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Are pixie fairies behind Bitcoin's latest bubble?

amycastor.com

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Re: Are pixie fairies behind Bitcoin's latest bubble?

#81

Post by darawk »

amycastor wrote: post #64
dannyw wrote: post #46

Earlier quoted context omitted.

Bitfinex is one of the largest exchanges, and Tether is also used by many other exchanges like Binance. It's not implausible to think that there's $13B of inflows to BTC this year. This whole Tether speculation / hit piece is basically people thinking "It's implausible people want to buy bitcoin on the largest bitcoin exchanges".

If Tether were in fact receiving real USD to support the billions in USDT it keeps issuing, then why hasn't it handed over financial docs to NYAG, which is investigating it for fraud? Why has it not had a third-party audit? Why does it keep printing USDT in larger and larger numbers (a sign that the real $$ may be disappearing from the system)? Why don't we see a similar growth in other regulated stablecoins?

Because their banks keep shutting down their accounts. They've been playing whack-a-mole with regulators for a long time, and they probably view the NYAG's request as a backdoor way to find out where and how they're banking in order to shut them down.

Re: Are pixie fairies behind Bitcoin's latest bubble?

#82

Post by seppel »

raziel2701 wrote: post #79
seppel wrote: post #77

Earlier quoted context omitted.

> The people that printed tether now sell their btc for a profit and can now cover their tether obligations to keep the illusion going that tether is 1:1 backed with usd. They can now repeat the tether printing cycle. And who is getting scamed here? Who is sitting on the tether at the end of the day?

Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value. If tether goes away that would hurt whomever believes it's worth a dollar. The exchanges who are in on the scam can trade tether back to USD if they need to when the tether company sells their bitcoin for a profit. But the exchanges also make a killing from increas…

Sorry, I'm slow and I really don't understand this.

> Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value.

But how? Let's say I have one BTC. You offer me 15k USD to buy it, I say no. You say, ok, what about 18k USDT (that you just printed)? I reconsider and say, yeah, ok. So you inflated the price ok, but then what?

I now have 18k USDT, but I can't spend them on blackjack and hookers. In fact, I can buy nothing with the 18k USDT except crypto!

So I have two options:

* I keep the 18k USDT. But why should I do that?

* I buy back my BTC. But then somebody else has the problem of spending the 18k USDT! Where do they eventually end up? I dont get that part.

Re: Are pixie fairies behind Bitcoin's latest bubble?

#83

Post by smabie »

seppel wrote: post #76
smabie wrote: post #30

Earlier quoted context omitted.

What, no? Tether is used as collateral for crypto futures positions. No day trader is buying spot, they are buying swaps (perp futures) or regular futures. And it's better to hold the collateral in tether or some other stable coin than in btc so you don't have to hedge as much exposure by writing futures.

I see. And these traders are responsible for the increased demand of tether?

pretty much. the firm I work at has many millions of tether for this reason (to support the market making bots)

Re: Are pixie fairies behind Bitcoin's latest bubble?

#84

Post by seppel »

smabie wrote: post #83
seppel wrote: post #76

Earlier quoted context omitted.

I see. And these traders are responsible for the increased demand of tether?

pretty much. the firm I work at has many millions of tether for this reason (to support the market making bots)

So there is no tether printing scam in the first place? (If there was a scam, I'd love to understand how it works)

Re: Are pixie fairies behind Bitcoin's latest bubble?

#85

Post by 35fbe7d3d5b9 »

seppel wrote: post #82
raziel2701 wrote: post #79

Earlier quoted context omitted.

Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value. If tether goes away that would hurt whomever believes it's worth a dollar. The exchanges who are in on the scam can trade tether back to USD if they need to when the tether company sells their bitcoin for a profit. But the exchanges also make a killing from increas…

Sorry, I'm slow and I really don't understand this. > Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value. But how? Let's say I have one BTC. You offer me 15k USD to buy it, I say no. You say, ok, what about 18k USDT (that you just printed)? I reconsider and say, yeah, ok. So you inflated the price ok, but then what…

It's musical chairs. When the music stops, somebody's holding USDT: either because they were using it as in intermediary to trade into other coins, or because they believed that Tether is really backed 1:1 (lmao).

> Where do they eventually end up? I dont get that part.

Without a chair.

