U.S. Regulators to Subpoena Crypto Exchange Bitfinex, Tether
bloomberg.com
bloomberg.com
Honestly just a curious question. (I'm not looking for snarky answers to the effect of "world police".)
[1] https://webcache.googleusercontent.com/search?q=cache:vl90MA...
Disclaimer: I'm not a lawyer, just found this from a cursory search.
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 [1].
[1] https://cblr.columbia.edu/the-u-s-jurisdiction-over-transfer...
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.
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.
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?"
[1] https://web.archive.org/web/20180110101846/https://www.arise...
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.
https://www.coindesk.com/tether-confirms-relationship-audito...
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".
They're also not promising otherwise and claiming to be regularly audited while firing/being fired by their auditor.
- 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 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.
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.
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.
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.
EDIT:
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.
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.
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.
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.
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.
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.
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 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.
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.
source?
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...
https://www.reddit.com/r/bitfinex/comments/7rbfca/ticket_636...
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.
Anybody been able to actually withdraw cold, hard fiat dollars from tether or bitfinex? Show of hands please?
.... crickets ....
"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.
[1] 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).
- 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?"
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?
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.
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.
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?
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.
Total Tether issued as of the end of January 2018 is about 2.3 billion.
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?
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.
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.
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.
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 :)
Bitfinex themselves? There’s no reason to assume that all the people buying USDT aren’t affiliated with the issuer(s) in some way.
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.
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.
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.
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.
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.
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...
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.
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.
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.
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.
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 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.
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...
'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.'
Looks a bit ugly, but works.
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.
I wonder if the auditor made a 'noisy withdrawal', basically alerting the regulators that this company is fraudulent.
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.
https://us.etrade.com/what-we-offer/investment-choices/futur...
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:
https://www.reuters.com/article/us-bitcoin-futures-contracts...
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[1] 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.
[1] 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.
They spoof their order books and use wash trading bots...so draw your own conclusions :)
Eg:
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.
Otherwise we're just wasting gigawatts of electricity to print Monopoly money.
The sooner people realize this is exactly what is happening, the better.
Not to mention it would never work, the blockchain has way too much overhead (many many orders of magnitude) to support an entire world's worth of exchanges every day. There literally isn't enough electricity in the world. People would have to do all of their transfers on third party exchanges that undermine all of the crypto guarantees of the currency in the first place. They're no better than putting your fiat currency in a bank run by criminals that have no respect for laws. And I'm not talking euphemistically about regular bankers here, I'm talking about full up scam artists. I mean why not, it's not like the law is going to get you. There are no pesky regulations to get in the way. No annoying insurance adjusters breathing down your neck. You have total freedom to scam everybody all day long.
BTC uses the same amount of energy to produce an empty block as it uses to produce a full block.
Markets cannot be completely decoupled from states as long as they trade in real goods and services - as long as you're not trading solely in virtual goods, the other part of the transaction still requires you to interact with the real world under the jurisdiction of some state, and thus the whole transaction, including the cryptocurrency (and the source of that cryptocurrency) is subject to those rules.
If you sell some virtual services for cryptocurrency and later want to buy a car with the proceeds, then not only the car purchase, but also your sale of these virtual services must have been done "cooperating" with all the rules of fiat - states can and will forbid using the proceeds made in markets completely decoupled from their systems of financial regulation; they will use their hold over the physical markets to try and regulate the virtual markets also as much as possible. In the long run, if cryptocurrencies won't cooperate, then they'll be ostracized - there's nothing stopping the gov't from passing a law that simply prohibits any legitimate merchant to accept bitcoin, greatly limiting the range of things that you can actually buy.
Fiat is and always will be tightly monitored and controlled. If cryptos want to replace fiat, they will have to do the same.
The moment people can start to pay rent and groceries in crypto, it makes sense to accept crypto even if you can't turn it into fiat. As long as taxes are paid in fiat, you need some of it, but that wouldn't make crypto useless.
If they sold a single USDT to an American, possibly. At the very least, they may be liable for American USDT investors’ losses plus fines.
Disclaimer: I am not a lawyer. This is not legal nor securities-related advice. Do not buy or sell anything based on my Internet comments.
An exchange could offer USDT trading but still have negligible exposure to its value itself. And then if USDT goes to zero – radically breaking the intended parity-with-USD – direct losses should be confined to USDT holders, not exchanges.
