actually taking money illegally out of people’s pockets and nobody said let’s shut them down

> But in practice there was not and nobody suffered any damage, zero, nada, nicht. So I guess its ok. Might as well pack it up and let them carry on with manipulation, lying and profiting. I don't get your rationale whatsoever.

It doesn’t make it okay, it just means it’s less bad than if there was actual harm.

Despite their lies, they were apparently able to meet their obligation to exchange tether for dollars for everyone who wanted it.

Re: Tether Fined $41M for Lying About Reserves

#230

Earlier quoted context omitted.

> during much of the 1900s you were required to sell gold to the US government for USD rather than keep it under your mattress, and if you refused they had the right to seize it with force Many considered this a violation of their rights. Justly so. I would say that "no such right is necessarily guaranteed" is only true in the sense that no rights at all are necessarily guaranteed.

That's nice, but regardless, the law stood for forty years, even surviving the Supreme Court^. Society abrogates individual rights by its very existence, and anarchic utopias that exclude all abrogation tend to fail comically^^ and/or catastrophically^^^. It turns out that compromise is a necessary factor of coexistence with other human beings, especially those we disagree with. If you don't feel that your rights are…

A relatively recent large-scale case from the U.S. that comes to mind is the internment of Japanese-Americans. I'm not sure if I can point to a specific Constitutional amendment that it violated (4th amendment on seizing a person without probable cause? Probably 9th amendment, that there are are additional rights not enumerated), but I think most declarations of rights cover a right to liberty unless one is charged with a crime or other strictly limited exceptions, and it seems clear that the Japanese internment violated that.

Interestingly enough, the Supreme Court of the time seems to have upheld part of what was done to the Japanese-Americans[1]. "In effect, the two rulings held that, while the eviction of American citizens in the name of military necessity was legal, the subsequent incarceration was not"[2]. About the first ruling, Wiki says: "Chief Justice John Roberts explicitly repudiated the Korematsu decision in his majority opinion in the 2018 case of Trump v. Hawaii. The case is often cited as one of the worst Supreme Court decisions of all time."

We haven't gotten as far as large-scale violations in the U.S. of a right to not be killed by official government policy (death penalty notwithstanding). (Also notwithstanding the FDA delaying the introduction of lifesaving drugs.) It has certainly happened in other countries, though. In the small scale, the U.S. government does sometimes assassinate individuals, and seems not too squeamish about killing whoever else is in the blast radius (some may protest that those people aren't citizens). I would admit it's pretty unlikely they'll go that far on this particular right (in the absence of a revolution), but for the majority of rights, it seems there will be circumstances where politicians will plead "emergency" as a reason to violate them, and often enough will get their way.

[1] https://en.wikipedia.org/wiki/Korematsu_v._United_States

[2] https://en.wikipedia.org/wiki/Internment_of_Japanese_America...

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