Some people being ignorant about how it works makes it (probably) a scam?
That ZH article's ifs, possiblies, and maybes are doing a lot of heavy lifting.
Is the Bitcoin price up? Queue the Tether FUD.
That ZH article's ifs, possiblies, and maybes are doing a lot of heavy lifting.
Is the Bitcoin price up? Queue the Tether FUD.
There are now >$60Bn worth of Tether coin issued. With that much money they'd be a very serious private financial institution, and yet they only have 13 employee's. They have never been audited by any independent third party. They have repetitively lied about who owns the company (the same people who own Binance, the world's largest crypto exchange own Tether, and yet did not disclose that until it was found out). They have receptively changed their story on what backs Tether coin (originally each coin had $1 in a bank account to back it, now it's majoritively unspecified "commercial paper").
There is nothing which proves that Tether actually is backed by anything and the billions in new Tether coin which are minted could very well be worthless.
Also, there is nothing which proves that Tether actually isn't backed by anything.
I see a lot of people jumping to conclusions about a topic they are self admittedly ignorant about. Perhaps wait for the DOJ to do their jobs if you don't have insider knowledge.
In response to -dsr's sarcasm below (rate limit), I've got a bit of my own.
"I've run a profitable business for years and haven't committed fraud during the time I spent in an unregulated environment. Now that regulators are nearing my doorstep, it's the perfect time to start committing fraud." /s
In 2017, when they were busy securing other banking partners due to accounts being shutdown.
I consider this a gap due to growing pains, as did the NYAG. How would you shutdown Tether temporarily (2-3 months) if a bank ends a relationship?
By refusing to take deposits for new Tether, and by shutting down redemptions if necessary while the banking relationship is sorted out.
Tether doesn't exist ex nihilo; it requires active management to issue and redeem coins. If it ever cannot live up to its "fully backed" claim, then continuing to operate under a pretense is fraudulent.
I agree and expect that is the lesson the $18M fine taught them.
The key point is, they had a legitimate reason for under-collateralizing during the biggest bull run in crypto history at that point. 2014-2017 was the perfect period to begin fraudulent activity if they were really interested in it.
I guess the question is, what is the best time to commit fraud in the crypto space, earlier or later (during-post increased regulatory scrutiny)?
When I see that a company founded by criminals has lied, I tend to assume that they will be lying again. I think that is a fairly safe bet.
This was while they did have a banking relationship. What was the exscuse then?
There's no evidence against it.
There's nothing proving that the boogyman doesn't exist either.
There is a lot of circumstantial evidence though. To wit:
* Tether was previously caught lying, in a manner that is attuned to how many big frauds start (you hit a small road bump, so you lie to cover up the road bump, figuring you'll be able to make up the shortfall before too long. But now your lying projections are going faster than your ability to catch up, so what was originally a "small" lie is now a "big" lie). Tether had had the cash, until it was stolen from them, and they started lying to pretend that it wasn't stolen.
* Notably, Tether has yet to provide any audited statement of their claimed finances, in over 4 years. Even the attestations that they have come out with don't actually provide much in the way of reassurance.
* Their claimed asset breakdown, the closest thing any of us have to being able to being able to validate their claims, is presented in the form of 2 pie charts with vague labels, one of which is so bad that no one knows what it's supposed to mean ("reverse repo notes").
* Doing the math in the above point, they claim to be one of the largest consumers of commercial paper. They haven't said whose commercial paper they're buying, and no one has reported transacting with them. Supposedly this is for privacy, but it is the standard in the entire industry to just list all of your holdings for transparency's sake [1].
* Also, Tether has increased its issuance to the tune of several billion dollars a month. That's the kind of extraordinary claim that requires extraordinary evidence to back it up.
[1] Unless you're Bernie Madoff and you're promising awesome financial returns with your secretive trading strategy. Except it also turned out that said strategy was a literal Ponzi scheme. Note that "we're not telling you what we're investing in" is generally one of the red flags for a fraud.
My understanding is funds in a bank account were seized and the account closed. Describing the shortfall that followed, while they tried to recover said funds, as fraud, is a tremendous mischaracterization.
Did somebody at Bloomberg have a BTC short position blowup? They have a long history of publishing FUD to manipulate markets in their favor. I hear people are still looking for the mythical SuperMicro "spy chips"... lol
The group ... didn't do that. They kept the BTC and said "sucks to be you".
They covered up pertinent facts that would seriously question their liquidity and/or solvency.
Let me put it like this: suppose you were selling your house to me for $1 million. If I had $1 million in We Are Criminals Shadow Bank, Ltd., and I've been struggling for weeks to get them to give me any of my money back, how would you feel if I told you that I had $1 million in cash without mentioning any of those details? That's exactly what Tether did.
If you still feel that calling that fraud is a mischaracterization, well, I have a bridge to sell you. I mean, I've been having a bit of trouble with the recorder of deeds over it, but that should get straightened out any day now, so it shouldn't matter, don't worry about it.
I thought Tether & BitFinex were the two partners? Am I wrong?