Nope. They'd only be insolvent if they had a legal binding commitment to redeem USDT 1:1 in dollars, and only if they didn't have sufficient other USD reserves to do so.
On what basis? Other than ones that commingle USD and USDT and/or are organizationally associated with Tether (which, I think, is mostly Bitfinex and Bitfinex), I'm not seeing where there is much basis for holding the exchange liable for the collapse in value of a traded asset.
But, for example, if it happens to get legally treated as an unregistered security, then the exchange would be fully liable for the losses of their customers, since it was not allowed to sell unregistered securities to general public/unaccredited investors. And this argument by itself seems sufficient to press a serious prolonged case, even if the courts later decide that no, this interpretation isn't the right one.
In general, being an intermediary in shady products may easily mean that you're (also) liable. "Normal" stock exchanges and stock brokers are the exception, they have specially listed immunity exceptions that apply if and only if they fulfil a bunch of conditions; otherwise people may well sue you to cover their losses just because it seems that it's easier to enforce judgments on you than a Hong Kong company.
And they don't have to win the lawsuit, they just need to not get it dismissed outright and scare others into leaving the exchange.
Other than Bitfinex (with he comingling issue mentioned upthread), I understood the main use case for USDT on exchanges is to avoid even touching USD transactions in either direction; for exchanges doing this, they wouldn't be at risk here.
> And they don't have to win the lawsuit, they just need to not get it dismissed outright
Right, but I'm not seeing where you get a colorable cause of action that avoids that for a typical USDT-supporting exchange from a USDT value collapse.
Anything creating high volume benefits exchanges, even if that volume is everyone trying to sell their tethers for other crypto.
Bitfinex has a few billion in publicly known cold wallets.
It would only do so if the exchange has a strange unrelated agreement (like to trade 1 USDT for 1 USD), or were holding the money they're using to run their operation in that asset. Except for maybe Bitfinex (because of the special case), no exchanges are doing that with USDT.
Note: only exchanges supporting USDT (tehter) is going to get hit hard, other exchanges such as BitStamp will probably see a downtrend but not going to crash
Not necessarily but the market shakes from a major exchange going bust can definitely hit other exchanges as well (a classic bank run), and even if there won't be a bank run other exchanges, especially any with ANY ties to ANY US institution or customer (which basically every exchange has!), will be expecting their own "audits"...
Going forward though there will be dexes and decentralized stable coins (such as Basecoin). Those would be extremely difficult to track down and have strong incentive structures to maintain their value.
This is just the beginning. As centralized exchanges start having all sorts of problems (CoinCheck, Bitfinex, maybe Bittrex and Poloniex soon), more people will start looking into decentralized exchanges and thus increase their liquidity. Even Binance, one of the biggest centralized exchanges right now, said that it wants to become a decentralized exchange.
All of this probably won't happen within the next year, but it will happen. It's just a matter of all the pieces falling into place for people to switch. Probably the #1 thing that could help their adoption is being able to integrate new cryptocurrencies faster than any centralized exchange can, especially if this integration is "permissionless", by simply allowing the cryptocurrency developers to support its protocol and then have the cryptcurrency automatically appear on the exchange.
A shortage of shitcoins isn't the biggest problem currently for the cryptospace.
No single exchange can keep up with every new cryptocurrency, so people start creating accounts with all the exchanges, and then start preferring the new ones if they also bring overall site improvements over the incumbents, and eventually dump the incumbents. This is healthy for the cryptocurrency market. If this wouldn't have happened, things could have been a lot worse with centralized exchanges.
I don't know what the "final form" of this ecosystem will be, but I hope it will be something like the internet. Decentralized exchanges essentially being "protocols" like TCP, which link all the cryptocurrencies (servers) and users (clients) with each other, and everyone can "exchange" (connect) one cryptocurrency to another.
But unlike the internet, I hope there will be a much bigger emphasis on P2P connections/transactions, and that we won't sacrifice that just to get a little more performance or more convenience. There will be such more centralized cryptocurrencies, too, just like today's internet continues to have huge walled gardens like Facebook, but hopefully it won't be the majority of them.
Is anyone at all surprised that they got subpoenaed?