Re: Are pixie fairies behind Bitcoin's latest bubble?

#86

Post by 35fbe7d3d5b9 »

darawk wrote: post #81
amycastor wrote: post #64

Earlier quoted context omitted.

If Tether were in fact receiving real USD to support the billions in USDT it keeps issuing, then why hasn't it handed over financial docs to NYAG, which is investigating it for fraud? Why has it not had a third-party audit? Why does it keep printing USDT in larger and larger numbers (a sign that the real $$ may be disappearing from the system)? Why don't we see a similar growth in other regulated stablecoins?

Because their banks keep shutting down their accounts. They've been playing whack-a-mole with regulators for a long time, and they probably view the NYAG's request as a backdoor way to find out where and how they're banking in order to shut them down.

So nobody knows if Tether is backed because:

* it isn't and Tether wants to keep people in the dark

* it is, but a hammer is ready to fall that probably involves OFAC freezing funds

Any other options I'm missing? Because neither of those look good.

Re: Are pixie fairies behind Bitcoin's latest bubble?

#87

Post by arcticbull »

dannyw wrote: post #46
raziel2701 wrote: post #23

Earlier quoted context omitted.

My understanding is that tether is printed (by Tether the company) and used to buy btc at just a couple exchanges (one is bitfinex, I forget the others) who are in on it. This initial purchase drives btc-usdt up, arbitrage bots then buy btc-usd so that it matches btc-usdt. The media and people notice the price increase and jump into btc-usd because it's going up, narratives are created to justify why the price went u…

Bitfinex is one of the largest exchanges, and Tether is also used by many other exchanges like Binance. It's not implausible to think that there's $13B of inflows to BTC this year. This whole Tether speculation / hit piece is basically people thinking "It's implausible people want to buy bitcoin on the largest bitcoin exchanges".

Danny you have that 100% backwards.

> This whole Tether speculation / hit piece is basically people thinking "It's implausible people want to buy bitcoin on the largest bitcoin exchanges".

This whole Tether speculation / hit piece is basically people thinking it's implausible that people are physically capable of redeeming Tether for USD, ever. Not a single audit has ever been conducted - except for one that was started and then the auditor literally quit half way through. If you begin there, the rest all falls into place.

Come on, you've got a super shady organization based somewhere between a virtual office in Hong Kong and a corporate entity in the BVI. [0] Who pretended not to be involved with Bitfinex until the Paradise Papers showed it to have the same principals. [1] Who lost banking access repeatedly - being cut off by Wells, before issuing a letter that they were now banked in Nassau, Bahamas with Deltec that Deltec then denied ("The bank previously declined to confirm any relationship with Tether when reached"). [2] For about as long as I can remember they promised to release an audit, but of course, their most recent auditor literally walked out once they got a peek under the covers [3]. Then when Bitfinex (care of Panamanian company CryptoCapital) had $850M seized they just transferred it from whatever mattress is keeping Tether funds and left Tether with an IOU [4]. And are now the subject of 5 or 6 ongoing investigations and lawsuits, most significantly by SDNY [5].

If I didn't have sources for all this you'd think this was the most absurd conspiracy theory ever. It's all true, though, and what sane person could possibly believe $2B of fresh new money is making its way to their big ol' Bahamian mattress?

Bitfinex is a massive fraud, and Tether is a massive fraud, it's plain to see for anyone willing to take a quick peek.

[0] https://craft.co/tether-holdings

[1] https://www.icij.org/investigations/paradise-papers/paradise...

[2] https://www.coindesk.com/tether-produces-letter-confirming-d...

[3] https://news.bitcoin.com/tether-severs-ties-with-its-auditor...

[4] https://www.wsj.com/articles/bitfinex-used-tether-reserves-t...

[5] https://cointelegraph.com/news/new-york-court-rejects-bitfin...

Re: Are pixie fairies behind Bitcoin's latest bubble?

#88

Post by arcticbull »

wmf wrote: post #45
qeternity wrote: post #38

Earlier quoted context omitted.

It's likely that most/all of that stablecoin was amassed by selling other crypto, which is zero sum. It's extremely unlikely that people took fiat currencies, and bought USDT directly from Tether, which is what they claim is happening. No sane person would hold USDT over USD.

