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U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

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Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#101

Post by stusmall »

gressquel wrote: post #4

Its shocking how they have been allowed to continue printing "fake money" for so long. There were rumours going around long before christmas. Its about time this 'scam' was exposed.

I'm not very familiar with this world, but that seems fast. I always assumed the world of financial crime enforcement moved like molasses. When I started hearing those rumors I just assumed it'd be months after the crash before the feds showed up. Maybe I'm just cynical.

But I 100% agree, its about time.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#102

Post by 21 »

politician wrote: post #6
machinecontrol wrote: post #3

If this is a grand jury subpoena, things could get ugly fast in the crypto space. Despite all talk of decentralization, the major exchanges pose a systemic risk.

The achilles' heel with these systems is their integration points with fiat. Always has been.

If you don't integrate with fiat, all you have is "mobile game gems" or "WoW gold".

Fiat is and always will be tightly monitored and controlled. If cryptos want to replace fiat, they will have to do the same.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#103

Post by lurker456 »

js2 wrote: post #51
ebbv wrote: post #31

Earlier quoted context omitted.

You're skipping a key bit here; billions of Tethers magically appeared on the market in the last month and were used to buy BTC in suspiciously regular fashion, in 100 million USDT amounts, and with no clear evidence that it was actually purchased by anyone using real USD.

Here’s what I don’t understand. You can exchange bitcoins for fiat currency. But afaik you can’t exchange USDT for fiat. So why is anyone willing to take the risk of holding on to USDT? Why are any exchanges even willing to touch it?

That's where I also get confused. So far the reasons I could come up with are:

  - the exchange got bought out silently and is now owned/controlled by the people behind tether
  - the exchange got paid to use tether (for example 0.5% of the volume as incentive)
  - the exchange holds a part of tether's fiat as guarantee
  - the exchange is run by people who are inexperienced in appraising counterparty risk 
  - the exchange is run by people who like to take risks 
  - the exchange expects to cover any potential losses with the profits they made so far
  - the exchange has been offered proof that the 1:1 peg is genuine (backed by the Chinese govt using US bonds)
other ideas are welcome

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#104

Post by ebbv »

rmrm wrote: post #93
ebbv wrote: post #64

Earlier quoted context omitted.

Because they're not claiming "We can maybe somehow come up with the money that the Tethers represent in the future." they're saying they have the money right now. And again, you're missing the point that it doesn't seem like they are selling the USDT for anything , BTC or otherwise. They're just printing it and buying BTC with it. EDIT: That may seem like splitting hairs but the point is they aren't issuing them in e…

Buying bitcoin with it and then selling the bitcoin immediately for USD, and banking it would mean they are at least solvent , is they key point he is getting at. Im not sure why anyone would want to trust money to that without audits, but its certainly possible. And quite important! Edit: the assumption seems to be that they are buying bitcoin and holding it, which would increase the bid and result in not being back…

They're solvent in that scenario, sure, because they committed fraud. That's the great thing about fraud, getting rich off of it.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#105

Post by spookthesunset »

andrewla wrote: post #88
js2 wrote: post #51

Earlier quoted context omitted.

Here’s what I don’t understand. You can exchange bitcoins for fiat currency. But afaik you can’t exchange USDT for fiat. So why is anyone willing to take the risk of holding on to USDT? Why are any exchanges even willing to touch it?

You can exchange USDT for fiat, on demand, for exactly 1 USD/USDT, but only at Bitfinex. For bank wires, they charge a .1% fee, so technically I guess 0.999 USD for each 1 USDT. For verified customers, there is no withdrawal limit. Kraken offers a USD/USDT market that allows you to obtain fiat for your USDT, and the price stays fairly stable but the liquidity is low (thus slippage is high). It's currently trading at…

> You can exchange USDT for fiat, on demand, for exactly 1 USD/USDT, but only at Bitfinex

My understanding is this isn't the case. My understanding is Bitfinex will take your USD and convert to USDT which you can then use to buy crypto. But it won't take your USDT and turn it back into dollars. In fact, my understanding is the only way to turn USDT back into USD is either directly through Kraken or indirectly through another exchange by going USDT -> BTC (or ETH/DOGE/whatever) -> USD.

Bitfinex lost the ability to bank in USD a while ago, which is how this whole tether business was invented in the first place.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#106

Post by tobltobs »

mtgx wrote: post #76
machinecontrol wrote: post #3

If this is a grand jury subpoena, things could get ugly fast in the crypto space. Despite all talk of decentralization, the major exchanges pose a systemic risk.

There are a bunch of decentralized cryptocurrency exchange projects coming. My favorite so far are https://loopring.org and https://0xproject.com , but there are like a dozen out there. This is just the beginning. As centralized exchanges start having all sorts of problems (CoinCheck, Bitfinex, maybe Bittrex and Poloniex soon), more people will start looking into decentralized exchanges and thus increase their liquid…

> especially if this integration is "permissionless", by simply allowing the cryptocurrency developers to support its protocol and then have the cryptcurrency automatically appear on the exchange.

A shortage of shitcoins isn't the biggest problem currently for the cryptospace.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#108

Post by dragonwriter »

JumpCrisscross wrote: post #48
treve wrote: post #20

Earlier quoted context omitted.

Ponzi schemes also only harm those who inflict it on themselves.

> Ponzi schemes also only harm those who inflict it on themselves Ponzi schemers lie to their investors. (Madoff purported to run a reputable shop.) It’s harder to argue, to the broader public, that someone buying Tether with Bitcoin could reasonably think they made a legitimate investment.

> Ponzi schemers lie to their investors

If USDT is not 1:1 backed by USD, so does Tether. If Tether and Bitfinex are different faces of the same group, and Bitfinex treats USDT and USD equivalently on their exchange relying on Tether’s backing claim as justification, so does Bitfinex.

Re: U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether

#109

Post by jhwang5 »

JumpCrisscross wrote: post #54
js2 wrote: post #51

Earlier quoted context omitted.

Here’s what I don’t understand. You can exchange bitcoins for fiat currency. But afaik you can’t exchange USDT for fiat. So why is anyone willing to take the risk of holding on to USDT? Why are any exchanges even willing to touch it?

> Why are any exchanges even willing to touch it? They’re earning fees from uninformed buyers coming from a community with an ideological aversion to governments. The first part makes it profitable. The last means the risk of their reporting you to the proper authorities is slim.

Not sure why you are getting downvoted.
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