Honestly just a curious question. (I'm not looking for snarky answers to the effect of "world police".)
They have the authority to issue a subpoena because Bitfinex had US-based customers.
The ability to enforce it is a bit trickier, but there are two things - first, it's plausible that they can get cooperation from local authorities; and second, they are able to seize USD transfers to/from them.
If they hold it as hard cash, practically, sure. If they want to be allowed to send or receive wires and generally not get sanctioned by the United States, no. The U.S. Treasury claims international jurisdiction over U.S. dollars .
Disclaimer: I'm not a lawyer, just found this from a cursory search.
William Shakespeare, Henry IV, Part I
There are actually two issues here: Firstly, on what basis, under US law, does the CTFC have the authority to issue a subpoena, and secondly, whether, under international law or treaty, it has any power to compel compliance. The link in sna1l's post has something on both issues.
Clearly, the SEC has had it with people running these huge scams.
For example, "Texas Banking Commissioner Charles Cooper finalized a cease-and-desist order on Friday that said the company, which is registered to a Texas address, is not authorized to engage in the business of banking in the state. The order also noted that Texas law prevents use of the word “bank” in a way that implies to the public that the person is engaged in the business of banking in this state."
That was on Friday ... and, in an astonishing display of ignorance and arrogance, they published an open letter stating that they refuse to comply. As the department said, they have had a bunch of cases where people have used the term “bank” in a name, but they had never ever seen a firm refuse to back down. So they sent in the sherifs to ensure that they actually do cease and desist.
The only real question is "why aren't they in jail yet?"
Bitfinex is a crypto exchange kinda based in Hong Kong and kind of based in Taiwan (this seems to change depending on convenience.) Taiwan recently started becoming more rigorous about monitoring international USD wires, and lots of Bitfinex users had their money stranded in Taiwan. Bitfinex stopped supporting US customers because of these difficulties (AFAIK most customers did eventually get their money out though)
Tether is a company/product that is a cryptocurrency that (aspirationally) has a value of exactly 1 USD. The Tether company and Bitfinex are (supposedly) two unrelated companies that nevertheless have mostly the same people employed as principals. Because crypto daytraders need easy ways to quickly pull their money in/out of crypto exposure, the Tether currency has been a massive hit as a way to convert into pseudo-dollars. Because of this, people have bought billions of these "tethers" from the company, but no one has a good handle on where these billions of dollars are safeguarded, if at all.
Pretty interesting findings.
But it is just circumstantial at this point. There are a lot of ifs related to Tether, but it has that fishy feeling to it.
While I think there is a very good chance that Tether is not backed by USD, I think the regulators may actually be more interested in USDT being used for money laundering and non-reporting of investment proceeds. In fact, that is likely a larger crime with respect to US regulators.
They’re earning fees from uninformed buyers coming from a community with an ideological aversion to governments. The first part makes it profitable. The last means the risk of their reporting you to the proper authorities is slim.
Some of them are being very squirrely with their users, telling you your "USD" balance which is actually USDT.
Some may believe it's a fraud, but be happy to benefit from the apparent boost it's giving cryptocurrency values and think they're safe enough if it collapses.
but you need to be verified on bitfinex to withdraw both tether and (real) USD.
- the exchange got bought out silently and is now owned/controlled by the people behind tether
- the exchange got paid to use tether (for example 0.5% of the volume as incentive)
- the exchange holds a part of tether's fiat as guarantee
- the exchange is run by people who are inexperienced in appraising counterparty risk
- the exchange is run by people who like to take risks
- the exchange expects to cover any potential losses with the profits they made so far
- the exchange has been offered proof that the 1:1 peg is genuine (backed by the Chinese govt using US bonds)
Exchanges make their money from people trading--not by holding their own reserves and betting on their values. If Tether value drops to zero, anyone holding Tethers would be upset, but exchanges would just have been profiting from all the trades necessary to bring that value down to zero.
As to why end users would touch it, that's obvious - a (potentially misguided) belief that things will work out fine.
the exchange is a fraud.
The average Joe who's paper rich because he has 100 bitcoins on an exchange and sells them, there's a good chance their local bank branch won't be happy if he's receiving a wire transfer of $1M from the Virgin Islands or Cyprus. So instead, they keep that $1M as USDT and they can keep trading with it and still be paper rich.
