Post: #51

(12-01-2017 04:03 AM)SamuelBRoberts Wrote:  Shorting knowing an entity has an infinite capacity to spike the price is suicide. Go spend your money on prostitutes and cocaine, you'll at least have some fun before it all disappears.

Just treat it as an additional risk factor to be aware of, and keep an eye on it.

Big thanks!

Unfortunately , my current holdings don't allow for too much in the coke and hookers department.

Post: #52

Very interesting. So, scenario analysis. If this Bitfinex'ed is right, what signals should we look out for?

How might we know when this is about to unravel (if he is in fact right)

Post: #53

The only signal you'll find is the arrest of tether/Bitfinex execs and an exchange shutdown.
I do not expect there to be a lot of warning.

Post: #54

(12-01-2017 12:47 PM)SamuelBRoberts Wrote:  The only signal you'll find is the arrest of tether/Bitfinex execs and an exchange shutdown.
I do not expect there to be a lot of warning.

But how would this affect exchanges without tethers?

All out crash or ????

I think one thing missing from the crypto equation is not a comparison to usd but to third rate currencies in countries where holding usd isn't legal or easy. Even a major correction won't necessarily chang that

Post: #55

I follow CrushCrypto on Twitter (you should too) and they somehow got their hands on the most recent Bitfinex shareholders' letter. It's unconfirmed that it's official but it's worth a read about what Bitfinex has to say about the recent Tether scandal.

I've cut and pasted the part about Tether but the entire document is worth a read.

https://pastebin.com/y6Mfp7FH

Quote:Negative Publicity & Tether
Bitfinex and Tether, a party related to Bitfinex, have been receiving negative press and social media commentary regarding an alleged lack of transparency and completed audits. This attack is persistent and coordinated, and is based on innuendo, lies, and misdirection. We are staying focused on our business, and getting the audits completed, but it is impossible to ignore the constant stream of defamatory and malicious claims. We are taking concrete steps to improve our communications, including more regularly sharing information and insights, but, for the time being, we want to offer our shareholders some comments that may be useful when encountering critics.

Specifically, much of the online discussion concerns the question “how can tether be created at night and on weekends? Tether has no banking — it must be fake!” While it is true that both Bitfinex and Tether have had banking issues in the last six months, we certainly have had access to banking, but for a limited audience. Since April, the vast majority of all Tether issuances have been occurring through Bitfinex.

Because Bitfinex and Tether have common principals and banking, there is no limit to the timing or amount of money that can flow between the two entities even if inbound and outbound customer wires are limited. Bitfinex holds the vast majority of its customer USD balances in the form of USD bank balances. Bitfinex typically only holds less than 20M Tethers for customer withdrawal. When that balance approaches zero, Bitfinex moves money (typically $20M) from the Bitfinex bank account to the Tether bank account at the same bank in order to purchase additional tether from Tether Limited. To be clear, when this happens, cash is credited (or removed) from Bitfinex’s balance sheet and debited (or added) to Tether’s. This can be done electronically, day or night, on weekends and on holidays.

The reason for the continuing creation of Tethers is simple: demand from verified Bitfinex customers. What are customers using it for? Tether recently added the following page to help answer that question. The principal use case for Tether is exchange arbitrage. Bitfinex simply acts as an aggregator of customer demands for bulk creation and acquisition of Tethers. Its balance sheet impact is completely neutral as to Bitfinex—as to Tether, every issuance of Tethers (a credit to its liabilities) is matched by a corresponding debit, or addition, to its assets, as described above—and has nothing to do with the USD lending market. Also, all of the Tether flows and balances are very transparent, which clearly corroborates the truth. Given Tether’s public and verifiable nature, fraud would be easy to detect if it were to occur.

I finally got my Coinbase/GDAX unlocked after nearly 3 months. I had to get an attorney involved but it was worth the cost to be able to trade in actual USD. I'm still not sure what I think about the Tether situation and whether or not it's safe to trade with it.

