
An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange - rayuela
https://www.bloomberg.com/news/articles/2017-12-05/mystery-shrouds-tether-and-its-links-to-biggest-bitcoin-exchange
======
busterc
I found this comment, by Richard Berger on SeekingAlpha, compelling:

> STOP! and think about what this author has revealed. Even IF Tether is NOT
> running a fraud, the arbitrage positions that automatically exist between
> Bitcoin and any tether are real and do create incentive to create an
> arbitraged feedback loop whereby a pegged tether between Bitcoin -
> any_generic_tether - USD does exist and self feeds, driving up Bitcoin
> exactly as the author contends may be happening with the current Tether. So
> long as such a scheme emerges naturally out of the system design, the design
> is fatally flawed and must asymptotically compound grow to an infinite
> exchange rate (impossible and unsustainable by definition), or it must
> ultimately collapse.

> Thus, the author has demonstrated a basic inherent flaw to crypto-currencies
> that can not be repaired other than by legal estoppel. Legal estoppel will
> never occur because jurisdiction is off-shored and proving a case by case
> would generate infinite litigation along with each estoppel creating a
> crash. This in itself would kill the cryptos as surely as the fatal flaw
> itself will.

> It is meaningless to argue WHETHER the author's speculation as to Tether's
> actions are fraud. The ONLY question is if his identifying of the nature of
> the available arbitrage can exist in reality. If it can, crypto is dead. No
> other conclusion is available.

[https://seekingalpha.com/article/4129543-bitcoin-one-way-
go-...](https://seekingalpha.com/article/4129543-bitcoin-one-way-go-
true#comment-76992585)

~~~
csomar
That author is plain wrong and shows deep ignorance about bitcoin and the
crypto-market.

An unsustainable price of bitcoin will lead to the collapse of other exchanges
since people cashing out on these exchanges requires enormous amount of _real_
money.

This will create a situation where the price of bitcoin in Bitfinex is
_higher_ than other exchanges by a big gap. This is not the case, actually the
opposite is true: Bitstamp, Gdax, and Gemini prices where higher for
substantial durations in the last few weeks.

You can only artificially pump the price to an unsustainable high for a very
short period of time (2013/mtgox) or have this market restricted (no
withdrawals/deposits, etc...). However, this is not the case. You can
withdraw/deposit to bitfinex and their coldwallet shows 1.6bn usd worth of
bitcoins.

TL;DR: The author fits the "butt-hurt" category, refuses to accept the reality
and tries to find non-real argument for his hypothetical flash crash.

Disclosure: I currently hold no Bitcoin but some bitcoin cash positions. I
also think the market is in a bubble. But a bubble with real people dollars
flowing in.

~~~
mgbmtl
Naive question: when an exchange sells, I assume they can decline to buy if
they don't have a buyer or too much inventory?

For example, if suddenly everyone wants to sell BTC, the price would drop, at
which point the exchange could buy the BTC at a much lower price, or not buy
at all?

(unless they commit fraud, massively purchase BTC without having the actual
money to back it, then not be able to wire money out of our accounts?)

~~~
csomar
The exchange doesn't sell/buy. It just connects the buyers/sellers. There are
brokers that do that but you can't call them an exchange. I also think
regulation prevent exchanges from trading on their own exchange to avoid
front-running and since they have lots of information about the
users/deposits/etc...

~~~
sp821543
From coinbase TOS:

You acknowledge that the quoted Buy Price Conversion Rate may not be the same
as the Sell Price Conversion Rate at any given time, and that Coinbase may add
a margin or “spread” to the quoted Conversion Rate.

~~~
csomar
Coinbase is not an exchange, it is a direct seller. Gdax is the exchange.

~~~
sp821543
Same TOS

~~~
csomar
I'm having trouble locating it but it is the same for Gdax except that it is
individual market makers who make the spread and not coinbase itself.

~~~
sp821543
Thank you for the clarification.

------
panarky
When something doesn't make sense, usually it's because information is
missing.

Every market participant knows that Tether doesn't prove their reserves, and
yet the market exchange rate to USD stays in a tight band between 0.98 and
1.02 across multiple exchanges.

If the market doesn't trust Tether, then it should trade at a deep discount to
USD, not at parity.