The same applies to exchanges, a lot of them are totally unbanked in the US. USDT allows them to play with Monopoly USD instead of the real thing.
Eh. If I'm Joe Average cashing out my 100 bitcoin in your situation, I call my bank manager a few days ahead, telling him to expect a wire transfer along those lines.
I think the risk on such transactions is _far and away_ "will your exchange honor the cash out?", "how long will it take?" (up to 12 weeks for some exchanges) "will there be onerous restrictions on cash out limits?" (this example would be 100 consecutive days of $10K transfers) - much more so than "Will Chase Bank NA be happy to accept a wire transfer from Scotiabank BVI?"
This week in "Laws are hard"
Bitfinex DOES seem to have very deep pockets to be able to respond somehow to it. I doubt bitfinex could pull off the self-heist move and dissapear.
Kraken offers a USD/USDT market that allows you to obtain fiat for your USDT, and the price stays fairly stable but the liquidity is low (thus slippage is high). It's currently trading at a discount; you could sell ~1M USDT for ~954k there. Kraken's withdrawal limits are way more severe than Bitfinex's, though, so it would take some time to get all of that out.
My understanding is this isn't the case. My understanding is Bitfinex will take your USD and convert to USDT which you can then use to buy crypto. But it won't take your USDT and turn it back into dollars. In fact, my understanding is the only way to turn USDT back into USD is either directly through Kraken or indirectly through another exchange by going USDT -> BTC (or ETH/DOGE/whatever) -> USD.
Bitfinex lost the ability to bank in USD a while ago, which is how this whole tether business was invented in the first place.
As for withdrawing, you can’t withdraw to the US any more, but you can still make international USD wires to banks in other jurisdictions, specifically Taiwan and Hong Kong. I have not heard anything contradicting this, and have seen a fair bit confirming it.
One exciting "feature" of all this is that most tickers that price out crypto currency values treat USD and USDT as one and the same. I've yet to see Bitfinex, for example, show up on a ticker as "BTC / USDT" (which is what, in fact, the pairing is).
It worries me because people use these things to inform their "investment" decisions and my hunch is most of the data they use is not quite on the up & up.
Just as when you deposit on any exchange, for example, Kraken, you don't have "USD" per se, you just have "Kraken USD credits" which you can withdraw, subject to their limitations, via wire transfer. Also, when you deposit your USD in Chase Bank, you don't have USD, you have "Chase USD credits" which you can withdraw, subject to their limitations, on demand.
In all cases you are dependent on the solvency of the institution, which is what is in question here. But Bitfinex is correct in not saying that you are buying or selling USDT -- you are trading with USD, regardless of what internal accounting practices they use to ensure that they are solvent.
No, I have USD in my account when I deposit to Chase. I can go to Chase and say "give me my fucking money" and they'll give me sweet cold, hard dirty fiat dollars with, in general, no questions asked. I deposited in dollars, my account balance is denoted in dollars, my withdrawals in dollars. 1 USD == 1 USD.
All of these Bitcoin exchanges.... ...... maybe you can do that but good luck..... maybe?????
Unlike a real bank, your "Bitfinex Credit" is actually backed by USDT, not USD. When you go to Bitfinex and say "Give me my fucking money in USD", they'll laugh and point out that you never had USD, you bought something called tether which is. Tether being, of course, the space-age crypto currency that is pegged to the USD using ...$methods.... and has, according to their marketing website, been subjected to "multiple professional audits" (cough).
So what you see on all these ticker sites is a bunch of USDT that is silently folded into the USD marketcap and pricing models people use to make their decisions. All of it assuming USDT is actually legit. If USDT goes south, it is going to fuck over the entire crypto market because almost everything there is now completely mispriced. Worse, there is allegations that USDT was being used to drive up and maintain the current crypto prices... if that is true, crypto is double-fucked because even the underlying valuations are bullshit.
> Bitfinex, as I understand it, allows withdrawals in USD (modulo the restrictions above).
Show me an average joe retail "investor" who has been able to successfully withdraw USD from Bitfinex. People have been asking for that person to stand up and raise their hand for months. Crickets is all you get in response.
