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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

#221

Post by lagadu »

throwawaylolx wrote: post #216
lagadu wrote: post #59

Earlier quoted context omitted.

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.

Erm, quoted from the exact announcement you linked (including the typo):

> These consulting services do not constitute anaudit or attestation engagement

They're saying themselves that they weren't audited.

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

#222

Post by throwawaylolx »

lagadu wrote: post #221
throwawaylolx wrote: post #216

Earlier quoted context omitted.

>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.

Erm, quoted from the exact announcement you linked (including the typo): > These consulting services do not constitute anaudit or attestation engagement They're saying themselves that they weren't audited.

Not quite--they're saying that the consulting services that Friedman offered on top of the audit procedure they were hired to do are not an audit. Friedman audited Tether, but it was not "a full audit" (https://www.coindesk.com/tether-confirms-relationship-audito...) and, according to Tether, the reason for the that is as follows:

>Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame. As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success."

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

#223

Post by vkou »

DINKDINK wrote: post #212
vkou wrote: post #182

Earlier quoted context omitted.

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 pat…

Yes, what led to the 2008 crisis was a misvaluation of investments. Fortunately, there exist solutions to that problem, built into the system. Short-term interbank loans, the FDIC, and nationalization. Notice how not a single American bank stole it's depositor's money... And that the rules of fractional reserves were changed, to reduce the likely hood of such a catastrophe.

There is a world of difference between that and a Ponzi scheme. How many investors took a haircut from Madoff's little game, again?

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

#225

Post by mortdeus »

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…

yeah, i thought it was a ponzi scheme too.

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

#226

Post by evilDagmar »

mancerayder wrote: post #131
dzdt wrote: post #105

Earlier quoted context omitted.

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.

The other allegation (which is pretty viable) was with large reserves to play with, they could cause crashes or spikes in order to gobble up their users risky shorts. Shorts they would know the exact number and values of.

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

#227

Post by evilDagmar »

sunsu wrote: post #97
bripeace wrote: post #76

Earlier quoted context omitted.

No, it's unlikely if Tether was legitimate USDT printing would correlate so closely with bitcoin (crypto) market downturns. The reason being, assuming tether is legitimate, for every printing they are sourcing additional USD to back the newly minted USDT. The idea they could so consistently find large investors willing to make NEW 100M+ investments while the crypto markets were in free fall is unlikely to say the lea…

This is inaccurate. Tether demand INCREASES when the cryptomarkets crash because traders want to escape to non-volatile assets. If everyone converts their crypto to USDT at the same time (which is what happens during big crashes) they MUST print more Tether or the price will increase.

No, they don't need to print more tether to protect the price. The price of tether is locked to $1.

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

#228

Post by thoraces »

DINKDINK wrote: post #87
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…

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…

What I wonder is: Even if it is totally a ponzi scheme/scam, it seems like the price holds even if people have little faith on whether or not it's properly backed.

So, has it _psychologically_ managed to create price stability? So long as there isn't a giant run on the currency where they actually did run out of the necessary US Dollars (as well as insufficient people stepping in willing to pay $1 for 1 USDT), does it actually matter whether or not they have fully collateralized the currency?

I find that to be sorta interesting.

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