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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

#211

Post by DINKDINK »

coinme wrote: post #162
DINKDINK wrote: post #99

Earlier quoted context omitted.

You're confusing a Ponzi scheme and fractional reserve. Two very different systems.

Tether is claimed to be fully backed by USD. If it is not then it quickly ends up being an effective Ponzi scheme.

Ponzi schemes are 'investment' promises that require ever growing layers of patsies to be recruited for each patsies' pay off to occur.

Fractional Reserve is a practice where an institution leverages themselves by only keeping the expected liquidity needs in reserve and using the other capital for other means. Eventually they blowing up, when the market demands the apparent liquidity.

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

#212

Post by DINKDINK »

vkou wrote: post #182
DINKDINK wrote: post #99

Earlier quoted context omitted.

You're confusing a Ponzi scheme and fractional reserve. Two very different systems.

A fractional reserve bank is a bank where: Cash on hand Cash on hand + Investments > Outstanding liabilities (Deposits). A ponzi scheme is where: Cash on hand + Investments A fractional reserve bank doesn't have the cash to let 100% of its depositors withdraw their accounts tomorrow. It does have the assets to let 100% of its depositors withdraw their accounts once its investments mature, or if they are sold at marke…

>It does have the assets to let 100% of its depositors withdraw their accounts once its investments mature

This line of thinking is what caused the 2008 crisis. The two metrics are interdependent. If a bank doesn't have liquidity, it can't make loans, which cant support the prices of the assets it owns which results in financial collapse.

Ponzi schemes are 'investment' promises that require ever growing layers of patsies to be recruited for each patsies' pay off to occur. Fractional Reserve is a practice where an institution leverages themselves by only keeping the expected liquidity needs in reserve and using the other capital for other means. Eventually they blowing up, when the market demands the apparent liquidity.

A ponzi scheme has to continue to grow or else it will collapse. Frantional reserve risks can perpetuate indefinitely until the liquidity is request:

StableCoin takes $100MM in USD deposits. Issues 100MM StableCoins. StableCo notices that it's 'never' had more than $10MM in USD of liquidity tapped. It decides "Hey we could make a stack of cash investing the remaining $90MM USD in XYZ" not until X years later does the fractional reserve issue arise as 'unforeseen circumstances' cause a liquidity demand of $15MM

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

#213

Post by wcarron »

whataretensors wrote: post #116
wcarron wrote: post #103

Earlier quoted context omitted.

It's interesting that bitcoin (and crypto maximalists in general) repeatedly harp on and attack QE as if it was the end of democracy itself. QE is just another tool for monetary policy designed to combat deflation and increase available capital supply as a stimulus measure. Because QE belongs to the school of thought that the economy is driven by consumer spending as opposed to consumer savings. Could you please elab…

Sure. QE is buying stock with printed money, inflating stock prices. People with lots of stocks get inflated value. When the inflated value leaves the stock market, it has an effect of deflating the value of the USD. It's a slow inflationary method of distributing public funds to the rich in the stock market, while creating market manipulation tools to coerce stock-driven companies into essentially being proxy govern…

First off (but probably inconsequential), why do you put "monetary policy" in quotations? Monetary policy is literally an Econ 101 term.

But also: A large percentage of any public companies' value can be decided by monetary policy, in the sense a companies value can be decided by inflation or deflation. Monetary policy is just an official term for central bank decisions to influence the supply of money and credit in an economy.

> When the inflated value leaves the stock market, it has an effect of deflating the value of the USD

If you're trying to argue that QE is bad because inflation is bad and people participate in profit taking, you'll need to get over that. What would you like to do? Ban the sale of stocks by persons over a certain net-worth?

> while creating market manipulation tools to coerce stock-driven companies

What, pray tell, are these tools? You know, besides creating mild inflation and some influence on interest rates?

Additionally, you seem to have forgotten that an explicit goal of QE is to lower interest rates, allowing everyone, not just the rich, easier access to capital in order to stimulate the economy. QE demonstratively does not solely redistribute more wealth to the wealthy.

Furthermore, your entire premise is shaky, considering the most prominent historical example (the US recession) mostly consisted of the Fed purchasing $4.5 trillion of mortgage-backed securities.

It's really not exactly "making money out of thin air" considering the Fed purchased securities pegged to a real good/service, mortgages.

Lastly, SV IPOs weren't exactly popular last year. Nor in 2016 or 2015.

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

#214

Post by tripletao »

Tesl wrote: post #29
Entangled wrote: post #16

Earlier quoted context omitted.

So, BTC created 16 million coins from air and nobody complained. Ripple created 100 billion coins from air and nobody complained. Tron, Stellar, Cardano, Iota, all in the billions. The top 1000 coins were created from air and nobody complained (most are scams). Why creating Tethers from thin air is now a cause of concern? That's a coin just like every coin out there, like Tron, Verge, EOS, they're created from nothin…

Its not the same thing because exchanges often trade only Tether/Bitcoin pairs, and don't allow people to withdraw into actual USD. If you can print as many tethers as you like, then you can massively pump the bitcoin price buying it with worthless tether. This only works as long as people selling Bitcoin have been happy to accept Tether instead of USD, which (inexplicably to me) they have been doing. If Tether is pr…

What's inexplicable? Tether supplies real value, by allowing people to trade in USD without complying with American (or any other) banking law.

