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Tether Critical Announcement

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Re: Tether Critical Announcement

#31

Post by patio11 »

cperciva wrote: post #29
patio11 wrote: post #4

If you haven't been following along, here's why this matters: Tethers is a sole-source cryptocurrency, pegged to the US dollar. Bitfinex produces it, though they're cagey (some would say outright lying at times) about the level of involvement. The primary purpose of tethers is money laundering, even more so than cryptocurrency generally. Bitfinex was cut off from the US financial system, which makes it impossible for…

Post-script: Is this good news for Bitcoin? Oh this is great news for Bitcoin. If you don't believe Bitfinex's $600 million in liabilities are worth a copper shilling, the only option for getting your value out of Bitfinex is to swap your liability for Bitcoin, which drives up the price of Bitcoin at the margin. Correct me if I'm wrong here, but this seems to be an argument for BTC/USD going up on Bitfinex -- but not…

Yep, you'd expect to eventually see a sustained divergence to price in an elevated level of counterparty risk (like we saw back at Mt. Gox). In the short run, though, arbitrage bots gonna arbitrage.

Re: Tether Critical Announcement

#32

Post by askmike »

empath75 wrote: post #5
patio11 wrote: post #4

If you haven't been following along, here's why this matters: Tethers is a sole-source cryptocurrency, pegged to the US dollar. Bitfinex produces it, though they're cagey (some would say outright lying at times) about the level of involvement. The primary purpose of tethers is money laundering, even more so than cryptocurrency generally. Bitfinex was cut off from the US financial system, which makes it impossible for…

$600 million in fake dollars? Amazing that they've gotten away with it for that long.

They are not fake, they have all of them. People from the US just can't access them anymore. Tether is the workaround so they can.

To add to the excellent summary of patio11:

The other side of the coin is that more and more exchanges are using Tether (USDT) as the only thing pegged to the FIAT world in any way (value wise), not having to deal with actual dollars and banks makes the legal side of running an exchange a lot easier and cheaper. So a lot of exchanges are supporting USDT for a reason way bigger than simply providing a trading marketplace for them. Think about exchanges like Bittrex and Poloniex, which volume wise are huge and don't offer any real dollars or euros.

Re: Tether Critical Announcement

#33

Post by stale2002 »

chrisco255 wrote: post #14
pbnjay wrote: post #11

$30M here, $30M there... by all means, please keep proving to me how secure and stable smart contracts are! I'm indifferent on bitcoin, it's a cool idea but there seem to be a lot of these "hammer everything" types that are doing it a disservice across the board.

Tethers are not smart contracts. It's a separate crypto blockchain currency from Bitcoin and it claims to have a near 1:1 ratio with the USD, hence the name...it's "tethered" to the USD. This is not unlike some foreign currencies.

Well, it is "supposedly" backed up by USD.

A whole bunch of people have been questioning whether they ACTUALLY have that money, very recently, and surprise surprise, there just 'happens' to be a hack that happens right now.

Re: Tether Critical Announcement

#34

Post by kamaal »

floatingatoll wrote: post #16
patio11 wrote: post #4

If you haven't been following along, here's why this matters: Tethers is a sole-source cryptocurrency, pegged to the US dollar. Bitfinex produces it, though they're cagey (some would say outright lying at times) about the level of involvement. The primary purpose of tethers is money laundering, even more so than cryptocurrency generally. Bitfinex was cut off from the US financial system, which makes it impossible for…

For the motivated amongst us, the SEC "Tips, Complaints, and Referrals" portal is here: https://denebleo.sec.gov/TCRExternal/disclaimer.xhtml They accept anonymous reports, and pay out whistleblower penalties in some circumstances. I can't tell if Tether is a US company or not, but regardless, it's still worth reporting if y'all care to - that USD has to get into the country somehow, and it sure is interesting how it…

Its hard to imagine they don't know about this stuff already.

Generally, they know about it, but they have to work to build a case against these people?

Re: Tether Critical Announcement

#35

Post by cperciva »

patio11 wrote: post #31
cperciva wrote: post #29

Earlier quoted context omitted.