If you look in the Bitfinex subreddit, you’ll see tons of posts complaining about slow withdrawals, but the older posts all say that the situation was resolved. It might be that they’re just oiling the squeaky wheels, but on the whole it looks like things are working, just slow.
You say that “Bitfinex Credit” is backed by USDT, not USD. Why do you think that? And even if they do this as an internal accounting trick, it is only problematic if Bitfinex is insolvent. USDT seems like a red herring here - either Bitfinex has the money to back their customer deposits or they don’t.
The last time they were insolvent they managed to issue funny money to recover, and, inexplicably, kept their position as the market leaders.
The allegations of market manipulation are concerning, but the crux of it is that if Bitfinex is printing unbacked USDT and using them to drive the price up, that simply means that they are insolvent. Because there are essentially no operating credit markets in the cryptocurrency space, the ripple effects of a run on Bitfinex would be limited by that; not to say they’d be nonexistent, but other market centers trade huge volumes now indepently of Bitfinex.
I’ve gotten more than that out of a credit union located in the basement of a grocery store using literally the exact same form that is use to exchange coins for bills and taking less time.
Maybe the assertion is you can’t do it without an irs notice from the bank? Sure but you can easily get the cash.
I've been hit by the insanity of "yes it's your money but you can't have it" from banks before, and it's one of those things you think everyone else must be a borderline criminal and/or exaggerating until it happens to you.
Anecdote isn't entirely useful here. The fact is they can do it, and even with sizable assets I had far fewer avenues of recourse than one may initially think. This made me really rethink banking security in a new sense.
> inexplicably, kept their position as the market leaders.
Only because there is apparently a large segment of people who do not have functioning critical thinking skills. I know HN doesn't like to do politics, but there is a huge overlap, at least in terms of thought process, in the people who support a particular president and those who support bitcoin. Both seem to lack any kind of critical thinking and both dismiss anything negative about their worldview as "FUD". It is pretty amazing human behavior if at least one of the two categories didn't have some very negative real world consequences...
Honestly, both could almost be considered a very large cult.
"About Tether Tokens; General Restrictions: Tether issues and redeems Tether Tokens. Tether Tokens may be used, kept, or exchanged online wherever parties are willing to accept Tether Tokens. Tether Tokens are fully backed by the currency or property used to purchase them at issuance. Tether Tokens are denominated in a range of currencies. For example, if you purchase EURT, your Tethers are fully backed by Euros. If you cause to be issued EURT 100.00, Tether holds €100.00 to back those Tether Tokens. The range of currencies available to denominate Tether Tokens is within the sole control and at the sole and absolute discretion of Tether. Tether Tokens are backed by money, but they are not money themselves. Tether will not issue Tether Tokens for consideration that is other Digital Tokens (for example, bitcoin), and will not redeem Tether Tokens for other Digital Tokens; only money will be accepted upon issuance, and only money will be provided upon redemption.In order to cause Tether Tokens to be issued or redeemed by Tether, you must be a verified customer of Tether. No exceptions will be made to this provision. "
(all typos and spacing are theirs. This change looks very hastily put together and quite sketchy)
It used to say some stuff about how USDT isn't actually redeemable, etc...
They're doing their best to put up a good face here but good luck actually getting them to hand over cash. The thing is blatantly scammy, they obviously don't have $2.3 billion in cash reserves on hand and never did.
Anybody been able to actually withdraw cold, hard fiat dollars from tether or bitfinex? Show of hands please?
.... crickets ....
 If you're a green-name who's skimmed up to here and you're about to say "but Kraken", I am not talking about selling Tether to someone else.
So, who is selling BTC for USDT and why? Who is selling so many BTCs for USDT that they have to print 100 million USDT every other week?
I'd really like to understand that (see also my parallel discussion).
that's... unlikely. mainly because if that were true, nobody would want to sell anything at bitfinex, and cryptocurrency prices there would skyrocket. this happened at mtgox when they halted withdraws, BTC prices skyrocketed there.
I haven't seen anybody anywhere claim they've gotten USD out of Bitfinex...
The thread here is about Bitfinex not writing money, but on the thread a couple of similar issues get resolved. Could be shills or Bitfinex oiling squeaky wheels. I too would love to see someone here on hn post about their experiences, though.
Completely agree. You'd think with the reach of this place, you'd get a couple people who have done it.