Unfortunately there's this story https://www.theblockcrypto.com/post/48857/former-head-of-cir... which says that legit investors wanted to buy on Bitfinex instead of a legit exchange so they had to first buy Tethers.

Totally irrelevant, the man's got a vested interest. Believe nothing short of an independent third-party audit from an auditor who doesn't walk out half way through like the last one did.

The reason I say this should be pretty obvious to anyone whose familiar with the inner working of a Ponzi scheme or other similar investment scam.

Bitfinex and Tether wanted to legitimize the use of Tethers, so they found one guy, Matuszewski, they knew was in a position to help them do so. They actually set aside a relatively tiny slice of capital (a few million out of 3 billion) and treated him the way they should be treating all customers but weren't. Then they let him loose on the talk circuits to tell the world of the sheer upstanding nature and legitimacy of Tether.

This is exactly the kind of stuff Madoff did.

Audit, or gtfo. (To Tether, Inc. not you of course)

Re: Are pixie fairies behind Bitcoin's latest bubble?

#89

Post by arcticbull »

seppel wrote: post #80
Rainarrow wrote: post #74

Earlier quoted context omitted.

>> then who is selling bitcoin for tether and keeps the tether? People who believe (in varying degrees) that 1 USDT == 1 USD. In countries with strict capital controls (China, Russia, etc), USD is inaccessible to most people. And the fact that USDT has been trading at 1 USD for the most part is the proof that most of its users either believe 1 USDT == 1 USD, or they simply don't care. In these countries, you have lar…

> People who believe (in varying degrees) that 1 USDT == 1 USD. I totally get that part. But then what? With USD I can buy, e.g, a house or a yacht. With USDT I can buy what? I guess only other crypto currencies. So what is the endgame here?

Since many exchanges use USDT and USD interchangeably, the endgame is for arbitrage bots to bid up the exchange rate between BTC:USD at legitimate exchanges to match BTC:USDT at Bitfinex. This allows Bitfinex to transfer the BTC they bought with Tethers to legitimate exchanges, sell them for USD, and transfer the USD back to themselves. They could care less about anything beyond that.

Re: Are pixie fairies behind Bitcoin's latest bubble?

#90

Post by raziel2701 »

seppel wrote: post #82
raziel2701 wrote: post #79

Earlier quoted context omitted.

Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value. If tether goes away that would hurt whomever believes it's worth a dollar. The exchanges who are in on the scam can trade tether back to USD if they need to when the tether company sells their bitcoin for a profit. But the exchanges also make a killing from increas…

Sorry, I'm slow and I really don't understand this. > Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value. But how? Let's say I have one BTC. You offer me 15k USD to buy it, I say no. You say, ok, what about 18k USDT (that you just printed)? I reconsider and say, yeah, ok. So you inflated the price ok, but then what…

So for this to work out I am tether the company, you are an exchange that is in on the scam. So the initial denial of declining 15k USD doesn't even happen. What happens is I print a billion tether and use that to buy a bunch of btc from you. You willingly take tether despite knowing that tether is useless, because you know that this transaction will pump the value of btc and you benefit from that. We both benefit from btc going up. So it's in our best interest to keep the charade going.

The price of btc denominated in tether (BTC-USDT) goes up after our transaction. Now, arbitrage bots will look at this in crease in btc-usdt, and be mandated to buy btc with USD so that BTC-USDT and BTC-USD are in parity. Now bitcoin's price in dollars has gone up and people notice this, and news articles are printed and people get FOMO.

But at the root of this pump is a fraudulent transaction. I printed tether that I know is not worth one dollar each, and you played along with me and we exchanged tether for btc, and we caused btc to go up in price so that we both benefit. Whomever buys btc (i.e. retail investors) after I've pumped the price is in great danger of being scammed because there was no real money behind the initial tether transaction. You, the exchange, might be holding a lot of useless tether, but it doesn't matter because you've already profited from the price increase in btc via higher trade volume and usage of your platform plus all the publicity you get from a media that is always happy to report insane btc valuations.

So you don't do anything with the tether, you don't care about it as the exchange. It's unclear if the tether in these exchanges, which is a lot, will be redeemed for dollars at some point in the future by coming back to me, the Tether company, where I would use some of my profits from selling btc high to trade some of your tether for USD and help maintain the appearance that tether is fully backed by USD.

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