Edit: Just the daily trading volume of, say, the forex market, completely dwarfs both the total market cap of tether or the daily volume of Binance. The total value of global equity trading worldwide is also insanely bigger than these two combined.
It should/could/is. However, there are two things you need to understand:
1. Crypto is mostly a young people game. Who happens to be quite broke. The people who have money where I'm from, are not comfortable with crypto. They'd rather deal cash, real estate, gold or valuable objects.
2. You can't launder money with crypto. You can only launder money with something that has an off-ramp. For now, crypto acceptance is very limited. The number of places, stores and businesses that accept crypto is quite minuscule that you almost always need an off-ramp into the traditional financial system. And that's where the laundering will happen, and is happening.
Even if we assume 100% of Binance and Tether are money laundering - it would be a fraction of the traditional money laundering industry already
From the AG statement:
>Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie…
>…for periods of time held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations.
>In reality, however, the cash ostensibly backing tethers had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’
>… the very next day, on November 2, 2018, Tether began to transfer funds out of its account, ultimately moving hundreds of millions of dollars from Tether’s bank accounts to Bitfinex’s accounts. And so, as of November 2, 2018 — one day after their latest ‘verification’ — tethers were again no longer backed one-to-one
The AG’s statement was pretty clear in going much further than “strongly implying” there are actual serious problems with Tether’s backing claims.
https://ag.ny.gov/press-release/2021/attorney-general-james-...
I guess US regulators will know if Tether is really holding half its reserves in Treasuries (around $30bn). Of course that's not a 1:1 but it's also not 0.
I don't regard Tether's market cap as evidence in either direction for it's level of backing. And I'm not sure US regulators have a straightforward mechanism that would allow them to determine the amount for treasury notes held by Tether. TRACE may be mandatory for member OTC traders, but not necessarily automatic. Also TRACE data is available & even free for non-commercial use so if there was a clear way to use treasuries transaction data to determine ownership like that then I'm sure plenty of curious folks would have already verified exactly how much in treasuries are held by Tether.
Right now all people have is the assurance reports from BDO Italia which is a small & independent accounting firm. It's a member of the BDO network, and all of their websites seem to go on at some length about how none of them have any control over or liability for what others in the network might do. Out of any list of the largest accounting firms, the top 10, minus BDO, all seem to have much more control and formal structure regarding their network offices than BDO. Even were that not the case, one or another of these accounting firms pop up in the news on a fairly regular basis for bribery, money laundering, assistance in dodging sanctions, and so on.
And of course BDO Italia may be acting very professionally, collecting their fees and honestly looking at Tether accounts once a month to make sure everything is fine. Meanwhile Tether is using the same trick of transferring funds in & out, and may continue to do so up until the music stops and one day the BDO Italia rep shows up and has to write up a bad report. Or just gets fired before that can happen, or for being a little more curious because "We pay you to confirm the numbers you see right now, we don't pay you to confirm or think about any other numbers".
I just am constantly astonished at how a large number of crypto enthusiasts, cynical & distrusting of traditional finance, will essentially take Tether's word for it while if we were talking about Goldman Sachs and the BDO USA it would likely be torches & pitchforks.
An interesting way to phrase it but do you have any sources to back your claim?
I know that Binance is being investigated for money laundering and sanctions violations. But this could just be a consequence of corporate greed and operating in unregulated markets (not some conspiracy against west).
You have the choice between a free, transparent, technically stable, instant payment system (< 10 seconds until 100'000 EUR), using a stable currency.
or
an unregulated system where unknown people create and control the currency, that is generally slow, often with high payment or exchange fees and where you need to trust a lot of unknown parties (software, tools, network, coins, etc), where you can lose your key, that is falsely transparent (you see transactions, but you don't know who control the network).
Mhhh...
Because of that, as part of the "West", I hardly see any benefit of crypto, unless you are in some other camp (aka: "anti-West").
This is what I meant.
That part of "West" you are referring to also had ultra low or even negative interest rates, thus eroding the buying power of Euros and other peripheral currencies. No wonder European countries also account for some of the highest numbers of bitcoin nodes (per capita).
