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U.S. Launches Criminal Probe into Bitcoin Price Manipulation

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Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#131

Post by mancerayder »

dzdt wrote: post #105
DINKDINK wrote: post #87

Earlier quoted context omitted.

If there was a problem redeeming Tether for USD, you'd expect that the market price distortion of Tether. But it hasn't[1] https://www.tradingview.com/chart/?symbol=POLONIEX:USDTUSD >they've created 2.8 BILLION USDT Absolute numbers are meaningless and less eye catching when they're compared to the entire market. 2.8 ~ ~ Billion ~ ~ USDT is only 0.5%-0.8% of the market. Do you really think that a 300-500 billion doll…

The mechanics are probably this: suppose someone goes to Bitfinex to redeem 10million USDT into USD. Since Bitfinex is behaving fraudulently, they don't actually have the 10million USD they promised they would hold to back the USDT. But they do have the ability to issue new unbacked USDT. So they issue 11million unbacked USDT and use it to buy bitcoin. They sell the bitcoin for 10million USD on one of the exchanges t…

That's a very interesting and plausible hypothesis.

One wonders whether the prolonged slump might lead to some sort of bursting of outfits like Tether/Bitfinex. It seems like a downward spiral of people selling BTC and Bitfinex doing the dance you described, and a bigger hole being created.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#132

Post by JumpCrisscross »

throwawaylolx wrote: post #51
sine wrote: post #5

For anyone who hasn't been following, the prevailing theory is that the largest Cryptocoin exchange "Bitfinex" also runs an altcoin called "Teather" which was marketed as being backed 1:1 by USD. So far they've created 2.8 BILLION USDT and coincidently the times they create millions of these happens to be in the middle of extreme market crashes. See this chart: https://i.imgur.com/Uo07d1d.jpg More details here: https…

They mint Tether during market crashes because that's when there is the highest volume on USDT pairs, and when Tether needs to create tokens to maintain the exchange rate around $1. Have you read their whitepaper? Further, there is more proof that Tether has the funding to back up the USDT than proof that Tether does not have the funds: https://blog.bitmex.com/tether/ https://blog.bitmex.com/tether-addendum-new-finan…

> there is more proof that Tether has the funding to back up the USDT than proof that Tether does not have the funds

There is no way Bitfinex has $2.2 billion in bank accounts. If a bank handles U.S. dollars, they are under U.S. jurisdiction. Bitfinex cannot show who own Tether; that makes beneficial ownership tracing, rules surrounding which became stronger twelve days ago, impossible.

Had they picked any other currency, the claim could have been plausible. But $2.2 billion in anonymously digital U.S. dollars? (Physical cash, too, might have been plausible.) Not likely.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#133

Post by [deleted] »

dTal wrote: post #58
ufo wrote: post #55

Earlier quoted context omitted.

Banks that use fractional reserve should still have balanced assets and liabilities. It is just that some of their money is tied up in loans to be paid back instead of liquid cash. If everyone the bank loaned money to paid back there would be enough cash to allow all the customers to fully withdraw their accounts. Bitfinex, on the other hand, is just outright insolvent.

Ah, so there is a difference. Thank you for clarifying. I wish I had phrased my post as a question - as a statement it seems rather unpopular...

[deleted]

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#134

Post by [deleted] »

mancerayder wrote: post #130

What grates my nerves isn't primarily Bitfinex/Tether, it's the other exchanges. Why did they accept Tether? Of all the 'altcoins', one backed by an asset like cash is the easiest to verify (or be skeptical of if verification requests are dismissed or ignored). When I signed onto Bittrex, USDT was one of the prominent trading pairs. It was a useful trading pair, because instead of seeing numbers like ".000000314121 :…

[deleted]

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#136

Post by zdkl »

simias wrote: post #44
zdkl wrote: post #19

Earlier quoted context omitted.