Something that I've noticed is that Tether is becoming more and more a base currency for the alt-coin market. With BTC skyrocketing, I have found it's a very bad idea to purchase alts with BTC as it will usually net you a negative return in Bitcoin but a positive return in USDT.

For now I'm out of all alts and only trading ETH, LTC, BTC which are available on GDAX. The only exception is Dash which from now on I will only trade with USDT.

Post: #56

What would it actually take for this to cause a crash? And when?

So far $750M USDT has been printed since the start of this month. This is insane. When this house of cards comes crashing down it'll make the dip last week look like child's play.

Post: #57

I don't know, I'm glad people are suspicious but I'm still not sure. I have some questions.

Can that 750m USDT really come out of Bitfinex's cash reserve as they say or are they really printing money?

Didn't Roosh point out that Bitfinexed was some bitter no coiner?

Firstly, how many people are trading Tether for US dollars? If it's only a small amount of people, can tether/bitfinex cover it?

Is this the only problem or is paying customers back their bitcoin also problem? I was under the impression that most tether is traded for other cryptos.

How much money does a bank keep in reserve to pay out it's customers? 10%?

So how much money does Tether/Bitfinex have to pay out it's customers? 10%?

Isn't that a problem with all exchanges converting USD to cryptocurrencies? They might not have enough money to pay out cash if everybody tried to withdraw at the same time? They probably don't, but neither would any bank if everyone tried to withdraw cash from them at the same time.

Are people just asking questions or have there been a large amount of people having problems withdrawing cash with Bitfinex and Tether?

Post: #58

(01-22-2018 11:03 AM)RedPillUK Wrote:  -snip-

Addressing your core questions:

The argument is that the are printing money - that they don't have nearly as much USD as there is Tether.

Whether he's a bitter nocoiner or not is irrelevant.

If your Tether isn't actually backed by a USD then you might as well be trading for a Deez Nut.

If there's a run on Banks, they'll probably run out of money, sure. That doesn't change the fact that Tether claims to have an actual USD for every issued Tether.

Post: #59

Actually whether he's a bitter nocoiner is relevant, because if he is that means that he wants cryptocurrencies to fail, so of course he would be spreading this.

I understand that is the argument, and I was asking whether there was any proof Tether don't have this money. They're recieving BTC or dollars for their Tether, so they should have at least 10% of the money they say they do, especially if they're cashing out that BTC they recieved a long time ago that will be more valuable now.

I'm just comparing the two, if theres a run on banks they'll probably run out of money, if there's a run on tether, they will also probably run out of money. Does the bank actually have all the money it says? If you compare the two and come to the conclusion that both have basically the same drawbacks, what difference does it make? You're fucked either way if something bad happens.

Post: #60

What circumstances would cause a run on tether?

Post: #61

(01-23-2018 01:08 PM)RedPillUK Wrote:  Actually whether he's a bitter nocoiner is relevant, because if he is that means that he wants cryptocurrencies to fail, so of course he would be spreading this.

I understand that is the argument, and I was asking whether there was any proof Tether don't have this money. They're recieving BTC or dollars for their Tether, so they should have at least 10% of the money they say they do, especially if they're cashing out that BTC they recieved a long time ago that will be more valuable now.

I'm just comparing the two, if theres a run on banks they'll probably run out of money, if there's a run on tether, they will also probably run out of money. Does the bank actually have all the money it says? If you compare the two and come to the conclusion that both have basically the same drawbacks, what difference does it make? You're fucked either way if something bad happens.

Calling him a bitter nocoiner is just an ad hominen attack, and the burden of proof of there being actual USD for each Tether is up to Bitfinex themselves, as you can't prove a negative.

Post: #62

If they fail to prove this, what happens?

If Tether/Bitfinex is shut down and the execs are arrested, then we have a problem.

Anything except that is just hot air.

Post: #63

Bitfinexed makes a lot of different claims, and some of them are potentially valid, and some of them aren't. That spoofing claims he makes are ridiculous, of course.
He also has a nasty habit of changing his stories lately. (For instance, he was claiming that tether is now backed by money earned by shorting bitcoin, a change from his claim that tether is backed by nothing at all.)