Similarly, the conventional wisdom says cryptocurrencies are in a massive
speculative bubble. The negative sentiment on Bloomberg, WSJ, NYT, Twitter
(not to mention HN) far outweighs the fanboys.

This is the most unregulated free market we've ever seen with many exchanges
in many countries, person-to-person facilities like
[https://localbitcoins.com](https://localbitcoins.com), margin trading, short
selling, futures, options, etc.

If everyone knows the whole thing is a Ponzi-bubble-hype-scam, why isn't that
information reflected in the markets?

There must be missing information that would make this make sense.

~~~
bcoates
Tether is how you short bitcoin -- it's hard to move USD out of exchanges,
people are worried about a bitcoin (or "all cryptocurrencies") drop, so they
move into tether hoping to buy back in after bitcoin goes down without having
to do the expensive/difficult bitcoin-usd move.

This assumes that the price of bitcoin will go down but the rest of the system
(exchanges, tether, mining, etc.) will stay intact.

As long as people want to short bitcoin there will be lots of demand for
tether at a little over a dollar that the tether company will be happy to
supply. These people will balance out anyone who wants out of tether in the
short term, and it's impossible to lever your "tether goes down" position.

In the future, when people decide to turn around and sell in bulk for a little
under a dollar, tether might not be able to make good, particularly if they
were holding their balances in bitcoin instead of USD like they claim.

Bitcoin shorters might be willing to gamble that they can move faster than the
tether market will collapse in that situation and not be the bagholder.

There's no way to short "the whole mess" aside from just not getting involved
in the first place or trying to get your money out while you can.

~~~
jpmattia
> _Tether is how you short bitcoin ... so they move into tether hoping to buy
> back in after bitcoin goes down without having to do the expensive
> /difficult bitcoin-usd move._

"Shorting" means borrowing bitcoin and then selling the borrowed bitcoin. What
you've described is simply selling bitcoin for USDT, unless I'm missing
something.

~~~
bcoates
It's short in the sense that you're selling before you buy and profiting off
the thing bought/sold (bitcoin) going down between the two trades. Sell ->
wait -> buy as opposed to the 'long' position of buy -> wait -> sell.

Since nobody-ish lets you borrow for bitcoin margin trades you have to "borrow
from yourself" (already own bitcoin) and be long-bitcoin in the long run for
that to make any sense.

But if you're a to-the-moon true believer that also thinks that bitcoin is in
a bubble and going to make a temporary correction you could make a ton of
bitcoin by being right... if you can actually make the trades and not get
screwed by a counterparty.

------
koolba
> Neither Tether nor Bitfinex disclose on their websites or in any public
> documents where they’re located or who’s in charge, but information is
> available elsewhere.

> Jan Ludovicus van der Velde is CEO of both Bitfinex and Tether, Torossian
> said by email on Dec. 3. A LinkedIn page for someone named J. L. van der
> Velde, who identifies himself as Bitfinex’s CEO, says he speaks Dutch,
> English, German, Italian and Chinese, attended National Taiwan Normal
> University from 1985 to 1988 and was previously CEO of PAG Asia Inc

I'm continually amazed that people will put $1,000s of dollars (or coins, or
whatevers) in the custody of an entity whose location they can't even
identify, let alone locate.

The only thing I can see stopping them from running off with whatever assets
they currently do have are either:

\- They're extremely profitable.

\- They're broke.

\- They're scared of mafia style entities following up where regulation
hasn't.

~~~
mancerayder
Well, they're also on the regulatory radar, now, almost certainly. Now if they
try to run off, that turns into a fugitive-like situation versus a potentially
just oops-type one. There's a lot of leeway for business fuckups in most
jurisdictions. Although in this case, there seems to be a strong case for
fraud, so who knows.

------
thisisit
Aside from the discussion on Tethers I am sure this is not going to stop
cryptocurrency buffs from talking/selling another round of "stable" coins.

The unfortunate thing is time and again same old story is presented about
either:

how the company releasing the coins will act as lender/buyer of last resort or

how "markets" will prevent the peg from going out of whack.

The former logic forgets about how it puts a lot of power in hands of one
company and leads to questions, like Tether.

While latter logic forgets markets are not efficient. And sometimes it can
remain irrational longer than someone can remain solvent.

