9 ms·

Bitfinex never ‘repaid’ their tokens, they started a ponzi scheme

209 points by mbgaxyz 9y ago

ISL 9y ago
Cache: https://webcache.googleusercontent.com/search?q=cache:Hpndb2l0FX8J:https://medium.com/%40bitfinexed/bitfinex-never-repaid-their-tokens-bitfinex-started-a-ponzi-scheme-86a9291add29+&cd=1&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:Hpndb2...
raverbashing 9y ago
LOL Even better than a Ponzi Scheme, let's just sell "shares" of this "company" (which by the way has a paper value of a very round and big ZERO) for cash Toilet paper provides better value Oh wait, he "buys low and sells high", that explains it.
- keypusher 9y ago
  Bitfinex is the largest BTC exchange in the world, over $500 million per day in volume today. Big days are multi-billion dollar volume. Like most exchanges, they take a percentage cut of every transaction. This is not a company with zero value. The "buy low sell high" arbitrage thing is from a previous, unrelated business idea posted 5 years ago to a btc forum by the founder of bitfinex. As far as I know, it never went anywhere.
  - martinko 9y ago
    Funny that comments that defend BFX, even on objective grounds, are immediately downvoted. Brigading is strong with this one.
- bearjaws 9y ago
  Are you 15? Shares in a company entitle you to a piece of that company, they can profit share with dividends, enable you the right to vote in corporate matters. If the company were to go bankrupt you also get money from the liquidation. What does your ICO give you?
  - ceejayoz 9y ago
    There has to be profit to give dividends, there's such a thing as non-voting shares, and bankruptcy liquidations tend to pay out nothing to shareholders.
  - raverbashing 9y ago
    > they can profit share with dividends Can, but not all of them do it > enable you the right to vote in corporate matters Can, but not all shares allow you to do that > If the company were to go bankrupt you also get money from the liquidation. https://i.imgur.com/seh6p.gif https://i.imgur.com/seh6p.gif > What does your ICO give you? Where did I mention ICO?
thisisit 9y ago
> As Bitfinex has become more and more desperate, they have listed more and more crypto-currencies of questionable value, such as EOS/IOTA/ETP and so on. As per coinmarketcap.com: EOS is ranked 19, 442 million in marketcap IOTA is ranked 11, 950 million in marketcap ETP is ranked 70, 73 million in marketcap Anyone can throw some light on what these coins really are? Additionally, BTC markets: https://coinmarketcap.com/currencies/bitcoin/#markets https://coinmarketcap.com/currencies/bitcoin/#markets shows Bitfinex raking in over 15% of the current market volume. I wonder what will happen to the price if they go under. While I agree to most of the article, specially the Tethers part, Debt to Equity swap is a real thing and not a Ponzi scheme: http://www.investopedia.com/terms/d/debtequityswap.asp http://www.investopedia.com/terms/d/debtequityswap.asp Though whether the equity shares are worth as much as Bitfinex is claiming them to be is an another question.
- raverbashing 9y ago
  > Debt to Equity swap is a real thing and not a Ponzi scheme Is it when your equity's value does not match the face value If you disagree I'll sell you 1% of equity in my lemonade stand for $1000
  - thisisit 9y ago
    Hence, the caveat: > Though whether the equity shares are worth as much as Bitfinex is claiming them to be is an another question. I am not sure but they might be restricting the IOUs or shares to trade on their platform. So they are raking in commissions on the shares being traded. In which case it is surely a scam. But to be pedantic it is not a Ponzi scheme.
    - mannykannot 9y ago
      As the author has made a strong argument that the equity shares are in fact worthless, the caveat is not much of one. To be precise, it is not the debt-to-equity swap that the author is comparing to a Ponzi scheme, but the part where it is suggested they get their money back by selling on to a second round of 'investors' - but pedantic arguments over what to call it can only distract from the central issue of fraud.
csomar 9y ago
While I'd enjoy a good detective journalism, this article is just making claims out of thin air. And here is one: > However, this doesn’t stop Bitfinex from tripping over their shoelaces to immediately list a fork which doesn’t exist, in order to make money off of suckers. That is not correct. Bitfinex didn't list Bitcoin Gold. They listed a future contract of Bitcoin Gold (though the naming "token" is a bit confusing). You can create a future contract about anything, like the weather or soccer. > Prior to publishing this post I was informed that Tethers are on the rise. Today, at the time of this post there has been another 25,000,000 USDT printed. First, a new creation of Tether doesn't result in a pump. That would be too obvious for traders to arb the effect. Second, Tether is not used by Bitfinex heavily. Tether biggest clients are Polonix and Bittrex. And there is blockchain proof for that: https://wallet.tether.to/richlist https://wallet.tether.to/richlist
- deleted 9y ago
  [deleted]
- al_chemist 9y ago
  > Tether is not used by Bitfinex heavily Tether is issued by Bitfinex-related company. There is no reason for USA to stockpile US dollars if they can print it. China would be the biggest client of US dollar and first place at dollar richlist.
- banderman 9y ago
  Who owns Poloniex and Bittrex? How are they licensed? Do they segregate customer funds from operating funds?
- einarvollset 9y ago
  >First, a new creation of Tether doesn't result in a pump. That would be too obvious for traders to arb the effect. Orly? -> https://www.dropbox.com/sh/lylx2da2vobps8h/AAAN0q62s1X_Wl0H-j3W7KGDa?dl=0 https://www.dropbox.com/sh/lylx2da2vobps8h/AAAN0q62s1X_Wl0H-...
  - mbgaxyz 9y ago
    There is interesting linear regression analysis in the folder above, between issuance of Tethers and the price of Bitcoin.
martinko 9y ago
