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Tether Critical Announcement

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Re: Tether Critical Announcement

#311

Post by 3pt14159 »

Ajedi32 wrote: post #308
geofft wrote: post #299

Earlier quoted context omitted.

On a side note, the fact that bank runs are rational decisions and that no FDIC-style agency exists to change the incentives seems bad for cryptocurrency in general. (Possible responses include both "the traditional financial system and fiat currency is actually pretty good" and "someone should run a reliable FDIC equivalent as a business for new exchanges and new coins".)

Isn't a bank run only an issue if the bank is using a fractional reserve? Cryptocurrency exchanges aren't banks; they're not supposed to keep a fractional reserve. If everyone suddenly demands all their coins at once, the exchange should have no trouble complying with that. The only problem is that there's no way to know for sure whether an exchange is running on a fractional reserve or not.

The issue is that they do run fractional reserves, even if they aren't supposed to. Much like banks of the 1600s.

Re: Tether Critical Announcement

#312

Post by thethimble »

runeks wrote: post #174

> Yesterday, we discovered that funds were improperly removed from the Tether treasury wallet […] > […] they have been flagged and will not be redeemable by Tether for USD. How will this ever work in real life? If I yesterday — right after the hack, but before the announcement — in good faith received $1m in USDT, and paid in Bitcoin, who’s liable? In effect, this policy just shifts the financial burden to innocent p…

Presumably the stolen coins have not been spent yet.

> The attacker is holding funds in the following address: 16tg2RJuEPtZooy18Wxn2me2RhUdC94N7r.

Re: Tether Critical Announcement

#313

Post by darawk »

3pt14159 wrote: post #278
darawk wrote: post #80

Earlier quoted context omitted.

...except that Tether long predates Bitfinex's wire issues. They're usable on many of the major exchanges (Bittrex, Poloniex, for example). Tether was explicitly created for the purpose of equalizing prices across exchanges. It's indeed possible that they're insolvent, but there is no real evidence of that, just lots of people speculating incessantly without much justification. Basically everything about the parent c…

I've been in Bitcoin for over 7 years. This type of back and forth is exactly what happened to Mt Gox. And you know what? My friend got the fuck out of Mt Gox before it burst. When you have to choose between following a pre-bankrun rumour or following unsubstantiated pushback, follow the rumour. It costs you maybe 5% to get out vs 100% if you're wrong and banks / money holders compete on assuring people that there is…

I was around during MtGox too. This is nothing like MtGox. The difference is frozen funds. MtGox froze people's money. Bitfinex hasn't. Simple as that.

Re: Tether Critical Announcement

#314

Post by darawk »

troc wrote: post #187
mrb wrote: post #154

Earlier quoted context omitted.

Bitfinex already fully financially recovered from the 119k BTC theft by repurchasing the last of the BFX debt tokens a few months ago.

and those tokens were traded at how many pennies to the dollar ?

They were redeemed by Bitfinex at full face value.

Re: Tether Critical Announcement

#315

Post by MrRadar »

darawk wrote: post #313
3pt14159 wrote: post #278

Earlier quoted context omitted.

I've been in Bitcoin for over 7 years. This type of back and forth is exactly what happened to Mt Gox. And you know what? My friend got the fuck out of Mt Gox before it burst. When you have to choose between following a pre-bankrun rumour or following unsubstantiated pushback, follow the rumour. It costs you maybe 5% to get out vs 100% if you're wrong and banks / money holders compete on assuring people that there is…

I was around during MtGox too. This is nothing like MtGox. The difference is frozen funds. MtGox froze people's money. Bitfinex hasn't. Simple as that.

Huh? This is pretty much exactly like Mt. Gox. At first Mt. Gox only suspended people's ability to withdraw USD, like Bitfinex. Then they suspended people's ability to withdraw BTC (apparently people have been experiencing delays getting crypto withdrawals to go through on BFX recently?). Even then they still allowed people to send money between accounts within the exchange, which resulted in a secondary market of people buying "Goxbux" from other people with money stuck in the exchange (at a discount, of course; basically betting that Mt. Gox was actually solvent).

Re: Tether Critical Announcement

#316

Post by darawk »

MrRadar wrote: post #315
darawk wrote: post #313

Earlier quoted context omitted.

I was around during MtGox too. This is nothing like MtGox. The difference is frozen funds. MtGox froze people's money. Bitfinex hasn't. Simple as that.

Huh? This is pretty much exactly like Mt. Gox. At first Mt. Gox only suspended people's ability to withdraw USD, like Bitfinex. Then they suspended people's ability to withdraw BTC (apparently people have been experiencing delays getting crypto withdrawals to go through on BFX recently?). Even then they still allowed people to send money between accounts within the exchange, which resulted in a secondary market of pe…

I can withdraw crypto from Bitfinex just fine and have done so recently. Taiwanese fiat withdrawals process just fine. In this case, we have confirmation that their foreign wire transfers are legitimately frozen. They're not lying about that. I don't see much comparison to MtGox at all.

Re: Tether Critical Announcement

#317

Post by darawk »

3pt14159 wrote: post #311
Ajedi32 wrote: post #308

Earlier quoted context omitted.

Isn't a bank run only an issue if the bank is using a fractional reserve? Cryptocurrency exchanges aren't banks; they're not supposed to keep a fractional reserve. If everyone suddenly demands all their coins at once, the exchange should have no trouble complying with that. The only problem is that there's no way to know for sure whether an exchange is running on a fractional reserve or not.

The issue is that they do run fractional reserves, even if they aren't supposed to. Much like banks of the 1600s.

They claim that they don't. If they do, that is a serious problem. Some of the exchanges have, but there is no evidence i'm aware of that points to any of the current major exchanges running a fractional reserve.

Re: Tether Critical Announcement

#318

Post by 3pt14159 »

darawk wrote: post #317
3pt14159 wrote: post #311

Earlier quoted context omitted.

The issue is that they do run fractional reserves, even if they aren't supposed to. Much like banks of the 1600s.

They claim that they don't. If they do, that is a serious problem. Some of the exchanges have, but there is no evidence i'm aware of that points to any of the current major exchanges running a fractional reserve.

The issue is that once there is evidence there is a bank run. Mt Gox wasn't supposed to, but they did. And there are others out there that I hear rumours about having 5 or 10% of their reserves stolen from hot wallets. Sure it's fine if there is never a run, but it's worth pointing out that this is a real threat vector.

Re: Tether Critical Announcement

#319

Post by ActsJuvenile »

mrb wrote: post #201
ActsJuvenile wrote: post #198

Earlier quoted context omitted.

Google "Wash Trading"

Doesn't work in crypto markets. Taker fees are typically > 0.20%, with the notable exception of BitMex.

Taker fees are significantly discounted for higher volume traders, because they bring smaller traders to an exchange. I know two mid-sized whales who have almost 0% rate as long as they trade certain number of BTC a month.
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