This whole thing is not a maths problem but an economics and market
microstructure problem, two apparently least understood topics in
cryptocurrency circles.

~~~
greenleafjacob
> how "markets" will prevent the peg from going out of whack.

One only needs to read about Long-Term Capital Management to see how flawed
this is.

~~~
pjmorris
If anyone is looking for books to read during holiday down time, they could do
worse than 'Liar's Poker' [0], followed by 'When Genius Failed' [1], following
the career of John Meriwether and the rise and fall of LTCM.

[0] 'Liar's Poker', Michael Lewis

[1] 'When Genius Failed', Roger Lowenstein

For a 'light reading intro to finance' trilogy, add 'A Demon of Our Own
Design: Markets, Hedge Funds, and the Perils of Financial Innovation', by
Richard Bookstaber.

~~~
CamelCaseName
JWMP is the successor to LTCM, built using the same models with less leverage.
They also blew up in 2007-2009.

It's cool, I just submitted a paper on LTCM yesterday. AMA?

~~~
pjmorris
Will you be writing the third book in the Meriwether trilogy? :)

------
tlb
Tether shows the problem with non-shortable securities. If even 1% of traders
believe it's valuable and 99% don't, the 1% can happily trade amongst
themselves at full value. If there were a short market, the majority non-
believers would drive the price down.

I think you could find 1% of cryptocurrency traders that believe any theory
you care to name.

~~~
Cakez0r
You can short Tether on Kraken.

~~~
arcticfox
Shorting Tether is pretty strange, since if it works as designed it will
essentially never increase in value, there's no risk on that end. And if it's
a fraud that collapses, the short pays off big.

Can somebody explain how that effect would get priced into the market? I can't
think of another commodity like that.

~~~
marroon
The price is the interest you pay on the borrowed short shares

------
ksutariya
There has been a blogger/journalist tracking this and writing some great
analysis on Tether and BitFinex

[https://medium.com/@bitfinexed/](https://medium.com/@bitfinexed/)

~~~
burger_moon
It's really unfortunate that Bitfinex is now suing this person because of
simply trying to bring some transparency to the situation. I'm really glad the
news outlets are picking this up and hopefully Bitfinex and their shady PR
firm stop trying to silence this person.

------
sailfast
This whole discussion reminds me of the Argentine peso. Pegged to the dollar,
economy slumps, harder and harder to back with actual dollars, then government
decides to float the currency.

US did this moving off the Gold standard as well. I guess these backing
commitments are useful for some stability? But it won't entirely eliminate
risk, so instead of relying on the wild swings of the market you're now
relying on a single institution's trustworthiness / solubility.

Take the risk you're willing to accept and hedge the others? A market for all
kinds I guess! Either way, this model feels like it's already been run at
scale a few times.

------
azureel
I'm not sure but, isn't this how the real banks operate, too? For example
let's take a legal, legit, Bank named X in a country. If all the account
owners wanted to retrieve their money, at the same time: can that bank serve
that demand?

Because normally for every 1 dollar deposited inside, bank can give away 5
dollars worth of credits to other people. (the ratio changes in every country
probably).

So accusing a virtual currency corporation with "you don't own all that money
you claim" applies to a real, physical currency banks. I guess.

~~~
PeterisP
Fraction reserve lending doesn't mean "for every 1 dollar deposited inside,
bank can give away 5 dollars worth of credits to other people" \- it means
that if people deposit 5 dollars, you can give away 4 dollars of them as loans
and only keep 1 dollar in reserves (as opposed to keeping all 5). It still has
to have more assets than liabilities, except that some of those assets can be
not available on demand, but loans to other people.

It does mean that a short-term run (e.g. if all depositors request all of
those 5 dollars back) can be a problem, but it's a problem of liquidity (you
have enough assets to pay _all_ of them back, but they aren't available right
now), not one of missing assets. Tether, on the other hand, has not properly
shown that they have enough assets to buy back 100% of tethers to USD at a
1-to-1 rate; we don't expect them to hold 800m dollars in large bags of cash,
but we'd expect them (just like a "real physical currency bank") to show that
they hold 800m of assets backing this.