It is not transparent as to how much currency debasement is taking place, nor does anybody outside a small group at the ECB have any control over it.
It is quite clear who owns decentralized networks - the participants. Are they perfectly equal? No but they are more egalitarian than what they seek to replace.
Decentralized networks are more resilient to outages than the electrical supply of some countries. It may not make sense for you to use but millions around the world have found a use for it.
Also noteworthy, cash payments are limited to 10,000 Euros (1000 Euro in Spain)
By the way, currency debasement is not an economic term. The only people who use it are conspiracy theorists and crackpots, as far as I know.
Fed’s Powell begging people to quit their jobs atm. So, it this the public mandate you are talking about?
Out of curiosity, where did you read this?
Proof of stake blockchains operate on the basis of more dollars = more votes, for this to be true for proof of work blockchains one would first need to spend that capital for mining equipment.
It is very egalitarian since everyone can participate on an equal footing, everyone can run a node and get a complete copy of all transactions and verify correctness. It is challenging and expensive to get the same kind of insight into the stock market.
The European Central Bank has arguably failed its mandate of keeping price stability within the eurozone when some countries have more than 20% inflation.
Currency debasement is more commonly known related to coins but I'll leave the term as is
I have friends that can pay rent but don’t have much left over. There are people in my city that live hand to mouth. I know plenty of people who are well off enough, but aren’t ever going to (or have the technical inclination, or sore cash to) run a node.
> get a complete copy of all transactions and verify correctness
I’m sure this is a real benefit for all the single parents struggling to feed and cloth their kid.
The reality is, most people don’t have the resources (time, technical or monetary) to participate in “egalitarian” crypto currencies. Moreover, even if they all did, it still wouldn’t be egalitarian, because they’d still be out-purchased by those with capital. So we’re back to where we started, except with more e-waste, energy bills and more exaggerated hyper-capitalism.
One doesn't need to run a node to use the system but it is accessible to everyone, just as the code is there to be scrutinized publicly.
The entire point was to reform currency where economic policy is more predictable and the currency less susceptible to kleptocracy.
Interestingly enough the inflation rate of both Bitcoin and Ethereum is now lower than that of major world currencies. So while volatility still needs to trend lower for day to day usage, the case for a store of value has already been established in the past decade and anyone can see the price history and number of wallets increasing exponentially.
I'm curious how you think people "make money" on crypto. Wouldn't those people getting rich be doing it at the expense of people losing money investing in crypto?
Of course everyone cashing out at the same time would be akin to a bank-run. In practice this doesn't happen since people bought in at different times and have a different cost basis.
If I bought 10k of ethereum at one point in time and sold if for 100k, I put 10k into a pot which I took 100k out of.
Basic math tells me there won't be a "rising tide" for the boats that are left when anyone else pulls out.
I do not see how crypto is not a zero sum game, actually its a negative sum game if we deduct the mining costs, lost coins and the exchanges fees. Wasnt this supposed to work without whaleish, centralised exchanges?
Just to clarify - this really depends on which chains you are talking about. Some proof of stake chains implement direct on chain governance, in which stake does directly translate into explicit voting power to implement policy changes. Polkadot in particular does this. But Ethereum, does not have anything resembling on-chain governance. Ethereum validators have no more say in what makes for valid ethereum blocks then what proof of work miners had to say. The folks that really matter is everyone running non-validating nodes and the people who choose to interact with those nodes for their transactions or inspecting the chain history.
It's not that simple. They could rise interest rates more but Italy and Greece would probably default on its debt, which would make euro a lot more unstable than keeping 20% inflation rate in three very small eastern european countries which corresponds to 3.6% of the whole EU population. Current inflation in euro zone is ~10%.
Errr, no. One dollar one vote is not equal footing. If you have more dollars you can buy more votes. That's the opposite of egalitarian.
Yeah, Bitcoin has really held up great in value in comparison to euros or dollar… it’s only down 70 % on top of those currencies‘ inflation.
It is still one of the best performing assets in history
Even putting that aside, it’s not equal footing because the wealthy people who are wealthy based on the traditional economy make crypto a defacto plutocracy because they can afford to buy their way into it one way or another.