Not very surprised, no. It was just a matter of time until it became public:
> The Albanian Civil War, also known as the Albanian rebellion, Albanian unrest or the Pyramid crisis, was a period of civil disorder in Albania in 1997, sparked by Ponzi scheme failures. The government was toppled and more than 2,000 people were killed. It is considered to be either a rebellion, a civil war, or a rebellion that escalated into a civil war.
Lots of people will get burned pretty badly though. Like the saying goes, freezing feet and burning head makes for a good average temperature.
[1] https://www.economist.com/news/leaders/21732526-there-invest...
Ponzi schemers lie to their investors. (Madoff purported to run a reputable shop.) It’s harder to argue, to the broader public, that someone buying Tether with Bitcoin could reasonably think they made a legitimate investment.
So yeah, I'd absolutely smack the exchanges for passively perpetuating a fraud which has been talked about for months now.
If USDT is not 1:1 backed by USD, so does Tether. If Tether and Bitfinex are different faces of the same group, and Bitfinex treats USDT and USD equivalently on their exchange relying on Tether’s backing claim as justification, so does Bitfinex.
is that all of them, or most of them? because there are ponzi schemes that openly state what they are.
Aside from that, I think an argument could be made that bitcoin itself is a form of pyramid scheme. I'm not sure if I 100% agree with that, but I understand the line of reasoning.
I'm glad regulators are looking into this and asking these questions.
EDIT: Or, if you’re a sports fan, consider the impact on the New York Mets and their budget over the last decade.
In particular the state can’t really afford to let money laundering on this scale continue.
Sure, but it pains me to see American securities regulators’ already-strapped budgets going after, almost alone, an international problem. Regulatory focus has an opportunity cost. More attention to cryptocurrencies means less to everything else.
> the state can’t really afford to let money laundering on this scale continue
The Treasury and Secret Service are the principal enforcers of U.S. anti-money laundering law. This action is being brought by the CFTC.
In any case, there is lower hanging fruit (in terms of ease of prosecuting, volume of funds laundered, and politics vulnerability) than cryptocurrency-facilitated money laundering which, by its nature, leaves a convenient and immutable public record in fact wake.
True, but cryptocurrencies - especially now, with ICOs - move such absurd amount of money that they do become a big problem. And it probably won't take much effort from SEC to make the whole charade collapse everywhere, so it might be a pretty good investment of time after all.
They're about as "inflicted on yourself" as most fraud is. You could say that a grandma getting scammed by a person pretending to be a government official[0] also brought it on herself, and so did the guy scammed by an insurance MLM. The truth is, there's enough of buzz around cryptocurrencies that it starts to impact regular citizens[1]. It's becoming a public issue, and so it's a perfect moment for the government to step in and start dealing with the fraudlent part of the cryptocurrency ecosystem.
--
[0] - Recent subject of fraud prevention campaigns by the police in Poland, not just a stereotype.
[1] - Hell, I heard a story about cryptoexchanges in local radio news this very morning.
"The other day my barber asked me whether he should put all his money in Bitcoin." - Paul Krugman
https://www.nytimes.com/2018/01/29/opinion/bitcoin-bubble-fr...
Pardon me, I didn't mean to say it isn't something regulators should go after. I was merely commenting on their incentives.
If you're an ambitious regulator, an easy-to-explain high-profile bust is worth its career weight in gold. "I got Martin Shkreli convicted of securities fraud" is potent and messageable. "This cryptocurrency scheme...what's are cryptocurrencies?..anyway, this scheme in Hong Kong sold other cryptocurrencies called Tethers in exchange for Bitcoin...no, we're still fighting for extradition..."
That is messy. Maybe you get a promotion. It could also backfire if it's perceived as preferential treatment of Silicon Valley.
"Remember that fake computer money used to buy hard drugs and order assasinations on the Dark Web? Those ones. Also, they're currently being used to scam people by megadollars. And I'm about to bust some of them."
Maybe not Shkreli-level in media applause, but close enough, I think.
Good god how could you even write that and not immediately understand the whole thing is a shitshow scam run by a bunch of clowns?
Someone fancies themselves an offshoot of the US treasury and is taking their new printing presses for a spin.
Hell if I had my own little US mint I’d be running it 24/7 too!
I don't understand why journalists don't provide a link to such public supporting source documents.
