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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

#291

Post by darawk »

thebiglebrewski wrote: post #276
darawk wrote: post #213

Earlier quoted context omitted.

I know that they offer it. And I know that I don't hear anyone complaining about them not honoring it, so I assume it works. I suppose it's theoretically possible they just offer it and nobody has even tried to take advantage of it, but that seems somewhat implausible to me.

I love how much you're defending and willing to go to bat for something you haven't tested yourself nor seen any real world examples of. Why?!

I'm not going to bat for them. I'm explaining the way i've reasoned about the situation. If you disagree with my reasoning, feel free to explain why. Here's the chain:

1. Bitfinex claims to offer wires to Taiwanese accounts.

2. Bitfinex does redeem Tether 1:1 for USD (nominally, within your Bitfinex account).

3. Bitfinex claims to wire that redeemed USD to any Taiwanese account without delay or haircut.

Now, given that, the price of Tether out to trade at 1:1 with USD. Which, for the most part, it does. If there were lots of Taiwanese customers unable to realize those wires, i'd expect we would hear some complaining from them. But we don't. Therefore it is my presumption that those wires are proceeding uninhibited.

If you have an alternative explanation of the facts, i'm happy to listen to it.

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

#292

Post by rocqua »

jhwang5 wrote: post #109
JumpCrisscross wrote: post #54

Earlier quoted context omitted.

> 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.

Just guessing: The idea that the current value in bitcoin comes from crypto-anarchists rather than people speculating.

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

#293

Post by darawk »

s73ver_ wrote: post #255
darawk wrote: post #216

Earlier quoted context omitted.

Yes. But that is likely a way of trying to skirt money laundering laws by saying technically it's not equivalent to USD. The fact of the matter is that they do redeem it 1:1, and have this whole time.

I cannot believe that, especially with that line in their TOS. Saying, "They're only saying that to skirt the law!" doesn't make things any better.

Well, it may not make things better from a moral perspective, but it does make things better from a value-of-tether perspective.

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

#294

Post by 0wing »

mancerayder wrote: post #277

What bothers me more than anything in this isn't the existence of Tether and the suspicious behavior of Tether/Bitfinex players... It's that Bittrex and others are attempting to become mainstream and they've accepted these USDT since forever, and they continue to accept them well after the suspicions were public. This is a black stain on the exchanges. It also personally makes me cynical of the entire space. I moved…

If Tether is a "scam" backed by nothing, why would other Cryptocurrencies be more valid?

It's just software.

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

#295

Post by conanbatt »

zerostar07 wrote: post #274
drcode wrote: post #24

Summary for newbs: Bitfinex is a crypto exchange kinda based in Hong Kong and kind of based in Taiwan (this seems to change depending on convenience.) Taiwan recently started becoming more rigorous about monitoring international USD wires, and lots of Bitfinex users had their money stranded in Taiwan. Bitfinex stopped supporting US customers because of these difficulties (AFAIK most customers did eventually get their…

dumb question but how is it minted? Every time someone wants to buy one, they print one? they have a limit?

They are probably holding Tether reserves in BTC, in a way gambling with the storage moeny. Figure that 2 billion dollars in sitting money generates very little interest, in comparison to 2 billion dollars in btc that might jump 10% in one week.

This bet however, inflates the price of btc alone, since its like someone selling a btc doesnt take any btc from the market (as a btc is traded for another btc concealed). This double spend increases demand for btc, and on paper makes tether rich.

However, if BTC drops below the cost of acquiring it, the fund becomes insolvent, and as it can't sell anything to recoup it can only spiral down.

Thats one theory anyway.

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

#296

Post by semi-extrinsic »

seppel wrote: post #267
hvasishth wrote: post #257

Earlier quoted context omitted.

You sell BTC to USDT if you are not looking to cash out of BTC. Instead, if you think that BTC is at a peak in the short term and you simply want to sell at the peak and get back in once it drops, selling to USDT is just fine. That way you can buy back BTC once price drops. When you do want to cash out to real fiat, you have to sell to USD. USDT allows a large number of exchanges to allow you to sell BTC and hold in…

> Instead, if you think that BTC is at a peak in the short term and you simply want to sell at the peak and get back in once it drops, selling to USDT is just fine. That way you can buy back BTC once price drops. Yes, I get that. But as you mentioned this is "short term". How does it explain that Tether is printing more and more Tethers? Do you think more and more people are selling BTC for USDT for a "short term"? W…

> Do you think more and more people are selling BTC for USDT for a "short term"

Could very well be. BTC is on a general downward trend, almost as low now as it was in November. If people think that seeing 18k again in the next couple of months is likely, then why not?

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

#297

Post by heliodor »

seppel wrote: post #267
hvasishth wrote: post #257

Earlier quoted context omitted.

You sell BTC to USDT if you are not looking to cash out of BTC. Instead, if you think that BTC is at a peak in the short term and you simply want to sell at the peak and get back in once it drops, selling to USDT is just fine. That way you can buy back BTC once price drops. When you do want to cash out to real fiat, you have to sell to USD. USDT allows a large number of exchanges to allow you to sell BTC and hold in…

> Instead, if you think that BTC is at a peak in the short term and you simply want to sell at the peak and get back in once it drops, selling to USDT is just fine. That way you can buy back BTC once price drops. Yes, I get that. But as you mentioned this is "short term". How does it explain that Tether is printing more and more Tethers? Do you think more and more people are selling BTC for USDT for a "short term"? W…

If a lot of people are buying USDT with BTC, it means they don't have confidence in BTC going further up and want out in order to wait for the price drop, so that they can buy in later , assuming the price will drop as expected by them. If they had a way to short BTC/USD, they would simply do that instead.

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

#298

Post by thedufer »

rmrm wrote: post #117
ebbv wrote: post #104

Earlier quoted context omitted.

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

Their assets equal liabilities in either case (whether selling USDT directly for USD, or cyclling them through BTC). Call it what you will, but in neither scenario is anyone rich. Tether if backed by USD at the end of the day is revenue neutral. What am I missing?

> Their assets equal liabilities

This is irrelevant, though. You can commit fraud without losing any money - Martin Shkreli was famously convicted of fraud a few months ago even though the victims all came out ahead.

In the USDT -> BTC -> USD trip, there is a point, namely the BTC part, where more USDT has been issued than USD has been accepted. If they claim USDT is backed by USD, but there were points where that was not true, they have committed fraud, regardless of whether they were lucky enough to come out ahead.

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

#299

Post by rhino369 »

rmrm wrote: post #287
rhino369 wrote: post #228

Earlier quoted context omitted.

That wouldn't be fraud (as long as they quickly converted from BTC to USD), but why would anyone do that?

Because its exactly equivalent to selling Tether for USD, which we know they do. There are arguments that they couldnt have liquidated so much BTC, but I don't see any specific argument that leads on to assume that they wouldnt have. Unless one puts fraud as the entire goal. Which can't be discounted, but its just not obvious, to me.

It's somewhat equvalent but more complicated and more expensive (Transaction costs at each step). It also has one huge downside, which accounts for why you wouldn't do it.

You'd be flooding the market Tethers nobody is asking for, which risks crashing the value of Tethers. They could buy back the tethers for dollars to stablize the price, but that would make the whole transaction useless.

There is also volitity risk. In a falling market they might lose money.

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

#300

Post by pkilgore »

AlexCoventry wrote: post #231

Anyone got a copy of the actual subpoena? I don't understand why journalists don't provide a link to such public supporting source documents.

It's not uncommon for investigative subpoenas to be under seal. But to be fair I have no idea how these particular agencies operate.
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