Transparent you say? Could you point me to the SEPA explorer where I can inspect every single transaction and account balance please? Here is the one for ethereum https://etherscan.io/ and for bitcoin https://blockchair.com/bitcoin/transactions
Ethereum and Bitcoin are transparent on transactions but intransparent on beneficial owner. Who is Satoshi?
Transparency plays both ways, and be sure that every address can be deanonimized
Seems people everywhere are largely the same.
Checkout via Paypal or debit/credit cards is much more straightforward and user-friendly, which is why they are still widely used (along with local services like Swish). A crypto wallet app that just requires scanning a QR code is even better, and miles ahead of anything SEPA/PSD2 offers in terms of user experience.
If it’s so great, why is nobody using it?
If people are so easily fooled into MITM attacks, why do they not happen?
Have you used Apple Pay? Works quite well.
> If it’s so great, why is nobody using it?
Where I live people pay by scanning QR codes all the time.
> If people are so easily fooled into MITM attacks, why do they not happen?
They do! People are getting scammed on these systems all the time; usually the provider agrees to repay the funds to keep them quiet.
Its quite lovely on invoices i must say.
Whats probably not there is that not every EU country uses this but that is matter of time. The banks are international, popular features spread. It will probably become standard very soon.
Strange to call Tether and Binance, "weapons aimed at the West", when their implosion would surely do more to damage cryptocurrencies than global US Dollar hegemony.
Of course one would be smart to use other platforms rather than creating single points of failure....
Crypto never threatened the dollar. What is creating issues is crypto’s risks causing losses to Americans and, possibly, the American financial system.
Quantitative easing directly lead to inflated asset prices and inflation.
Then VCs jumped on the bandwagon and pushed FTX to unsustainable heights.
Now people all over the world are suddenly supposed to sit in cash while everything is crashing with high inflation to boot?
Isn't Tether based in Hong Kong?
The US recently during the Covid shutdowns rapidly spent and extra $trillion, then did it again 3 more times roughly a year. This is essentially done via minting fiat money.
The US also has too many strategic interests in Europe to allow an economic attack there either, although all of crypto is still too small to bother the EU to any high degree in terms of an economic attack.
Finally, Binance may be filled with criminal gains but criminals frown on people taking their money so if anything Binance, to the extent it’s resources have criminal origins, is constrained in deploying them beyond a certain point to defend their business.
No, Binance is far from immune to collapse, it’s just that if they start down that pathway then the criminals will be pretty insistent on being first in line to get their money out.
And I doubt the North Korean or Russian governments are using Binance.
North Korea has amassed a veritable crypto fortune, hundreds of millions worth, that they're using to finance their illicit nuclear weapons programs. They don't need to use binance, but binance continued existence props up the value of the crypto space and their holdings allowing their games to continue.
[edit] To be clear I'm not saying that NK or any other state actor is propping up binance or Tether (I just don't know) however it's pretty clear IMO that they benefit from its continued existence.
Thank Satoshi for true net neutrality.
If it helps exert pressure then financial sanctions are strictly better than kinetic war. The ability to end around those sanctions can lead to significantly more death and suffering - both there and potentially elsewhere. It's not about fairness it's about minimizing harm. If you disagree, vote.
> Thank Satoshi for true net neutrality.
No thanks man. Seems like an interesting cult y'all have there.
[edit] Nobody has the right to trade. If you want to not conform to social norms and pose a risk, fine - but you don't have a fundamental right to exchange with foreign powers whom you detest. If you want to go down that path you better be prepared to be self-sufficient.
Then again fanatical users speaks to good product design somewhere
Or to a conflict of interest. Unlike consumer products, crypto usually ends up being worth more if more people are using it. Most crypto proponents hold some crypto and have a financial incentive to get more people into it.
Metcalfe's law applies here as the utility of the network rises with the number of participants.
Speaking objectively here: obviously yes.
There is no government on earth that does not function without at least tacit consent of those governed. That consent may be obtained in all sorts of manners (many coercive or brutal) but fundamentally that matters very little from the perspective of an external nation.
