Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

U.S. Launches Criminal Probe into Bitcoin Price Manipulation

bloomberg.com

Post reply on HN
Print view View original

81–90 of 228 posts

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

#81

Post by whataretensors »

bhouston wrote: post #10
TangoTrotFox wrote: post #4

Markets are constantly manipulated and what we consider acceptable or not seems at times quite arbitrary. For instance quantitative easing is a practice we engage in whose entire purpose is to artificially inflate the value of markets to help spur 'growth.' Is the problem that people may be trying to manipulate the price of decentralized commodity or that people are investing in a decentralized commodity without real…

Central banks are in the business of market manipulation via interest rates, and money supply. This is to control growth and inflation so that business cycles are smoothed out to a degree.

Not to mention steal money from the public with QE.

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

#82

Post by anonymouz »

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…

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 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.” - Tether spokesperson

See https://medium.com/@bitfinexed/bitfinex-and-tether-is-unaudi...

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

#83

Post by nonbel »

ceejayoz wrote: post #78
nonbel wrote: post #61

>"The Justice Department has opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies, dramatically ratcheting up U.S. scrutiny of red-hot markets that critics say are rife with misconduct, according to four people familiar with the matter. [...] Federal prosecutors are working with the Commodity Futures Trading Commission, a financial regulator that oversees der…

> Why isn't there a better source for this than "four people"? Because they're leaking. "Four people" is how a media organization says "it's not just one whackjob making shit up". > I didn't see anything on the DOJ site. Why would you? They don't appear to have publicly announced anything yet. > Is it normal for the DOJ to anonymously report its activities to journalists like this? It's normal for people at the DOJ t…

So it sounds like we are dealing with a rumor here. What reason do we have to believe these four people? I guess it is the reputation of the journalist on the line if the rumors turn out to be false.

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

#84

Post by nonbel »

cjbos wrote: post #75
nonbel wrote: post #61

>"The Justice Department has opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies, dramatically ratcheting up U.S. scrutiny of red-hot markets that critics say are rife with misconduct, according to four people familiar with the matter. [...] Federal prosecutors are working with the Commodity Futures Trading Commission, a financial regulator that oversees der…

Its highly unlikely that any of those 4 people are DOJ employees. More likely 4 traders that have been interviewed and confirmed as much to the journalist.

This is even worse than if it was DOJ leak. We would be dealing with a rumor started by people under investigation for manipulating bitcoin prices...

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

#85

Post by celticninja »

rtpg wrote: post #60
celticninja wrote: post #28

Earlier quoted context omitted.

the idea being that you create new tether when someone deposits the same amount of USD and when USD is withdrawn from the loop then so should the same amount of tethers. What I dont see happening is the removal of tethers when the USD flows out of the crypto space. Enough people have taken profits at this stage that surely some of those USD should have been used to pay out early investors in BTC, thus some tethers wo…

You don't need the withdrawal step in the current market I buy BTC w/ USD Bitfinex prints USDT Bitfinex uses USDT to get BTC In the end of this operation bitfinex has the USD and everyone else is satisfied. Normally Bitfinex needs to hold onto it to settle USDT claims, but so long as there's a USDT-usable market this might not be necessary Even if USDT is at 50 cents to the dollar it's still a license to print money

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.

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

#86

Post by ceejayoz »

nonbel wrote: post #83
ceejayoz wrote: post #78

Earlier quoted context omitted.

> Why isn't there a better source for this than "four people"? Because they're leaking. "Four people" is how a media organization says "it's not just one whackjob making shit up". > I didn't see anything on the DOJ site. Why would you? They don't appear to have publicly announced anything yet. > Is it normal for the DOJ to anonymously report its activities to journalists like this? It's normal for people at the DOJ t…

So it sounds like we are dealing with a rumor here. What reason do we have to believe these four people? I guess it is the reputation of the journalist on the line if the rumors turn out to be false.

> So it sounds like we are dealing with a rumor here.

Media organizations get pretty good at distinguishing between rumor and leak. Any major one will have all sorts of policies on how a story gets verified, and they tend to work. Mistakes do get made, as with anything involving humans.

> What reason do we have to believe these four people?

The media organization involved deems them credible enough to use as sources. It's left mostly up to you whether you trust that media organization.

> I guess it is the reputation of the journalist on the line if the rumors turn out to be false.

Yes, essentially (and their editors, and the publication, and the media as a whole...). This is why reporters cultivate sources, vet their information, keep track over time of their reliability, and generally require multiple independent sources if those sources are leaking anonymously.

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

#87

Post by DINKDINK »

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 dollar market is being propped up by less than pennies on the dollar?

What can be said about Tether: it's a trusted third party that's vulnerable to fractional reserve (like all other exchanges). I wouldn't recommend people use it but to point to the tether creation as proof positive of manipulation rather than discussion fractional reserve issues I think is people confusing lurid facts with silent evidence threats.

Other reading: https://medium.com/crypto-punks/tether-misconceptions-298443...

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

#88

Post by tptacek »

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…

No, not necessarily. Ponzi schemes can survive redemptions for years or even decades; they blow up when there's finally a run.

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

#90

Post by tptacek »

ufo wrote: post #55
dTal wrote: post #47

Earlier quoted context omitted.

>MtGox was also a scam by the end, since they were trading on their exchange bitcoins and USD that they didn't actually have for people to cash out. Heh. When a bitcoin exchange does it, it's a "scam". When a bank does it, it's "fractional reserve".

Banks that use fractional reserve should still have balanced assets and liabilities. It is just that some of their money is tied up in loans to be paid back instead of liquid cash. If everyone the bank loaned money to paid back there would be enough cash to allow all the customers to fully withdraw their accounts. Bitfinex, on the other hand, is just outright insolvent.

It also helps that banks are insured federally.
Post reply on HN