The Tether foundation itself isn't going to buy back the USDT because then it will just have to burn them because it no longer has the supposed dollar backing it.
The Tether folks were like "Our balance sheet is really simple! We just add numbers to this column until it evens out, what's the problem?!?" and the auditors are like "that's just fraud".
- Create Tether out of thin air
- Sell it to people for $1USD each
- Put that USD in a bank account to earn interest
Hell, there's probably still an opening for someone else to do it right.
- Create MyTetheredCrypto out of thin air
- Convince people & exchanges to accept it ???
- Sell it for $1USD each
- Unlike Tether, let your company be checked and audited frequently
- Get rich off the interest
So what likely started out as a legitimate operation probably found it impossible to continue that way once it could no longer easily exchange tether for USD. So the options were probably to shut down or keep operating "untethered" and basically have a free money printer.
So if your coin has the same use case as Tether does now, people may not buy MyTetheredCrypto off you directly for USD, but they might buy it off you for Bitcoin or other cryptocurrencies you accept if it's not easy for them to convert to USD. Then you sell those coins immediately for their value in USD (you presumably having more access to do this than the buyer does) so you have your USD-backed tethered cryptocurrency with every MyTetheredCrypto backed by a real dollar USD.
Obviously I'm not really suggesting all this seriously though, there are lots of potential problems all over it.
They're also not promising otherwise and claiming to be regularly audited while firing/being fired by their auditor.
1. Tether will not convert your USDT into USD. You can only offload it to a bigger fool.
2. Tether's accounts have yet to be audited.
3. Tether has lied about #1 and #2.
What I don't get is: This means somebody sold BTC for billions of USDT (instead USD!). Who is doing this? Why would you sell for USDT instead USD?
Maybe there some daytraders on the exchanges that go in and out the Tether every day, yeah. But that should not account for that much. Who is hodling that giant pile of USDT? And why?
So then if you have volatility and you come back you can have double or triple your money. It's not a perfect system, but it's low work and you really only lose out if it goes to 0.
The problem with Bitcoin is that what do you sell it for? In many countries the only option is Tethers.
Yeah, why not. But does it explain the increasing demand for USDT? Why are they printing Tethers like crazy?
> The problem with Bitcoin is that what do you sell it for? In many countries the only option is Tethers.
The problem with Tethers is that what do you sell it for? The only option is BTC :)
On many international exchanges, USDT are the easiest way to convert BTC to a (supposedly) USD-backed asset.
I'm sorry, but I cannot follow.
Let's say you want to sell a BTC, current worth about 10k. So you go to a shady exchange, click sell and 10k of USDT appear in your account.
Good, but what is the next step? The next thing you will notice that there is nothing that you can buy for your USDT. You cannot buy a house, you cannot buy a car, you cannot even buy food. The only thing that you can buy for USDT is BTC (or some other cryptocurrency). This is the only thing you can do next.
And the BTC is even worth more than the USDT, because there are actually people willing to sell you stuff for BTC.
But let's assume for a moment that people are really hodling USDT. This would mean that there is an increasing amount of such people, because Tether is printing more and more and more of USDT. This means there needs to be an increasing demand of USDT, and I really cannot see where this is coming from.
When you do want to cash out to real fiat, you have to sell to USD.
USDT allows a large number of exchanges to allow you to sell BTC and hold in something that looks like USD. Without USDT a number of exchanges won't see anywhere near the volume they get. By enabling a larger volume, USDT is indirectly helping inflate BTC (and other currencies) price.
Why not just sell BTC for USD, and keep the USD balance that you get in the exchange? You can buy-back once the price drops. You don't have to wire transfer the money out, the exchange will happily keep it on their books for you.
If your exchange can't keep USD on their books, there's something seriously wrong with the exchange, and you should probably look into taking your business somewhere else.
Yes, I get that. But as you mentioned this is "short term". How does it explain that Tether is printing more and more Tethers? Do you think more and more people are selling BTC for USDT for a "short term"? We are talking about billions here.
The demand for Tethers is high because the demand to be able to trade is high.
> Do you think more and more people are selling BTC for USDT for a "short term"?
More and more people have been getting involved in trading as the price of Bitcoin and other cryptos was spiking. Now those people are in the market, but Bitcoin has been dropping. It makes sense that a lot of them would want to hold a USD proxy under these circumstances.
