For all the noise about Tether being insolvent, it turns out that it was completely solvent? Then in 2018, Bitfinex got taken by Crypto Capital and raided the Tether reserves for $850M backing the Tether issuance?
So if I'm reading this right: The holders of tether are now screwed and should be converting to bitcoin/litecoin/etc asap.
I don't think this says that; it says that the ~$2bn in tether had at least $700 million in actual backing, because at least that much was transferred out of it's backing.
It still could have been insufficiently backed to start with.
The primary suspicion about tether was lack of solvency, and the [edit: CFTC] subpoena went out in late 2017. It would not have taken more than some weeks to determine if the assets were not present.
It's pretty hard to imagine the AG sat on tether insolvency for 18 months.
Per the court filing, the investigation of Bitfinex and Tether began in 2018 and the subpoena went out on November 27, 2018.
CFTC subpoenaed Tether back in 2017: See eg https://webcache.googleusercontent.com/search?q=cache:4hW_8L...
(Also, the CFTC and US DoJ investigations were still active at least as recently as November of 2018, which doesn't sound like they found that things were A-OK, more like they were—and presumably still are—trying to nail down the details and responsibility/liability issues surrounding identified irregularities.)
Because it's pretty hard to imagine the CFTC would not have communicated with the NY AG if they had the info about Tether's insolvency. Also hard to imagine NY AG not contacting CFTC before filing.
> (Also, the CFTC and US DoJ investigations were still active at least as recently as November of 2018, which doesn't sound like they found that things were A-OK, more like they were—and presumably still are—trying to nail down the details and responsibility/liability issues surrounding identified irregularities.)
Again, with regard to insolvency, it's pretty hard to imagine CFTC would allow Tether to continue operations for more than a year if they had evidence of insolvency.
It's also pretty hard to imagine that, in filing their own case, the NY AG would reveal sensitive information about a still-active federal investigation, but that's your apparent theory.
> it's pretty hard to imagine CFTC would allow Tether to continue operations for more than a year if they had evidence of insolvency.
It's pretty easy to imagine that of taking action would in any endanger the ongoing DoJ criminal investigation that it would hold back; it's worth noting that the ongoing law enforcement investigation exemption was among the exemptions CFTC cited in June of last year in declining to provide documents in response to an FOIA request about the Tether-related subpoena.
what makes you think so?
2. It's hard to imagine bitfinex draining 100% of the tether reserves and thinking it wouldn't blow up. So I'd hazard a guess that they took only a fraction, with the expectation of replacement before getting caught. (Isn't that the embezzler's cliché?) Since that fraction amounted to $850M, it's probably not a bad guess that they were fully backed or at least pretty close, so that Tether could continue any redemption operations.
The CFTC and DoJ were (and to all appearances still are, the latest news I can find on it is toward the end of 2018) conducting a wide ranging coordinated civil and criminal investigation of Bitfinex/Tether; there's no reason they would publicly release information before being prepared to take action, which wouldn't usually be when they first identify irregularities, but when they've chased down the responsibility and context issues enough to know the full range of charges they expect to file.
The idea that the NY AG not saying something about he results of an ongoing federal investigation in a state filing implies that the federal investigation immediately found everything to be just fine even though it continued for at least a year afterward and hasn't visibly ended is...not warranted.