~~~
wampwamp
The banking system can expand an initial deposit of $100 into a maximum of
$1,000 at a 10% reserve ratio when subsequent loans are re-deposited.
($100+$90+81+$72.90+...=$1,000). This all gets counted as M1 money.

~~~
PeterisP
Yes, the total supply of funds in circulation is increased by making it
circulate; however, this question was about solvency. We're not expecting
Tether to hold 800m in liquid reserves, but we definitely are requiring Tether
to have 800m in assets (as they claim to do) and to demonstrate that it really
is so.

The claims others have on you must be balanced by claims you have on others,
otherwise you're defrauding your depositors; and if you want to accept money
from the public, your words can't be taken at face value but need to be
verified (and publicly supported) by trusted, independent external auditors.

------
mancerayder
Can anyone with a more studied background in economics help hypothesize the
after-effects on Bitcoin and other altcoins if this 814M 'digital
counterfeiting' for lack of a better term, is true? For example, 800M has been
artificially pumped into the Bitcoin and general crypto ecosystem, like air in
a bicycle tire.

And this is a game theory sort of question, too:

If this is true: now, what?

~~~
empath75
If people want to pull dollars out of bitfinex, and can't redeem tethers, then
the price of bitcoin will skyrocket on bitfinex due to tether hyperinflation
(we're probably already seeing that, and have been for months). People will be
buying bitcoin at basically any price on usdt denominated exchanges, and start
moving them to other exchanges to sell. At that point, you'll start to see
price differences between usdt and usd exchanges, as the bitcoin price
skyrockets up on bitfinex and drops on gdax.

Probably at some point, bitfinex will become insolvent and shutdown
withdrawals entirely. Not sure what will happen then-- probably the price of
bitcoin collapses in a general panic.

~~~
rsynnott
Note that this basically happened with mtgox. It took a surprisingly long time
to shake out.

------
lxcid
2 camps:

USD 814M accumulated over a year, legit vs not legit?

You don’t really need to think hard, who is these 30 mil, 30 mil deposit? If
you divide by a year, they need to have an average 2.2 millions of deposit a
day. That’s just to Tether. That’s a lot. Just moving these amount of money in
any country will put your account in question.

Will you do it if their T&C doesn’t guarantee withdrawal? A bank actually need
a govt to issue deposit insurance for it to work? People are depositing 2.2
millions without any deposit insurance, with shady T&C?

I mean you can believe in it, but I’m definitely skeptical.

------
jpereira
Stable coin systems are going to be massively important and there's a ton of
different projects trying to make it happen.

This [1] is a really solid explanation on how one of them, Dai from MakerDAO,
works.

[1] [https://medium.com/cryptolinks/maker-for-dummies-a-plain-
eng...](https://medium.com/cryptolinks/maker-for-dummies-a-plain-english-
explanation-of-the-dai-stablecoin-e4481d79b90)

~~~
wpietri
One of the other parallels that interests me is that there's very little
incentive to be publicly skeptical of the nonsense.

People were immensely critical of Warren Buffett during the dot-com bubble. He
was frank that their valuations didn't make sense to him, and he took a
pasting for it. He turned out to be right, but only after taking a lot of
heat:
[http://news.bbc.co.uk/2/hi/business/1217716.stm](http://news.bbc.co.uk/2/hi/business/1217716.stm)

There's little glory or money in being critical of Bitcoin and
cryptocurrencies. But there is a great deal of money and attention for hyping
them. That means anybody new to the topic receives an unbalanced information
diet, deepening the problem.

Even if I were a Bitcoin fan I'd be concerned about this; bubbles misallocate
resources and cause a lot of damage when they pop. The taint can last a long
time. E.g., it took Florida decades to recover from their 1920s land boom.

~~~
s17n
Calling bitcoin a bubble seems like the wrong word. There are basically two
possible outcomes: total market cap zero, or in the trillions. How much you
think bitcoin is worth depends on your guess (and it really is just a guess,
nobody has any idea what is going to happen) about the relative likelihood of
each.

~~~
aaavl2821
From Wikipedia:

"An economic bubble or asset bubble (sometimes also referred to as a
speculative bubble, a market bubble, a price bubble, a financial bubble, a
speculative mania, or a balloon) is trade in an asset at a price or price
range that strongly exceeds the asset's intrinsic value."