Of course, that's the optimistic scenario. It's also possible that There's are being used fraudulently to pump BTC. Without proper transparency, it's impossible to be sure.
My point is: How can you pump BTC with USDT? You need somebody to buy your USDT if you want to sell USDT. In fact, you need somebody to buy an enormous amout of USDT if you want to pump BTC.
Pumping BTC is not a one sided thing, and I fail to understand the other side. What I get from this thread is that that nobody really knows who is buying the 100 million USDT per week.
Get people to believe it's backed 1:1 by USD when it's not, so that it is viewed as equivalent to USD but less problematic in regulatory
terms, and then print a bunch of unbacked USDT and use them to buy BTC. To the market, the effect is as if a whole lot more actual USD were chasing BTC, effectively looking like higher demand.
But who is buying and HOLDING the USDT? Sorry that I repeat myself but this is the whole point I want to understand.
Yes, somebody is selling USDT for BTC, I get that. It is nice but I want to understand the other side. Who is buying USDT for BTC? Why? Somewhere there is a billion of USDT lying around. Somebody bought it. Somebody is keeping it. WHY is somebody keeping it? Why is somebody buying more and more of it?
I think it is a very crucial point to understand. Yes, maybe you can convice some fools to sell their BTC for USDT. But they will notice, because there is nothing that you can do with USDT except buying BTC. So they will BTC again and try to cash out somewhere else. So who is holding the one billion of USDT?
Total Tether issued as of the end of January 2018 is about 2.3 billion.
I think you may not realize how large the market has become. The top 6 biggest exchanges are currently trading more than $10 billion worth of cryptocurrencies daily, and there are many more that trade $100s of millions daily.
If that volume is sustained (it reached a peak recently with the price spike), it would put the annual trading volume well into the trillions, perhaps around $5 trillion.
100 million USDT per week seems pretty reasonable (if not small) to support that kind of activity.
Could very well be. BTC is on a general downward trend, almost as low now as it was in November. If people think that seeing 18k again in the next couple of months is likely, then why not?
But what we are seeing does not look like a temporary move. All the printed USDT are "somewhere", and I want to understand where and why.
Bitfinex themselves? There’s no reason to assume that all the people buying USDT aren’t affiliated with the issuer(s) in some way.
Bernie Madoff’s operation sucked in billions for years and years. Were there an audit at any point, the scam would have been revealed.
This would be something like a run on a bank, except without the FDIC to step in and make sure everyone gets their money out.
Accepting USDT is akin to giving Bitfinex an interest free loan with a high chance of default--no possible upside and lots of possible downside. No one should use any exchange that deals with USDT in any way.
That's not the concern. The concern is that if you have a contract that promises to pay the bearer X and you don't pay the bearer X when they ask because you lied, then that's fraud.
It's especially frowned upon when X has 10 digits before the dp.
Now, I happen to think that the Tether folk have been a tad more crafty than some of the black and white commentary is making out. More specifically, if they've been careful with who they've allowed to set up accounts, it may be effectively impossible for them to be called out.
I also don't think the CFTC calling in Dec is that interesting. It probably precipitated their change in T&Cs at the beginning of Jan though.
Guess we'll find out.
And again, you're missing the point that it doesn't seem like they are selling the USDT for anything, BTC or otherwise. They're just printing it and buying BTC with it.
That may seem like splitting hairs but the point is they aren't issuing them in exchange for value, they're just creating them and then using the value they supposedly have based to purchase BTC.
An analogy if you still don't understand the difference; it's the difference between buying a $50 Gift Certificate to a store with $50 USD or just printing one on my printer. One represents $50 USD that exist and were exchanged to buy it, and the other represents nothing.
Edit: the assumption seems to be that they are buying bitcoin and holding it, which would increase the bid and result in not being backed by USD. If they are not holding the bitcoin, then the buys and sells even out, and they are not adding to the bid, and they hold cash equivalent to USDT. I am quite interested to find out which it is.
This is irrelevant, though. You can commit fraud without losing any money - Martin Shkreli was famously convicted of fraud a few months ago even though the victims all came out ahead.
