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$1M bounty for details on Tether’s backing

hindenburgresearch.com

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Re: $1M bounty for details on Tether’s backing

#91

Post by sremani »

tcgv wrote: post #19
filvdg wrote: post #4

Disclosure: Hindenburg Research does not hold positions, either long or short, in Tether, bitcoin or any cryptocurrency at the time of this press release.

I wonder why this Reaserch firm is offering such a substantial bounty for information on Tether. What's in it for them? Where will this money come from? From their site they provide an answer (and even a "track record") [1]: > We look for (...) man-made disasters floating around in the market and aim to shed light on them before they lure in more unsuspecting victims. Hence it seems they're doing it for the bennefit…

You can have positions in Microstrategy and Coinbase.

If Tether tanks -- there are definitely decent proxies out there.

Re: $1M bounty for details on Tether’s backing

#92

Post by legutierr »

paulpan wrote: post #21

Last week CFTC fined both Tether and Bitfinex $42.5M for allegedly not holding enough reserves and colluding together. https://www.cftc.gov/PressRoom/PressReleases/8450-21 Seems like a fairly small fine in grand scheme of things no? If the critics are right and $70B+ supply is just made up paper money, then it'll be huge losses for all Tether holders. I'd conjecture it would tank the entire crypto market - and possib…

There is one scenario in which the 70 billion was at one time made-up money, but where it won't ever actually tank the crypto market:

1. Tether prints $1 billion with no backing.

2. Tether buys $1 billion of Bitcoin with the the fraudulent tokens.

3. Bitcoin triples in price.

4. Tether sells 1/3 of their position in exchange for hard currency, and holds that money in their reserves.

5. Tether now has 100% reserves backing the tokens they created, and is also holding $2 billion in Bitcoin. Maybe they sell the extra Bitcoin to diversify.

6. Rinse and repeat.

Under this scenario, what these guys did was to take a massive uncollateralized loan from ordinary consumers, use it to buy buy Bitcoin, and sell off the Bitcoin in order to pay back the loan. Basically an uncollateralized version of what most DeFi borrowers are doing right now, but at a massive scale.

As long as the price of Bitcoin is going up, the scheme a surefire way to make a lot of money. If the price of Bitcoin starts going down before they can cash out, then it can easily bankrupt them and crash the market—which is also a big risk with DeFi.

It could be that we are passed that point with Tether, though. With as much scrutiny as they are under right now, if Tether ever defaults, the people who run Tether are going to be wanted for criminal prosecution in dozens of countries. They will be running and hiding for the rest of their lives. I can't believe that a few more billion dollars in the bank is worth the risk—especially if they won't be able to access those billions.

If you look at the rate of issuance of Tether since June 1 of this year, it has flattened out dramatically.[0] Could it be that the people at Tether have realized that the jig is up, and are now just trying to get things in order so they can walk away clean? Maybe.

Or, it could be that they printed so much funny money last year that the amount of Bitcoin they need to sell is more than the market can accept without tanking the price of Bitcoin, given current market liquidity. Maybe they aren't generating more Tether for themselves because they figured out that whenever they try to sell the Bitcoin they need to sell in order to replenish their reserves, they crash the Bitcoin market. Maybe they're stuck.

Or it could be that Tether is fully backed, that they have never minted any Tether that didn't correspond to $$ in their bank account, and the reason that Tether's growth has slowed is only because people are now buying USDC and other stablecoins instead. (Not likely, in my opinion.)

[0] https://coinmarketcap.com/currencies/tether/

Re: $1M bounty for details on Tether’s backing

#93

Post by Dma54rhs »

perl4ever wrote: post #35
rexstjohn wrote: post #12

Federal Reserve was crafted in a secret meeting on Jekyll Island ( https://en.m.wikipedia.org/wiki/Federal_Reserve ) between industry and government. Still exists and functions today. Lot of people don’t like it, but it’s there regardless. Even if the origin, operation of Tether is highly suspicious: if it functions, is widely adopted and does what is expected … may last longer than people think. Best response is mor…

When people say "hey, Tether is no worse than the existing financial system" I wonder if they don't understand the difference between holding a fraction of deposited money as reserves, and only having a fraction of deposited money as assets, period. As far as I know, when the latter happens in a real bank, they get shut down, shareholders lose their money, and only the FDIC saves the depositors. Just because that's t…

I've never held any coin but why can't it be true? The money is imaginary anyway and while you can talk about backing dollars with tanks and bomb at the end of the day is there are believers there is a market snd one market can outlive another. Saving depositors in regular banking is pure belief as well.

Re: $1M bounty for details on Tether’s backing

#94

Post by fnordfnordfnord »

graeme wrote: post #2

This is very interesting. Hindenburg is the real deal. One challenge may be that, like the Mafia, Tether keeps its inner circle and employs family members. They have ~15 employees for a 70 billion dollar operation. The CTO’s wife is a manager, and the CEO’s daughter works for an unnamed crypto family office, which may be related. Their counterparties in Chinese commercial paper may not know they are counterparties du…

>Hindenburg is the real deal.