Seems like a reasonable description of bitcoin to me

I have yet to see a well thought out, rational, specific description of the
intrinsic value of bitcoin. If it is the case that people think it will either
be zero or a trillion market cap, that suggests to me that people aren't
thinking seriously about the real world end game for bitcoin and thus that
there's is no solid bounding of the potential intrinsic value

Bubbles are formed by people who think they are being rational, but in fact
are not. One sign that you aren't being rational is when you don't think
critically, quantitiavely, specifically and probabalistically about possible
future states

~~~
fosk
Is Gold in a bubble right now? Because the current price of Gold strongly
exceeds the intrinsic value of the material and it has been like that for a
while.

Bitcoin has pivoted away from being a currency. Bitcoin is now a store of
value, like gold.

~~~
aaavl2821
gold has always been a weird instrument since it was decoupled from fiat
currency, and it has a unique position because it has been around for a long
time so investors sort of understand it. the value of gold is determined a lot
by confidence in the asset's performance as a "non correlated" backup medium
of exchange. there is a long track record here, which matters, despite how
"soft" and "squishy" this line of thinking may seem to someone who doesnt work
in markets. bitcoin doesnt have this: it is not widely used as a store of
value, and it does not have a track record. basically, the perceived
probability of it going to zero is infinitely higher than the perceived
probability of gold going to zero

this article does a much better job than i just did:
[http://www.businessinsider.com/economist-jim-rickards-
bitcoi...](http://www.businessinsider.com/economist-jim-rickards-bitcoin-
versus-gold-price-manipulation-2017-12)

and heres an intersting history of gold:
[https://www.investopedia.com/articles/investing/071114/why-g...](https://www.investopedia.com/articles/investing/071114/why-
gold-has-always-had-value.asp)

------
FooHentai
>every tether is always backed 1-to-1 by traditional currency held in our
reserves

>There is no contractual right or other right or legal claim against us to
redeem or exchange your tethers for money. We do not guarantee any right of
redemption or exchange of tethers by us for money

Then it's not backed by anything, is it?

------
searine
Rising complexity of financial instruments? Check. Uncertainty about the
capital backing of a booming market? Check. FOMO fever? Check.

Where have I seen this before?

~~~
alexasmyths
The sheer scale of these potential frauds - including the total ambiguity of
massive $ raised for ICOs is not only consistent with the shenanigans of the
.com - it's much worse.

In .com - companies were creating value, and we all assumed people would pay
for 'email' \- turns out consumers would not - so many businesses failed, and
there was a stampede out of equities.

All of this coin and ICO fraud, including 'regular company' valuations of 300x
P/E rations - is absurd.

In 2000 - the bubble was popped with a little bit of an interest rate hike
that caused major funds etc. to scramble, causing a stampede.

Markets are definitely emotionally positioned for a black-swan event to cause
a scramble.

The markets have to correct for all this sketchy/possible fraud going on.

~~~
goialoq
Parent was talking about the 2008-2009 GFC, not the 2000 .com stock bubble.
The .com stock bubble was just speculation about a new technology, not massive
worldwide fraud.

~~~
nissimk
[https://en.wikipedia.org/wiki/Enron_scandal](https://en.wikipedia.org/wiki/Enron_scandal)

[https://en.wikipedia.org/wiki/MCI_Inc](https://en.wikipedia.org/wiki/MCI_Inc).

------
brendanw
BTC Trading volume over the last 24hrs is $6,795,970,000
([https://coinmarketcap.com/currencies/bitcoin/#markets](https://coinmarketcap.com/currencies/bitcoin/#markets))

Tether trading volume over the last 24hrs is $803,868,000
([https://coinmarketcap.com/currencies/tether/#markets](https://coinmarketcap.com/currencies/tether/#markets))

At most tether can make up 11.8% of BTC's daily trading volume. If tether
tanks, then it seems that worst-case BTC could suffer a 10% drop in demand,
ceteris paribus.

Please tell me if there is a flaw in this logic. Seems like there is a valid
critique about BTC being boosted by tether, but that doesn't come anywhere
close to explaining the exponential growth of value in BTC.

~~~
heptathorp
It could be misleading to look at volume. For example how much of that $6.8B
is due to wash trading? Also Bitcoin is paired with literally hundreds of
altcoins, which make up a portion of that volume. We would want to focus on
how much BTC is purchased with USD vs how much is purchased with USDT.