In the USDT -> BTC -> USD trip, there is a point, namely the BTC part, where more USDT has been issued than USD has been accepted. If they claim USDT is backed by USD, but there were points where that was not true, they have committed fraud, regardless of whether they were lucky enough to come out ahead.
So, whether their books line up is irrelevant to whether they committed fraud, perhaps, but VERY relevant to the price of bitcoin.
It's like having a printing press that creates legitimate money. No individual loses, but the prices of everything you can buy will artificially increase (or another way to look at that is the currency deflates) if you print enough of it.
I think the math is fairly straightforward. There is a USD/USDT driven cross. Creating and destroying USDT is straightforward there. There is also a BTC/USDT cross. That creates a drive for USDT. If that demand to sell BTC and buy USDT bids up USDT, then USDT would be created, and the BTC would convert back to USD. I agree that Tether is not forthcoming that this happens, but yes this is exactly what I would expect to happen. Its not mysterious sounding to me, or necessarily nefarious. I dont understand why Im beimg downvoted, its a discussion about generic market mechanics. We can leave bogeyman words out of it.
It's called "lying" and "fraud", your "but what if they did have the cash" is irrelevant, because they don't, and you're getting downvoted because you're aggressively refusing to address that point in favor of hypotheticals.
Could you hypothetically have a legitimate Tether token? Yeah, sure. Is the Tether Foundation on the up and up? Hell no.
There's a reason their auditor bailed before completing the audit.
EDIT: This apparently is no longer a site to ask questions or to challenge assumptions in good faith to get at an understanding. Its a religious conversation. One takes things on faith, or GTFO, apparently.
Going from USDT to USD in a roundabout way through BTC doesn't change anything if USDT themselves are bullshit.
RE your EDIT: it is, but deep downthread like this, it's always luck what you get. Also don't worry about the downvotes, everyone gets their share of them here :).
I dont know the answer to the above, but its critical for the future price of bitcoin and is really really important. Everyone just seems to assume they held the bitcoin, which is a crazy move. If they could have sold for USD, it makes sense to me they would have...thats why I think its an important question. It doesnt seem to interest anyone else tho, which is fine.
The comment above said liquidity dictates they could not have, that they must still be holding bitcoin. But I also say today, bitfinex'ed, the blogger that has been on this story, says they redeemed 330 million in past 24 hrs. Which is far above the 10% of 2 billion number he said of the entire crypto market is backed by USD. So to say the liquidity doesnt exist doesnt seem to make sense, there seem to be a lot of dollars into crypto. 1 million people with $1000 invested is a billion alone. That isnt crazy.
You'd be flooding the market Tethers nobody is asking for, which risks crashing the value of Tethers. They could buy back the tethers for dollars to stablize the price, but that would make the whole transaction useless.
There is also volitity risk. In a falling market they might lose money.
I dont see it as flooding the market with anything, the Tethers are created in effect by people exiting cryptos into Tether on all these exchanges that only deal with Tether rather than USD (potentially!).
Lets step back to Tether creation. There are zero out there. Someone gives Tether $10 million for 10 million USDT. Those matriculate out in the universe, and are being exchanged back and forth for cryptos. Someone somewhere always holds those 10 million Tether. The price of cryptos rises and rises. Now all of a sudden the demand for USDT has increased, as people who exit crypto on those exchanges need more units than before, rather than 8500 USDT per BTC its 20000 USDT per BTC. No one has given Tether anymore USD directly for USDT. What would happen in this scenario is the price of USDT would rise. One way, not the only way, but one way for Tether to bring the price back under control, would be to buy BTC for USDT, issuing new shares, to bring the price back down. Which at $1 means equillibrium.
Is that how things work, I certainly dont know. But that mechanism is one way it could work. And it could explain why USDT are created on down days. Its the demand of people getting out of BTC driving it.
Now they could totally take that money and spend it on hookers and yachts for all I know...but thats at the end of the chain.
First of all, banks do have to balance their books. The 'fractional reserve' model taught in school is actually not how banks work in reality, and violates accounting rules.