Post: #64

Some more things to think about with regards to Tether:

Post: #65

Tether is pegged to the USD. Holding tether is like holding USD. It can't "moon" since that will defeat it's purpose

The only use is to buy tether before a dip since it has shown to be resilient.

Post: #66

(01-23-2018 10:10 PM)RedPillUK Wrote:  

Assuming it's not a troll post, this is some CNBC-level idiocy right here.

Post: #67

Nah Tether's going to moon bro. Come back to my post in a year after the 20x gains.

Post: #68

There is a news report that the US Commodity Futures Trading Commission sent a subpoena to Bitfinex and Tether.

Quote:UPDATE (30th January 2:11 p.m. EST): Bloomberg has updated its report, stating that the subpoenas were sent on Dec. 6, not last week.

Cryptocurrency exchange Bitfinex and Tether, the company behind the controversial USDT token, have been subpoenaed by the U.S. Commodity Futures Trading Commission, according to a new report from Bloomberg.

Citing an unnamed source, Bloomberg said that the CFTC had sent queries to both companies. The news comes days after CoinDesk reported that Tether's relationship with auditing firm Friedman LLC had "dissolved," though it still remains unclear which party moved to curtail the work. Friedman had been working on an audit with Tether, which is closely linked to the British Virgin Islands-based Bitfinex.

"We routinely receive legal process from law enforcement agents and regulators conducting investigations. It is our policy not to comment on any such requests," the companies said in a statement to Bloomberg. A representative declined further comment when reached.

The news is likely to further inflame the controversy around Tether's USDT token, which functions as a kind of synthetic dollar. Critics have argued that the token isn't backed on a 1-to-1 ratio with the U.S. dollar as otherwise claimed and that the tokens generated by Tether in recent weeks have been used to boost the price of bitcoin, particularly during times of market weakness.

The report also sparked a rout in the price of bitcoin, sending it below $10,000 as word emerged about the CFTC subpoenas. At press time, the price of bitcoin is trading at $9,957.88.

It's not clear as to what specific information was requested but it looks like if there is something wrong, it could blow up soon.

I saw a series of tweets from Charlie Lee (Litecoin creator) indicating that the subpoena had been issued on December 6th and that if there was anything wrong, it is unlikely that they would have continued to issue USDT tokens after the subpoena date which they have continued to do.

Charlie then stated that if it is true that the Tether is not backed 1 to 1 with USD, then USDT will go to zero and that although it would have a temporary affect on the price that eventually it would not matter, or something along those lines. Basically, he recommends to just hold your coins but not USDT or any other Tether currency pair.

One thing that I have noticed today is that the USDT exchanges (i.e. Bitfinex, Binance, Polo) are all trading at a higher rate than the actual fiat exchanges (Gemini and GDAX). It is almost always the case that the price of BTC is cheaper in USDT than it is in actual USD. This would lead me to assume that people are cashing out of the USDT exchanges and selling back to USD on the fiat exchanges.

I think that in the next couple of days we should see some more information.

I have absolutely no Tether at the moment and it would be advisable that you cash out to BTC or an alt at the very least. That way, if Tether does go to zero, you can at least have something rather than a worthless shitcoin.

Post: #69

Again suprised this thread isn't getting more action. This Tether situation is getting a lot more attention and it doesn't look good.

New York Times is now mentioning the Tether situation which means that it's now an issue that will be dealt with shortly.

The single question that needs to be answered is "Is Tether backed 1 to 1 with USD or not?" If not, this will be a significant revelation as Tether is an extremely important tool in the entire crypto trading space.

Quote:Again suprised this thread isn't getting more action. This Tether situation is getting a lot more attention and it doesn't look good.

New York Times is now mentioning the Tether situation which means that it's now an issue that will be dealt with shortly.

The single question that needs to be answered is "Is Tether backed 1 to 1 with USD or not?" If not, this will be a significant revelation as Tether is an extremely important tool in the entire crypto trading space.