Delisting would hopefully signal that "we know there's sketchy stuff happening there, so we are working around it and finding solutions." And it would insulate the exhanges from huge price swings on every USDT/* trading pair.
They still need to do cost-basis accounting for taxes, and this just shifts their risk of <exchange I use stealing all my USD and the police will never get it back> to <USDT will pop and collapse into worthlessness>.
I understand how this benefits exchanges (Because they can claim they don't need to follow KYC), but how does it benefit their users?
They'll also eventually need to convert USDT into USD - which they can withdraw. If you have an exchange that you can withdraw USD from, why are you even keeping your balance in USDT? Just trade on that exchange...
It's like if the NYSE only allowed you to cash out in scrip. I understand how this benefits them, but how does it benefit me?
It doesn't benefit you, as you're left holding a bag of useless scrip if there's a big crash.
Which is precisely why tether is such a cause for concern. Well, except for crypto fanatics that call anything perceived as negative as baseless FUD.
Being able to move USD between banks as fast and frictionlessly as you can move crypto makes it easier to take advantage of price differences on different exchanges. The tethers themselves are also tradeable with people who may or may not pay taxes or trade on KYC-compliant exchanges.
Or hypothetically you could pay for stuff that's priced in dollars without the friction and fees of the traditional banking system. I don't think anybody actually does that though.
It's a way of combine the advantages of cryptocurrency - speed, fees, lack of regulation - with the stability of fiat currencies.
Not very stable if the issuer is insolvent though.
Why wire money from one exchange to another? Is it to trade instruments that are available on one but not the other? Is it because your exchange does not have fiat withdrawals? Is it to take advantage of pricing arbitrage, because one of the two exchanges does not allow fiat withdrawals (How will you cash out, then, without paying a premium, that will eat your arbitrage?)
If so, why not just wire the bitcoins? Or Eth, or litecoin, or whatever? Why introduce conversion to USD or USDT as an intermediate step?
Tether seems to be solving a non-problem - or at least, it's not solving it in a way where its alleged USD peg provides any value. Use litecoin, or bch, or dogecoin, or whatever.
edit: At least that's what I remember seeing last, laws may have changed.
If that is true, then the point of it seems to be enriching the people running exchanges, at the expense of their users.
I believe "stablecoins" will be needed in the cryptoworld, especially if the goal is still ultimately to have crypto coins used a "currency". But I'm not sure there's any reason why they need to be "pegged to the dollar" or any FIAT currency. It just needs to be relatively stable, perhaps in relation to the total market cap of cryptocurrencies at any given point in time.
Tethers are car wash tokens, not dollars, so various organizations are willing to let you do whatever with them. The obvious incentive on the sell side is that you can print literally billions of car wash tokens and buy other cryptocurrencies with them.
Also note that if holding USD is the only problem this is supposed to solve, why not just hold USD? Except if you want to bypass your local laws. I buy USDT in country A. Trade BTC for it, then sell BTC for USD in another exchange in country B. This is the only utility and this itself seems illegal.
Nope. That's how it was until about a year ago, when all their banking accounts were closed (probably due to the issue you describe).
For the past year, they just randomly printed millions of "US-Backed" tokens, and people trade them as if they were actually backed by dollars, even though they are not the result (since a year ago) of any USD deposits, and even though you can exchange them for actual USD. It's bizarre.
That was a typo, I should have written, "and even though you can't exchange them for actual USD."
https://www.sec.gov/news/pressreleases
Then there was that time back in 2008 when all these banks crashed our economy and a single guy was prosecuted and went to jail. 1 guy.
But in the last month I can remember at least 3 press releases from the SEC about crypto concerns and investigations.
Contrast that with crypto where fraud is commonplace, and people constantly flaunt regulations, claim they aren't securities or banks so regulations don't apply, etc. Crypto is a new ballgame and the SEC is trying to figure out how to regulate it appropriately so of course there's a lot of activity there.
Point: USDT is used as a holding point for people wanting to stay in crypto but not be subject to price movement of other coins. This could be used to not trigger a taxable event (even though recently, crypto to crypto transactions were deemed taxable by the IRS). When buying crypto in general, it's much easier/faster to start a transfer from another crypto as opposed to having to move fiat into the "cryptoverse".