------
abledon
What is that style of art/animation the video uses? I feel its aesthetic is
really 'greasy', kinda covered in grime from cigarettes. I've seen it before
in order graphic design.

~~~
sbarker
It looks like 60s graphic design with a vibrant modern color palette to me,
but when it first opened I thought 80s PBS

------
dude01
I find this whole set of crypto-currency experiments fascinating. It's a grand
libertarian experiment -- what happens if you create a new market, without any
government regulator? It looks like you initially have chaos (makes sense),
and I _think_ there are now groups of people working together. The one thing
we definitely don't have is transparency. I'm a bit worried that the groups of
people working together are manipulating prices, but without transparency, I
have no idea.

------
kkotak
Is there a single person in HN that has profited more than $1M through
Bitcoin? And I mean someone who has actually sold and now has $1M more in the
bank?

~~~
gruez
Are you looking for a documented case, or just wondering about the
probabilities? The former is "no", and even if there was, I doubt it was
formally verified. Think about it, if you made millions in bitcoin, why would
you paint a huge target on your back by posting to an online forum? The latter
is "probably yes", considering that at least 20% of hners heard about bitcoin
when it was cheap (< $100).

------
synaesthesisx
I would highly, highly recommend moving money off of Bitfinex in the near
future (especially if you are a U.S. customer)...

~~~
FireBeyond
Yeah, good luck. They only recommend using a few exchanges, only one of which
seems able to get your money back into USD...

------
lee101
If your anxious about things going to crash because of tethers the best way
you can hedge against the volatility is watch the markets like a hawk lol. Can
be very profitable too with all the volatility

Checkout the live charts and forecasts at
[https://bitbank.nz](https://bitbank.nz)

~~~
jaaames
Problem is there's no safe rail to exit a position.

You can sell to USD but can't withdraw overnight and deposit in the morning so
you're exposed to counterparty risk which in the crypto sphere is enormous.

Only safe position is to be out of this market currently.

------
cryptodogemoon
Why would anyone buy more new tethers @ $1 when they're selling for less than
$1 at Kraken?

------
trhway
Basically Tether does what banks did in 19th century - printing their own
dollars. It worked for banks back then because of gold reserve. Without enough
gold ( or dollar in case of Tether) reserve we have an opening scene of
Cryptonomicon in the near future.

------
ThomPete
This is off topic but since a lot of people seem to be experts I just wanted
to ask.

Can someone explain this to me

[http://000fff.org/uploads/bitcoinprice.png](http://000fff.org/uploads/bitcoinprice.png)

The flat-lines. I have seen it several times. Is is because of lack of data of
trading or lack of trading or what's making the price flatline like that?

~~~
lowdest
It's due to large order volume at those prices. If an unusually large limit
order or group of limit orders is placed at $11,800, then incoming market
orders can chip away at the remaining volume available at that price but not
move the externally visible price.

~~~
ThomPete
Thanks

------
JohnJamesRambo
[https://makerdao.com/](https://makerdao.com/) is a decentralized stablecoin
that is coming soon hopefully.

------
victor106
This sounds like what would happen to stocks if NYSE/NASDAQ are able to print
USD to just keep the stock market going up...oh, wait the FED is doing that...

------
perseusprime11
Is ETH a better alternative?

------
slazaro
WARNING: Auto-playing video with possibly loud sound.

~~~
epaga
Why sites continue to do this is beyond me.

But, fortunately, disabling auto-playing in Firefox is actually not that hard.
about:config, then set "media.autoplay.enabled" to false. Done.

~~~
StavrosK
Yes, but I do want YouTube and other sites to autoplay.

~~~
imglorp
There's also addons that let you remember a choice per site.

[https://addons.mozilla.org/en-US/firefox/addon/disable-
autop...](https://addons.mozilla.org/en-US/firefox/addon/disable-
autoplay/?src=api)

~~~
StavrosK
That's a great idea (especially disabling preloading as well). Unfortunately,
it doesn't seem to actually _do_ anything on FF 58.

------
down
all the "safeguards" the financial instruments have, didn't stopped them from
crashing the economy in 2008, bitcoin is actually a response to that, I did
lost my job then and had quite a hard time, now the same bankers tell me what
is fraud and what is not.