If it is found that the recent growth was completely manufactured via price manipulation, you will definitely see a rush on the banks type of situation.

Quote:It is not yet clear what information the regulators are seeking. Technically, the Tether tokens are issued by a separate company (called Tether) that is owned and operated by the same people who run Bitfinex. The C.F.T.C. subpoenaed that company at the same time that it subpoenaed Bitfinex, according to a person familiar with the matter.

Although it's not exactly clear as to the information that was requested, if it cannot be proved that they can answer yes to the question "is each USDT token backed by 1 USD" they are done. This makes any inquiry very simple and luckily it cannot be evaded.

Quote:Bitfinex had contracted with an American firm, Friedman, to audit its records and prove that its operation of Tether is above board. But last week, Bitfinex said it was cutting ties with Friedman, after waiting months for it to finish the audit. That news generated more suspicion.

I highly doubt that Bitfinex cut ties because the auditing firm took too long. This entire thing could take 1 day. Friedman probably wasn't being given access to the records and data it needed to to their job. I honestly believe that Bitfinex/Tether was just stalling the entire process in order to get their ducks in a row to keep the cash cow going longer and to devise some sort of exit strategy.

Quote:Tether offered a preliminary report last year from Friedman, the accounting firm, suggesting that it had bank accounts with dollars corresponding to all the Tether that had been issued. But the report was far from conclusive and Tether has never produced a real audit, leading to suspicions that Bitfinex may be printing virtual money backed by nothing.

Again, there is absolutely no reason for an audit like this to take so long.

Quote:Bitfinex has not commented on the subpoena or recent reports about Tether, and company officials did not respond to repeated requests for comment. In the past, the exchange’s executives and spokesman have said that its customers are simply using Tether to buy virtual currencies as they might otherwise use United States dollars.

They are not defending themselves.

Could Tether actually be backed on a 1 to 1 basis? Absolutely. Would I want to bet my money on it? Nope.

I took all of my holding out of Bitfinex. I'm also going to get all my holdings out of the Tether based exchanges as well (Binance, Poloniex, Bittrex).

I suspect that the people who are on the inside that have large short positions on the CME exchanges (fiat not tether) could use their influence to hold off on any significant legal action (i.e. arrests) until just before the next expiration date of the BTC futures contracts.

Post: #70

Bitfinex sued WellsFargo for cutting them off but dismissed the case 2 days later.

Why?

Post: #71

Here is the link to the NYT article.

https://www.nytimes.com/2018/01/31/techn...price.html

Post: #72

@blancpain.

Can't say. Only thing I know is that Bitfinex and Tether are not even defending themselves at this point. They made no comment or reply to the New York Times. This is a situation that is an "either-or" type of issue. You have or you don't. I'd bet my money that they don't. The article was released about 15 hours ago and the price of BTC has coincide with the sell-off we've seen today.

They dismissed the case likely because they don't have a case. Wells Fargo would be compelled to cut them off if there was anything shady going on. The banks could be held liable if they didn't engage in proper due diligence.

Post: #73

CNBC praise Tether for not losing value during the drop. Don't believe the FUD, it's going to the moon!

https://www.cnbc.com/2018/01/16/cryptocu...-rest.html

Post: #74

So this thing is about to pop? That will be my buy signal.

Post: #75

Tether allows you to easily trade without calculating the radical movements of BTC/ETH against the currency you’re buying/selling.

During high up/down volatility (which is when I like trading) I was willing to eat the fees of trading into tether first to avoid losing all my profit to a simultaneous movement in an alt pairing (BTC or ETH).

Or as was as often the case, I kept my money in tether for days, weeks, months, without switching completely back to fiat. I set buys/sells in tether. Why? Setting those orders in BTC/ETH pairs screwed me time and again when they moved hard in either direction against the dollar.

This is what the fight is really about. Lots of money being locked up in tether is equally bad for other cryptos and fiat. So it’s getting hammered from hardliners on both sides.

The solution is obvious. Allow unlimited tether trading and zero tether withdrawal. It’s a “fiat crypto” used for transactional convienience (if that makes sense).