Question: Why does it matter if Tether is backed at 1:1 ratio with USD? I understand that the people behind Tether have explicity said that each USDT is backed by $1 USD. Why are the legal implications of non-backed USDT different than other cryptocurrencies whose values are based on the market? Is it simiply because Tether has claimed USDT is backed?
2. Correct, the claims are a problem. They claim backing and audits and these may constitute fraud
3. If they just print them out of nowhere they are basically printing hundreds of millions of dollars for themselves. If they aren't backed, do you think they could hold value in these circumstances?
4. These magic unbacked tokens are probably a large part of BTC price rises in recent months, and look like extra demand in the marketplace, massively distorting the BTC and altcoin markets.
This will be interesting to see. I wonder how long until we'll know.
I saw an interesting data analysis here on HN a while back showing a correlation, and hypothesizing a causation between the rise of Tether and the price of BTC.
"Absent a reasonable legal justification not to redeem Tether Tokens, and provided that you are a fully verified customer of Tether, your Tether Tokens are freely redeemable... Furthermore, residents of certain U.S. states are not permitted to be customers of Tether; are not permitted to cause Tethers to be issued or redeemed; and, are not permitted to hold Tether Tokens. Beginning on January 1, 2018, Tether Tokens will no longer be issued to U.S. Persons."
So if you hold Tether Tokens but are not a "customer", you have no claim to be paid. I suppose Tether customers (whoever they may be) might be willing to pay you dollars for your coins, but there's no reason for them to give you 1:1, for sure.
And you are required to deposit a minimum of $10,000 USD fiat.
And you are required to wait 3 months for verification.
So, sure, go ahead and do it "right now", subject to those caveats.
Any actual, verified customer of Tether here willing to provide a demo?
1. Bitfinex claims to offer wires to Taiwanese accounts.
2. Bitfinex does redeem Tether 1:1 for USD (nominally, within your Bitfinex account).
3. Bitfinex claims to wire that redeemed USD to any Taiwanese account without delay or haircut.
Now, given that, the price of Tether out to trade at 1:1 with USD. Which, for the most part, it does. If there were lots of Taiwanese customers unable to realize those wires, i'd expect we would hear some complaining from them. But we don't. Therefore it is my presumption that those wires are proceeding uninhibited.
If you have an alternative explanation of the facts, i'm happy to listen to it.
All your other posts on this thread have made these as statements of fact. "Bitfinex offers wires", "Go ahead and open an account right now", etc.
I'm buying this reasoning as evidence towards the hypothesis that they indeed redeem some amounts of USD.
All the other things I've read so far suggests this will turn into a game of musical chairs - some amount of people who make the wire orders first will get redeemed, and the rest will be out of luck.
So in the best case scenario to redeem USDT for USD:
1. You have to have a Taiwanese bank account.
2. You have to gain verified status at Bitfinex's discretion.
3. You have to have a balance over 50k USDT.
Thus it logically follows, they have very little incentive to actually keep 2.3B in USD EVEN if they received 2.3B in USD.
I can buy the explanation that originally Tether planned to have 1:1 USD for each USDT.
However the massive regular printing of Tether really strains the 1:1 claim.
As far as I understand the current conditions for retrieving the real dollars from tether/bitfinex are dissuasive enough that most people won't bother doing that, so they just need to have enough liquidity to pay the small portion that will.
No one has provided proof of withdraw from Bitfinex USD or Tether since they've gotten kicked out of their banks.
Recent wires from Bitfinex have been associated with a rural bank in Poland which is normally only used only by farmers.
https://www.trustnodes.com/2017/11/22/bitfinex-reveals-new-p...
Are there even meaningful numbers of Taiwanese customers? Has it been marketed in Taiwan?
For the time being, we will only process requests above $50,000 in size. We believe that by the time we are able to get to the smaller withdrawals, other, less cumbersome
Your only knowledge of this is based on "surely we'd hear of people complaining on English language forums if they weren't able to".
And at the very least, if you do wish to do anything, you are required to maintain at least $10,000 USD (not USDT) and wait for up to 12 weeks for verification.
At least a cursory search of English fluency says that if there are complaints (or compliments) on Bitfinex, most users are certainly not going to be posting them on English-language forums.
News that makes new revelations that were not generally known about events in even the distant past is still new news, and last December isn't the distant past, anyway.