Every single deposit in the bank does need to be backed by something - if banks just stored deposits then they would have to either have the full reserve backing, or other assets (cash, investments, etc.) backing every dollar. Lending seems different, but is really the same. Lending creates new money, by creating a new asset on the bank's balance sheet (the loan), and creating a matching liability of the bank (the deposit). But it is still backed by an asset - the debt to the person they lent to. (Central bank reserves don't actually come into lending, until the banks need to transfer money to other banks. Reserves are used for this, and the bank requires enough in their asset mix to maintain liquidity of their interbank transfers. They can just borrow reserves, for pretty close to the headline interest rate from other banks if they need some extra though).
So, Tether could be operating like the banking system, but, if they don't have full backing they would have to be creating matching debt for the remainder, with the intention of it being repaid. Otherwise their liabilities (the Tether) don't match their assets and it's just fraud.
Secondly, banking systems have a lender of last resort. If a bank faces a liquidity problem, they can still borrow reserves from the central bank. If Tether faces a liquidity problem, it's likely that nobody will lend them money, their business will collapse and all tethers will be rendered worthless.
But Lehman Brothers wasn’t a commercial (retail) bank, which is what I was describing. They were an investment bank, which generally don’t take deposits or directly offer loans.
This is also moving the goalposts, because they claim that Tether is fully backed, not fractionally. Changing their story there would involve admitting to a billion-plus-dollar fraud.
No audit is expected at this point, we're getting close to the "exit" phase of the scam.
This bet however, inflates the price of btc alone, since its like someone selling a btc doesnt take any btc from the market (as a btc is traded for another btc concealed). This double spend increases demand for btc, and on paper makes tether rich.
However, if BTC drops below the cost of acquiring it, the fund becomes insolvent, and as it can't sell anything to recoup it can only spiral down.
Thats one theory anyway.
It may work in an incredible bull market (which we have) but it has immense risk exposure. Also bear that the monet that Tether sells their btc, they depreciate their own reserves.
Its about time this 'scam' was exposed.
But I 100% agree, its about time.
The subpoenas were issued December 6; just because the news just broke doesn't mean that the government just got involved.
If people were holding tether because they wanted to be flat with respect to the cryptocurrency market, they will likely sell their cryptocurrency on a dollar exchange, suppressing prices there.
Dollar prices will adjust as BTC->Dollar and Dollar->BTC flows change. Dually the Tether prices. The only thing that keeps these prices in line is a Tether/Dollar arbitrage, but that arbitrage will slow and halt as people flee tether.
If anything, I would guess that a sudden increase in selling pressure from people doing Tether->Crypto->Dollar risks pushing people into a Crypto->Dollar fear feedback loop.
a) Chase Manhattan Bank in New York City ( USD )
b) National Westminster Bank in London ( GBP )
c) HSBC ( Paris ), account in Euros.
The wire must show up live in 72 business hours and post to the account within 72 * 2 hours.
Not sure how this works for non dutch citizens. Presumably a dutch bank-account suffices.
They don't seem to be an exchange though. Instead they are essentially market making, keeping their own supply. You don't have an account there. Instead, when selling they present you an address to send to, and when buying you give them the address to send to,
Moving 500 BTC there in a single trade would probably exhaust their supply. At the moment they report 250BTC+, I've seen ~150BTC the last few times I checked.
Still, it seems to be an actual functional on/off ramp for BTC - EUR.
Second time, though, no problem. Less than 72 hours.
It may not be overnight, and there may be additional fees, but it’s not going to take 100’s of days to move $1M unless you aren’t trying very hard.
(a) i am already a customer and they have verified that I'm me.
(b) i have completed all needed forms before
(c) i have followed the authorization protocol, including verification via control phone number registered with the bank and controlled authorization code
Same goes for any brokerage.
You are correct, but even banks and brokerages have limits (AFAIK) that they can invoke as needed.
Those soft-caps are significantly above $10k/daily, however.
My main point was with Coinbase you can do the required prework to request the higher daily limits and receive similar service, but you need to think about it in advance vs. having it automatically in place.
it's the late to the game profit seekers who have bought in over the past few months who will get killed by this. even if the tether founders have made off with whatever cash deposits they had and there's nothing in the vault, cryptocurrencies will still have value and will rise again.
Are there any? I’m being honest and not snarky here: I’ve yet to see a single company in the space that’s not at least somewhat shady.
Iirc, the idea is you say you want x amount of cryptocurrency M sent to address A1, and you want to pay in cryptocurrency N, and it gives you an address B2 and a quantity y, and you send it, then they send it. With this set-up, I don't see much of a way for them to behave dishonestly that wouldn't be immediately discovered, as either you get the currency or you don't, and if they don't, then you can quickly tell.