In my country banks moved away from their social propose lending, and they
just take high commissions for everything (eg. ATM commission for seeing how
much I have in my account) and buy state bonds with deposits money, they
advertise credits, but they don't actually credit businesses they credit
people who don't need a credit and have enough real estate guarantees to pay
the loan in full, so they won't lose interest profit.

~~~
goialoq
If you had securities investments in 2008, your money is fine, as long as you
held it for a few years before or after 2008. Only if you cashed out stocks in
2009 or sold your last house in 2010 would you be hurting.

For the larger economy, there's no reason to expect Bitcoin would promote
general economic health/growth more than national fiat currency.

~~~
etr-strike
Stocks only recovered because of unprecedented money printing by central banks
across the world. That experiment is, at best, half over. I'll trust in
bitcoin, thanks.

~~~
Aunche
That's not an entirely accurate representation what the Federal Reserve does,
but even so, it's their job to issue bonds, which helps regulate the economy.

------
brndnmtthws
There's a lot of FUD, but very little evidence of wrongdoing. It seems mostly
like one person on a campaign to discredit Bitfinex because of some grudge.
[https://twitter.com/Bitfinexed](https://twitter.com/Bitfinexed) is the person
spreading the FUD, they're also shitposting all over Reddit and elsewhere.
Seems like now the 'media' is going along for the ride and enjoying the ad
revenue.

~~~
Cthulhu_
If it's FUD it's easy to disprove, but since Bitfinex or whoever's behind
Tether is not transparent about whether it actually has that $800M+ in
reserve, the alternative is that they just printed fake money for profit.

Who are you and what's your angle? Are you on Bitfinex' payroll?

~~~
brndnmtthws
Feel free to troll through my internet presence. There's a link to my bio in
my HN profile.

I have never used Bitfinex, and do not own any USDT.

~~~
lawlessone
All bitfinex has to do is prove they have the money. but they can't do that.

~~~
brndnmtthws
They have publicly refuted the claims, but people are still running around
with pitchforks.

~~~
PeterisP
They have _not_ publicly refuted the claims, because a meaningful refutation
cannot consist of their own statements about their own situation - it must
include a trusted third party/auditor claiming that they have verified books
and assets of Tether, and have verified that the claims match reality.

------
antisthenes
Is this another scare story to create a temporary trough in the BTC price?

------
zitterbewegung
Patio11 has commented on this already
[https://news.ycombinator.com/item?id=15745532](https://news.ycombinator.com/item?id=15745532)

------
goialoq
Why does HN have an active discussion of every rehashed ("hashed", hah!)
crypto ponzi/pyramid/fraud scheme that flies, but not every new MLM?

There were always be scammers peddling garbage backed by lies. It's getting
boring.

~~~
659087
Probably because people in the tech industry are far more likely to be
involved with cryptocurrency than an MLM scheme?

------
vesak
I yet have no reason to believe anything else but articles like this having
just a single reason: to drive BTC price down so people can make money off the
dip.

------
doctoboggan
For a decentralized solution to the problem of a price stable cryptocurrency
check out BitShares and bitUSD

[https://bitshares.org/technology/price-stable-
cryptocurrenci...](https://bitshares.org/technology/price-stable-
cryptocurrencies/)

You can see it has not been as stable as USDT but it has certainly been
hovering around $1 USD:

[https://coinmarketcap.com/currencies/bitusd/](https://coinmarketcap.com/currencies/bitusd/)

------
jondubois
For all the bad press that Bitfinex gets, they're the only exchange that I
know which lets you sign up for an account and start depositing, trading and
withdrawing cryptocurrencies in less than 10 minutes. At least when my money
is on Bitfinex, I know that I can take it all out at any time... With that
kind of liquidity, I wouldn't care if Bitfinex was owned and operated by a
colony of wild monkeys.

I don't care if they get hacked, so long as they don't get hacked during that
small 10 minute window when my funds are sitting on their wallets.

By comparison, I've been waiting for 1 month and a half to get my account
verified on Bittrex (to enable withdrawals). Ticket #347145

~~~
kurthr
That ability to withdraw even from Bitfinex appears to be limited to small (1
BTC) amounts. They like others have quite onerous verificatiin and anti-
moneylaundering documentation requirements and give themselves at least a
month to review your papers. You, like most people, won't need to get out a
lot of money, until you do... and then you may not be able to. Good luck :^)