Hindenburg is not the real deal. If you think Hindenburg is the real deal you should pay closer attention to their activities. They (he) are one of a number of noisy short sellers who try to drive stock prices with their tweets/reports. SEC should be doing things to these people.

That said, he is probably right about Tether. Tether should make every crypto speculator or holder very nervous.

Re: $1M bounty for details on Tether’s backing

#95

Post by skulk »

JumpCrisscross wrote: post #63
javajosh wrote: post #54

Sounds like they're offering to bribe an insider to disclose specifics about the "commercial paper"[1], which is presumably how a company like Tether would make most of its money. That is, taking advantage of the time-value of money over short periods of time ( Note that Tether looks shady at first blush, with a link to "Proof of Transparency"[2] that is content-free. I also find it sus that their job listings only l…

> Is it illegal for a private person to offer to pay someone to illegally snitch on an illegal operation? It's not illegal to pay someone for information. If you induce them to violate an NDA, yes, it could be. But given the question "under what jurisdiction does Tether really operate" is a debatable question, I'd say it's probably risky but fine. (If you trade on that information, it could be a different story.)

"Induce" is a tricky word; does it imply the target has agency? I think the line is drawn when you strip the target of agency. Does offering a large amount of money constitute stripping a target of agency? It may depend on how you feel about capitalism.

Re: $1M bounty for details on Tether’s backing

#96

Post by elefanten »

dnautics wrote: post #87
tcgv wrote: post #19

Earlier quoted context omitted.

I wonder why this Reaserch firm is offering such a substantial bounty for information on Tether. What's in it for them? Where will this money come from? From their site they provide an answer (and even a "track record") [1]: > We look for (...) man-made disasters floating around in the market and aim to shed light on them before they lure in more unsuspecting victims. Hence it seems they're doing it for the bennefit…

I wish they also published a list of things they were wrong about.

I agree, but "them and everyone else too..."

Re: $1M bounty for details on Tether’s backing

#97

Post by speedybird »

ygjb wrote: post #85
skybrian wrote: post #32

Earlier quoted context omitted.

There are firms that look for good opportunities to short stocks. Find some credible bad news, short the stock, then publicize the bad news. If the news is actually true, this might even be considered a public service (as well as obviously a way to make money). They probably wouldn’t do until they actually got a tip. Also, they might short crypto-related stocks if that’s easier.

I am curious about how that type of activity doesn't constitute insider trading? Presumably having "bad news" would constitute material nonpublic information?

It might be insider trading in some countries, but it isn't in America. It's perfectly legal to trade on information you found out through your own research and didn't tell anybody about.

Re: $1M bounty for details on Tether’s backing

#98

Post by PKop »

Marazan wrote: post #73
shoo wrote: post #11

Earlier quoted context omitted.

not clear if it is the easiest target to short, given that many people who use tether are fairly skeptical about how/if the tokens are backed by assets but use it anyway (if the recent Bloomberg story is accurate).

It is a terrible target to short as you can only do it through exchanges that deal in Tether. Exchanges that can manipulate your position and liquidate you if they feel like it. Exchanges that benefit from Tether existing.

Tether is pervasive in DeFi. You could borrow Tether through a smart contract, exchange for another stable or asset. Pay the interest until it collapses in the future and, buy back worthless Tether cheap to pay off loan and get collateral back.

Re: $1M bounty for details on Tether’s backing

#99

Post by javajosh »

UncleOxidant wrote: post #76
JumpCrisscross wrote: post #63

Earlier quoted context omitted.

> Is it illegal for a private person to offer to pay someone to illegally snitch on an illegal operation? It's not illegal to pay someone for information. If you induce them to violate an NDA, yes, it could be. But given the question "under what jurisdiction does Tether really operate" is a debatable question, I'd say it's probably risky but fine. (If you trade on that information, it could be a different story.)

> If you induce them to violate an NDA, yes, it could be. Is violating an NDA illegal ? I'm not a lawyer and I don't play one on TV, but I don't think violating an NDA is illegal as in you could go to prison for violating a law. Yes, it could open you up to legal jeopardy as in a lawsuit which could be expensive, but I don't think any laws are violated. And if you're violating an NDA to expose some corrupt practices…

Never thought about this, but I guess you might be on the hook for fraud if you violated an agreement for profit. That is, an employee violating an NDA for profit might be considered committing fraud against their employer. It's strange - Tether seems shady but I don't think Hindenburg's offer is on firm ethical or legal ground. What if Hindenberg offered $1M for access to a private list of donors to a [prominent abortion rights organization]?

But now that I think about it, why doesn't every successful private contract enforcement action end in a public prosecution for fraud?

Re: $1M bounty for details on Tether’s backing

#100

Post by fknorangesite »

speedybird wrote: post #45
lgierth wrote: post #37

Earlier quoted context omitted.

Zeke = ZK = zero-knowledge?

I guess it's actually his real name, and Zeke short for Ezekiel isn't uncommon. But Zeke can also mean 'cloak'.

Christ this may as well be numerology.
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