Tether loaned USDT to investors and illegally traded in New York, says NYAG

>The majority of markets don't care if it is 100% backed, like they don't care when their bank does fractional reserve.

Banks are insured, and in general they haven't failed for the last like 100+ years.

I do think what you are saying about usdt is mostly true though, however if(when) usdt does fail the entire market will take a dive off a cliff. So even if your assets are in other cryptos it still represents a systemic risk to the entire system.

>The majority of markets don't care if it is 100% backed, like they don't care when their bank does fractional reserve.

Yes, but doesn't Tether promise that they back each coin with a dollar? I would care very much if I found out that the issuing party is lying.

> The majority of markets don't care if it is 100% backed, like they don't care when their bank does fractional reserve

Fractional reserve banks' deposits are backed more than 100% with more or less liquid assets. That's why nobody cares if a bank does fractional reserve. With tether there is no reason to believe there is even close to 100% backing. Unless you count as a reason an unverified claim that they are backed.

Interesting! Can Augur manage USD via escrow?

It’s important to take any information someone presents you that doesn’t line up with your existing worldview and just find a way to ignore it, that’s why were all here right?

> I'm just saying that tether has worked for years, and the peg seems to be still there.

But traditionally in finance, when things go wrong everything is fine for a few years then everyone loses all their money.

Tether has not worked for years, they say on their website they're not redeemable for dollars ever. Yes, I suppose by that metric chuck-e-cheese tokens work too, but you'd have the same luck trying to get your cash back out of either. It's "worked" on a hope and a prayer because crypto-to-crypto exchanges who can't achieve AML/KYC compliance rely on it. How else are the narcos and the sanctioned supposed to launder their proceeds? When this whole thing goes tits up how long do you think it'll take before the founders go "missing" like Gerald Cotten?

Their CEO literally tried to start a ponzi scheme right before he kicked off Tether haha (https://steemit.com/bitcoin/@binyamin/bitfinex-s-founder-see...) and you trust these people that they're just plain sitting on BILLIONS of dollars?

You know what they say, first you go broke slowly, then all at once.

  I'm just saying that tether has
  worked for years, and the peg
  seems to be still there.

A parachute that has "seemed to be there for years" is all very well - but evidence it's fine when no-one pulls the ripcord doesn't tell us what'll happen when someone does.

And if it's a parachute, what happens when someone pulls the ripcord is kinda the most important thing :)

But if your jurisdiction is NY (as it is for OP), then this doesn't really answer your question IMHO.

On a crypto only exchange, if you want to have some of your holdings fixed to the dollar then you hold it as tether. Usually because you are getting out of crypto or waiting to get in. Taxable events are on you to report and pay regardless.

> In the US trading crypto to crypto has tax liabilities.

Or, more accurately, just because you record the ownership of an asset on a blockchain doesn't mean you're allowed to violate the law.

Oh for sure. I didn't mean to imply it was a good idea. For anybody in the USA this is not going to be a legal winner as any transformation from crypto A to crypto B is going to be a taxable event.

I bet there's still plenty of people using this for tax purposes, either misguidingly for tax avoidance or explicitly for tax evasion.

Also it's not "very difficult", it's nearly (if not exactly) impossible.

Most crypto is traded outside of the US though; most of the volume is on Binance and Bitmex. In this sense they cut themselves off from many customers. The advantage of their business model seems to be that with less competition from other US-law-abiding exchanges (because there are so few of them), they can charge much higher fees: Coinbase fees are higher than most large non-US exchanges, and Gemini fees are insane, something like 1% per trade.

That's not useful if you are trying to arbitrage Bitcoin between 2 exchanges.

Not when you're trying to hedge with cash

And in the mean time the value has droped tenfolds.

Who did the tax collection? Did the exchange collect it automatically, or did your buddy do the filing? If the former, the exchange is sketchy; if the latter, your friend messed up.

https://www.nerdwallet.com/blog/investing/bitcoin-taxes/

Sounds like your buddy may wish to chat with a CPA/tax-advisor.

This can happen with stocks as well, someone the agent will report 0 cost basis and IRS will believe it and you have to document the actual cost basis. For me that made the IRS happy and I think your friend could have done the same here if he can document what he bought them for.

Being sketchy means Tether are less likely to do that (blacklist) despite claiming they do. So some people are attracted to that type of organization…so they won’t get their coins blacklisted for whatever reason.

ROTFLMAO

Are you serious? You need to establish presence at an exchange meaning you need to scan and send your ID to a company which more likely than not -- does QuadrigaCX ring a bell -- is run by scammers. Then you need to buy bitcoin and store it somewhere... and then send it to someone. The sending costs an unknown amount, takes an unknwon amount of time, the receiver gets something but none of you can predict how much that is actually worth by the time they receive it. If they want to do something with it they need to go through the exchange rigmarole. And you call this very easy to use.

Bitcoin was, is always will be nothing more than a novel scam. It's not a Ponzi... it's a novel form of scam. https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

It could be, but it's still dishonest to describe what seibelj was doing as "promoting an investment".