The case of coins that optimise for consumer/general purpose hardware (by employing PoW algorithms suited for CPUs, or explicitely switching algorithms periodically) is interesting in this context. Traditional cloud platform providers are also in a position to impact mining on those. I doubt that any coin could cope with those warehouses of potential mining power. I'm looking closely at monero on this subject. Despit…

I think it's only postponing the inevitable. If any cryptocoin manages to become "the new dollar" the incentives to micro-optimize the mining will be tremendous. Even assuming that they manage to create an algo (or change it often enough) to make custom ASIC pointless it just means that it's CPU vendors who have the edge. Intel, AMD and friends could sell their first batches of new and improved CPUs for a primer duri…

I think you're missing some context on the difference between CPUs and ASICs in terms of PoW algo design and hardware cost&distribution.

Again with monero because it's pertinent to your point, I would encourage you to read up on its design goals, and the discussions around the recent PoW algo change on github or Reddit.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#137

Post by staplers »

TangoTrotFox wrote: post #4

Markets are constantly manipulated and what we consider acceptable or not seems at times quite arbitrary. For instance quantitative easing is a practice we engage in whose entire purpose is to artificially inflate the value of markets to help spur 'growth.' Is the problem that people may be trying to manipulate the price of decentralized commodity or that people are investing in a decentralized commodity without real…

Never get in the way of web devs inflated egos when they're ranting about things which are vastly outside their scope of expertise. Bitcoin is a trigger word for the HN community and unless you're using every big word to insinuate it's a scam, then you'll get downvoted/ridiculed.

You're absolutely right by the way, libor rates have been rigged for decades and governments simply "fine" companies doing it. A simple google search will bring up sources for this claim.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#138

Post by Nursie »

perl4ever wrote: post #128
Nursie wrote: post #112

Earlier quoted context omitted.

> It makes perfect sense. If many people are trying to BUY USDT (increasing demand for USDT) the price of USDT will increase. Why? It's worth exactly one dollar. Which they have in an account. That's the point. The price of the other cryptocurrency will come down, and the value of USDT compared to that cryptocurrency will indeed rise, as it should when people want to sell to a market where there's more demand on doll…

I thought that what people call a "currency peg" is normally the same as what you are calling "maintained purely by supply manipulation". So I suspect you may be using words in a nonstandard way.

Not here, not the way tether is set up. Its claim is that its peg is concrete and reliable in the way a floating peg is not, because every tether is backed by a real dollar in a bank account, and in theory is redeemable.

Take a look at their homepage.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#139

Post by dkersten »

ceejayoz wrote: post #79
dkersten wrote: post #68

Earlier quoted context omitted.

I know people who have exchanged bitcoins and cash anonymously on the street. Sounds pretty risky to me and I certainly don’t think it’s feasible for large volumes of either currency, but it’s possible and has happened, at least.

> I know people who have exchanged bitcoins and cash anonymously on the street. If I were a narcotics undercover agent, I'd be working to become The Guy locally to trade Bitcoins with in this manner. Have a partner snap a photo or follow them home to compile a list of people transacting like this. Chances are good this is already happening in some cities.

Sure, as I said it sounds pretty risky (for many reasons), I’m just saying that it does happen and st least has a possibility of anonymity.

Re: U.S. Launches Criminal Probe into Bitcoin Price Manipulation

#140

Post by ceejayoz »

dragonwriter wrote: post #117
Nursie wrote: post #104

Earlier quoted context omitted.

> USDT is only 0.5%-0.8% of the market. This is false. Market cap is a meaningless statistic when applied to cryptocurrencies. If I create a billion 'FOOCoins' and sell one to a friend for $1, FOOCoin now has a 1 billion market cap, but only a single dollar has changed hands. He sells it back to me for $2, now FOOCoin has a cap of $2 billion! With only $3 having changed hands. This is clearly an exaggerated scenario,…

> If I create a billion 'FOOCoins' and sell one to a friend for $1, FOOCoin now has a 1 billion market cap, but only a single dollar has changed hands. He sells it back to me for $2, now FOOCoin has a cap of $2 billion! With only $3 having changed hands. Only $1 has changed hands in this.

$1 changed hands, but the trading volume is $3.

There's a lot of speculation that this sort of "wash trading" happens in Bitcoin - some exchanges permit buying/selling to yourself, which lets someone boost both price and volume trivially.

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