And the alleged fraud is that they're creating USDT out of thin air, and spending them to buy BTC, in order to manipulate the price of Bitcoin upward. If you're a Bitcoin bull, then that's almost a selling point. I don't think any of this ends well, but I see the short-term appeal.

People don't appreciate how slowly government works, especially on financial crimes. Liberty Reserve was blatantly illegal and technically simple, without even the blockchain fig leaf. It operated openly for seven years. Then the government arrested the founder, and sentenced him to twenty years in prison.

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

#215

Post by [deleted] »

wcarron wrote: post #213
whataretensors wrote: post #116

Earlier quoted context omitted.

Sure. QE is buying stock with printed money, inflating stock prices. People with lots of stocks get inflated value. When the inflated value leaves the stock market, it has an effect of deflating the value of the USD. It's a slow inflationary method of distributing public funds to the rich in the stock market, while creating market manipulation tools to coerce stock-driven companies into essentially being proxy govern…

First off (but probably inconsequential), why do you put "monetary policy" in quotations? Monetary policy is literally an Econ 101 term. But also: A large percentage of any public companies' value can be decided by monetary policy, in the sense a companies value can be decided by inflation or deflation. Monetary policy is just an official term for central bank decisions to influence the supply of money and credit in…

[deleted]

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

#216

Post by throwawaylolx »

lagadu wrote: post #59
throwawaylolx wrote: post #51

Earlier quoted context omitted.

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…

Well, right on tether.to they say, and I quote: > Our reserve holdings are published daily and subject to frequent professional audits. All tethers in circulation always match our reserves. They've been around for years and the grand total of independents audits is 0 (zero). Sure, assumptions don't make rumors true but them flat-out lying about audits and transparency speaks louder than anything else and we're not ev…

>flat-out lying about audits

Huh? They did do audits https://tether.to/announcement-transparency-update/ and they don't say they must be as public or as comprehensive as the community demands.

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

#217

Post by tripletao »

seppel wrote: post #144
celticninja wrote: post #85

Earlier quoted context omitted.

For every buyer there is a seller, bitfinex are not selling you the BTC. So that seller now wants to trade his USDT for USD to withdraw, whether he does that through bitfinex or another exchange using USDT, the end result should be an outflow of USD and a corresponding drop in the number of USDT.

Exactly, I'm wondering the same. Somebody bought 2.8 billion USDT and it is unclear who and why (to me).

I think people hold USDT:

1. For convenience, like if they're speculating in BTCUSD and their exchange uses Tether.

2. Deliberately, because they're breaking the law and they'd get caught if they tried to deposit their money in a regulated institution.

I doubt many people in the first category have thought much about the risks, or even know the difference between USD and USDT--if they had, then they'd probably use a different exchange. I'll bet there's a lot of them, though. I could imagine that people in the second category would consider the risk and still want USDT. A portfolio of half each BTC and USDT is probably less risky in some sense than all BTC. Even if the investment in USDT has negative alpha, it might improve your portfolio's Sharpe ratio, if the correlation between the risk that USDT collapses and the price of Bitcoin is small enough.

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

#218

Post by throwawaylolx »

spookthesunset wrote: post #121
anonymouz wrote: post #82

Earlier quoted context omitted.

Even worse, they tried to get an audit, but it ended up with them and their auditor ending the process without producing an audit. Apparently they weren't too happy the auditor wanted to actually take a close look: “We confirm that the relationship with Friedman is dissolved. Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that a…

The fact that people still support tether after getting fired by their auditor and then releasing the statement you quoted astounds me. It is the most clear cut indicator that there is some super sketchy shit going on ever. People seem to be willing to believe whatever they want despise clear signs they are wrong. Especially when there is the possibility of getting lambo-rich with Bitcoin....

>It is the most clear cut indicator that there is some super sketchy shit going on ever.

Yes, there is something that they're hiding, but there is no evidence that this has anything to do with their 1:1 USD reserve being a bogus. It's far more likely they are encountering regulation problems given the regulation uncertainty surrounding crypto.

>People seem to be willing to believe whatever they want despise clear signs they are wrong.

Or perhaps I'm not willing to commit to conspiracy theories based on baseless speculations.

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

#219

Post by [deleted] »

wcarron wrote: post #213
whataretensors wrote: post #116

Earlier quoted context omitted.

Sure. QE is buying stock with printed money, inflating stock prices. People with lots of stocks get inflated value. When the inflated value leaves the stock market, it has an effect of deflating the value of the USD. It's a slow inflationary method of distributing public funds to the rich in the stock market, while creating market manipulation tools to coerce stock-driven companies into essentially being proxy govern…

First off (but probably inconsequential), why do you put "monetary policy" in quotations? Monetary policy is literally an Econ 101 term. But also: A large percentage of any public companies' value can be decided by monetary policy, in the sense a companies value can be decided by inflation or deflation. Monetary policy is just an official term for central bank decisions to influence the supply of money and credit in…

[deleted]

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

#220

Post by throwawaylolx »

JumpCrisscross wrote: post #132
throwawaylolx wrote: post #51

Earlier quoted context omitted.

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 curr…

Have you looked at any of the links I posted? https://blog.bitmex.com/tether-addendum-new-financial-data-r...
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