Post-script: Is this good news for Bitcoin? Oh this is great news for Bitcoin. If you don't believe Bitfinex's $600 million in liabilities are worth a copper shilling, the only option for getting your value out of Bitfinex is to swap your liability for Bitcoin, which drives up the price of Bitcoin at the margin. Correct me if I'm wrong here, but this seems to be an argument for BTC/USD going up on Bitfinex -- but not…

Yep, you'd expect to eventually see a sustained divergence to price in an elevated level of counterparty risk (like we saw back at Mt. Gox). In the short run, though, arbitrage bots gonna arbitrage.

In the short run, though, arbitrage bots gonna arbitrage.

Don't people who run arbitrage bots usually understand concepts like counterparty risk? Do they not realize that by moving money into Bitfinex they're potentially acquiring a large amount of assets which will end up being devalued?

Re: Tether Critical Announcement

#36

Post by ThrustVectoring »

cperciva wrote: post #35
patio11 wrote: post #31

Earlier quoted context omitted.

Yep, you'd expect to eventually see a sustained divergence to price in an elevated level of counterparty risk (like we saw back at Mt. Gox). In the short run, though, arbitrage bots gonna arbitrage.

In the short run, though, arbitrage bots gonna arbitrage. Don't people who run arbitrage bots usually understand concepts like counterparty risk? Do they not realize that by moving money into Bitfinex they're potentially acquiring a large amount of assets which will end up being devalued?

It depends on the experience level of people running them. Cryptocurrencies have a good deal of enthusiasts YOLO-ing on them, as far as I can tell.

Re: Tether Critical Announcement

#37

Post by askmike »

stale2002 wrote: post #33
chrisco255 wrote: post #14

Earlier quoted context omitted.

Tethers are not smart contracts. It's a separate crypto blockchain currency from Bitcoin and it claims to have a near 1:1 ratio with the USD, hence the name...it's "tethered" to the USD. This is not unlike some foreign currencies.

Well, it is "supposedly" backed up by USD. A whole bunch of people have been questioning whether they ACTUALLY have that money, very recently, and surprise surprise, there just 'happens' to be a hack that happens right now.

Not sure if "a whole bunch of people" equates more than 5 extremely vocal people on twitter and reddit.

Tether published an audit a month ago.

Re: Tether Critical Announcement

#38

Post by polyomino »

patio11 wrote: post #4

If you haven't been following along, here's why this matters: Tethers is a sole-source cryptocurrency, pegged to the US dollar. Bitfinex produces it, though they're cagey (some would say outright lying at times) about the level of involvement. The primary purpose of tethers is money laundering, even more so than cryptocurrency generally. Bitfinex was cut off from the US financial system, which makes it impossible for…

This is much easier to unwind than Mt. Gox since tether is only redeemable through the tether company.

Participating exchanges have to upgrade their omni/tether clients or they run the risk of accepting the unredeemable tethers for which their customers will hold them liable. Omni's design allows tether to track all the disavowed tethers so there's no risk of payout to addresses downstream of this one.

Re: Tether Critical Announcement

#40

Post by rtpg »

polyomino wrote: post #38
patio11 wrote: post #4

If you haven't been following along, here's why this matters: Tethers is a sole-source cryptocurrency, pegged to the US dollar. Bitfinex produces it, though they're cagey (some would say outright lying at times) about the level of involvement. The primary purpose of tethers is money laundering, even more so than cryptocurrency generally. Bitfinex was cut off from the US financial system, which makes it impossible for…

This is much easier to unwind than Mt. Gox since tether is only redeemable through the tether company. Participating exchanges have to upgrade their omni/tether clients or they run the risk of accepting the unredeemable tethers for which their customers will hold them liable. Omni's design allows tether to track all the disavowed tethers so there's no risk of payout to addresses downstream of this one.

has anyone checked to see if this money has already spread to downstream addresses? It's possible the damage is already done and exchanges have accepted money from the poisoned address.
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