(I mean, the exchange rate they give might not be the best available, but it is the consumer's choice whether or not to accept the exchange rate for the convenience.)
Also, it is possible that I am substantially mis-remembering how it works, as I've never used it (I don't in fact own any of any cryptocurrencies, and never have except for testnet ether)
Also, I don't know if shapeshift is still around or not.
I mine eth and/or zcash in small quantities. If I want to buy a small quantity of something else I use shapeshift. This way I hold no accounts anywhere.
'course I have no way to cash out, but then my holdings total less than 1 ETH so it's no big thing...
It's that Bittrex and others are attempting to become mainstream and they've accepted these USDT since forever, and they continue to accept them well after the suspicions were public.
This is a black stain on the exchanges. It also personally makes me cynical of the entire space. I moved my mainstream coins off of Bittrex and back into GDAX where it seems safer.
<rant warning> Why can't profitable exchanges like Bittrex and Kraken self-regulate?? Over and over again the invisible hand of the market is proved to be eclipsed by the visible hammer of the regulator (which can't come soon enough, by the way). </rant>
It's a pain to store a few K USD worth of altcoins in my hw wallet (which I'm not even sure supports most of them). What if I'm at work and an event happens that makes me want to sell? The wallet requires an app to be installed.
If there's a hint of an issue with Bittrex, I'll trade to ETH and move them to GDAX.
Am I being a fool here?
Cryptocurrency frees you from needing to trust central banks/exchanges... so why continue to trust them? Especially un(der)regulated ones?!
At best, store only the smallest amount you're willing to lose, so you retain some liquidity for sudden trades...
It's just software.
So if I own USDT, I should be able to convert USDT to BTC (e.g.) or paper money. If everyone converts their USDT to paper money, the organization that backs USDT has to refund USDT to dollars. If there aren't enough dollars to cover the price of USDT selling, then the USDT market goes belly up.
BTC is buy/sell driven through some kind of exchange so the price can float.
'The U.S. Commodity Futures Trading Commission sent subpoenas on Dec. 6 to virtual-currency venue Bitfinex and Tether, a company that issues a widely traded coin and claims it’s pegged to the dollar, according to a person familiar with the matter, who asked not to be identified discussing private information.'
I wonder if the auditor made a 'noisy withdrawal', basically alerting the regulators that this company is fraudulent.
Look up E-gold if you want to feel the experience of history repeating itself. For bonus points check the dates when E-Gold was shutdown and when bitcoin was created.
That's...an unwarranted conclusion.
If this were all done and resolved, then Bitfinex would have a strong incentive to say that clearly, specifically, and unequivocally. The fact that they aren't and CFTC isn't commenting strongly suggests that the process starting with the subpoena is ongoing.
Looks a bit ugly, but works.
Tether looks like a good short since if it is a fraud it will go way down and if it isn't a fraud it will stay right where it is.
I'm in the US and would like to short Tether. But I want to get paid if I'm right.
I found this, but it didn't clarify much: http://www.cmegroup.com/trading/equity-index/us-index/bitcoi...
Thanks for the help. If it's easier to follow up by email it's in my profile.
Two futures exchanges run Bitcoin contracts, CME (trading under BTC) and CBOE (trading under XBT). They're not a lot different outside of size, CME's contract represents 5 bitcoins while CBOE's represents 1. Here's a decent listing of the differences:
It's definitely worth reading up on how futures work before trading them, but it's similar to stocks in terms of using a ticker and making buy/sell orders. A key difference is margin, but with the volatility of bitcoin both exchanges have really high margin limits so you can't get into too much trouble. The other key difference is you're trading a specific month so you need to be more correct on timing than you would for a stock.
 The tickers work a little different than stocks in that the root is XBT or BTC, but the full symbol for the contract includes the month and year. This is similar to options. Your trading platform should make this clear.
I'm not actually qualified to give investing advice. But this part isn't strictly true. In a functioning market, the price could be depressed by the regulatory uncertainty. If that were the case and it was cleared up, you would see the price rise.
They spoof their order books and use wash trading bots...so draw your own conclusions :)