The entire point of cutting a nation out of the financial system is to generate internal pain among the population that removes consent for their government that is currently committing atrocities.
If they want back in... the options are clear and simple: Choose a new government (through any of several means - up to and including rebellion or civil war). Stop the actions of your current government.
One thing I've noticed visiting Russia (multiple times) is how politically indifferent the average Russian is. (Or more precisely the average big city Russian). There's this idea everywhere that, you know politics is really complicated and you don't really understand it, so let the people in charge make decisions.
So yes, Russian people have exactly the government they want.
That's the whole point...
You seem to be implying a value judgement I'm not making. I'm not making some random condemnation of Russia/Iran/Whoever, or extolling the virtues of western countries - I'm telling you the point of sanctioning those countries is that it's a path towards adjusting behavior by removing consent of those governed.
If the Russian/Iranian/Whoever people are happy, content, well-fed, and have easy access to luxury items... what the hell is their incentive to change how their government is acting on the international stage?
The sanctions serve to show those people providing consent that the rest of the group of nations they are interacting with are not happy.
It's a feedback mechanism that is not: "hey - we're going to kill you now". Which Western nations are using 1) because it's less expensive in terms of both capital and bodies. 2) because it's arguably more humane. 3) Because nuclear weapons have made countries averse to full war.
There's no value judgement about whether the sanctions are good or bad, or some prescriptive judgement that the west is better. It's just the clear intent of the sanctions is to make life harder for the citizenry without having to kill them.
Whether the countries making the sanctions are moral or not (in my opinion, your opinion, or that of anyone else) has fuck all to do with the functional manner in which they are being used.
Sanctions are a tool, whether that tool is being used justly has zero relation to how the tool itself functions.
It's essentially a signaling mechanism - how strong that signal is received can vary a lot.
In the case of Russia at least - it's dampened quite a bit because both India and China are not participating. While they're not outright supporting Russia - they don't find the current government so unpalatable that they're willing to break off economic activities (and again - this is not a value judgement either way... simply a statement of efficacy).
In my opinion - I don't really think sanctions are going to be terribly effective (I also think the price cap on oil purchases will not be effective), but people don't seem to grasp that a very real possible alternative is outright war. Which, at least personally, I'd like to avoid. So I'm willing to let sanctions ride for a bit and see. But I'm also in favor of providing more arms and weapons systems to Ukraine in the meantime.
that said... I also have a bunch of duct-tape, plastic sheeting, water, and some iodine pills in my basement - because while I tend to hope that all the nuclear powers involved here will act with some restraint, those items will be very difficult to acquire in the 15 minutes when I might really need them, and they're relatively cheap to buy right now. So picking between that and sanctions... again - I vote for sanctions right now.
Speaking as an American, I'd say "yes". At least for the citizens who were adults at the time and were aware.
I'm suspicious of any moral framework that's hand-tuned to paint some persons as upright.
I think we just shy away from the fact that we are in fact culpable, so we look for rationalizations.
Very much so, but as far as I can tell nobody cares enough. Just to give an example: in my city Ukrainian asylum seekers get free public transportation, whereas those who escaped war in Africa ans went through the Libyan lagers we help finance don't. And don't get me wrong I would really like to see everybody get treated like a human, I'm not advocating for any mistreatment of Ukrainians...
... Yes. Just like how the former are currently being conscripted to fight their relatives in a stupid war, started by their government.
Life isn't fair, and people generally suffer when they allow bad governance to ruin their country. Ultimately, any government, even a repressive one can only function when the people it governs believe it to be legitimate. I hear that this sort of thing is being protested in Iran[1] these days.
[1] The thing they are protesting has little to do with the cause of the sanctions, though, but that's another story.
Hundreds of millions isn't a fortune for a state. Certainly financing a credible nuclear program costs way more than that every year. Let alone everything else a state needs to finance.
(Not buying the theory though; if Binance does have access to unlimited funds they're not doing a great job of propping their coin up)
That being said, Tether USDT is priced (and supposedly backed) in USD. Is the USA part of the West?
Agreed on the regulation front though, that may well - and should - happen.