Lots of bullshit. Just a few points: A) Iota is a legit currency trying to do something new in the crypto space. B) The listing Bitcoin gold did not 'create' 2 bn usd - if you tried to liquidate even a fraction of that, you would drive the price to 0. There was significant demand from trader and speculators for its listing (not that I agree with it, but anyway). C) Saying that a company that generates 30 mil. usd in revenues each month is worthless is really laughable. D) This author has had a bone to pick with bitfinex for a long time. I consider him a shill with an agenda, and it is surprising that he is given so much space (even on HN) to spew his BS. edit: formatting
- the_stc 9y ago
  IOTA made their own crypto, then when got called on it they denied it mattered at first. Then they backed down and said it was intentional! So that they could destroy anyone else using their open source code. When pressed to promise that they had not left more backdoors in, they refused. Of course they had to refuse, these were accidental bugs rolling their own stuff. That looks totally incompetent to me. Then mention centralized coordinator and they throw fits. Refuse to discuss it because it is only temporary. But judge for yourselves. Look at this nice comment by Vitalik Buterin (Ethereum) and the childish retorts from the IOTA people: https://www.reddit.com/r/CryptoCurrency/comments/72l7kp/why_i_find_iota_deeply_alarming_eth_core_dev/dnk2zdy/ https://www.reddit.com/r/CryptoCurrency/comments/72l7kp/why_...
  - martinko 9y ago
    Fair enough, the currency has questionable potential. However, the article seems to imply that bfx lists some questionable currencies, and I feel that that characterization is misleading.
dnautics 9y ago
Maybe I misunderstood this, but basically you got 1 bfx token for each dollar that was stolen due to the hack. As people sold bfx tokens at lower prices than $1, (in part, because the us announced this was not ok, in part due to varying confidence in bfx ability to repay,) bitfinex could rebuy some of those tokens at a discount, and clear them to itself at a fraction of the cost There were also occasionally rolling rebuys of bfx tokens at the face value of $1.
salemoz 9y ago
Bitfinex has a big pie chunk of bitcoin trading volume https://www.coingecko.com/en/coins/bitcoin/trading_exchanges https://www.coingecko.com/en/coins/bitcoin/trading_exchanges Not going to afford another mtgox are we?
thisisit 9y ago
Reading this article made me wonder - how much of the bitcoin rally is due to counterparty risks? If I remember correctly the last ramp up happened during Mt. Gox era. They were having USD withdrawal issues which resulted in BTC prices being very high on the exchange. But it din't deter them from publishing prices and making markets. Now is the case of Bitfinex suffered from a hack like Mt. Gox and are trying to stay afloat. As per coinmarketcap, has nearly 15% of bitcoin volume which is pretty high to ensure market follows in-step to their market making. A quick search on Google turns up pages of people asking about Bitfinex withdrawals. For people who are curious about this, there was an article yesterday about Zimbabwean Bitcoin soaring to 12k USD, which obviously hinges a lot on counterparty risks and resulting low liquidity: https://news.ycombinator.com/item?id=15627608 https://news.ycombinator.com/item?id=15627608
- cm2187 9y ago
  I am not sure I follow. Counterparty risk should push the price down, not up. This thing is not worth as much because there is a significant risk your investment may go away because of a bug or a mistake.
  - nosuchthing 9y ago
    That assumes there's an immediate withdraw method on the exchange with higher rates. MTGox abused the latency of withdraws in an attempt to attract BTC desposits (after their original deposits were stolen) on their exchange and presumably sell those back for cash via other outlets to slowly pay off customers and appear solvent. MTGox also manipulated the market with trader bots. https://willyreport.wordpress.com/2014/05/25/the-willy-report-proof-of-massive-fraudulent-trading-activity-at-mt-gox-and-how-it-has-affected-the-price-of-bitcoin/ https://willyreport.wordpress.com/2014/05/25/the-willy-repor... https://www.theguardian.com/technology/2014/may/29/bitcoin-bots-bought-millions-in-the-last-days-of-mt-gox https://www.theguardian.com/technology/2014/may/29/bitcoin-b...
  - thisisit 9y ago
    It is in exchanges favor to offer increased prices so as to shore up their balances using BTC commissions earned per trade. This inversely leads to them serving an increased percentage of daily trades. Add to the fact that, increased risks means people want more out of their BTC. So, if x is a fair price in other exchange, they want x + y% for the same BTC on exchange with issues. Some of these people become aware of withdrawal issues later or buy some other crypto currency, move to another exchange to cash out.
Geee 9y ago
Every exchange has their own "virtual dollars", i.e. the user deposits. How do you know they are real? Tether is just a way to securely transfer user deposits between exchanges, and it's not more or less trustworthy.
- nosuchthing 9y ago
  If the alligation is true that the supply of Tethers is created from nothing, they would have the ability to trade their millions of "dollars" for other cryptocurrencies, taking control of the supply of other blockchains.
  - Geee 9y ago
    Every exchange can fake their user deposits in the same way. Tether doesn't change that. We have to trust their audits.
themanual 9y ago
> As Bitfinex has become more and more desperate, they have listed more and more crypto-currencies of questionable value, such as EOS/IOTA/ETP and so on. EOS and IOTA are legit!
keypusher 9y ago
This guy has been trying to spread doubt about bitfinex for a long time, but never has much to back it up. A few months ago he went on a big campaign against Tether (tokens associated with Bitfinex), claiming they were created out of thin air. Tether then completed and released an audit by a professional, accredited team of their bank balances (1). I don't personally use Bitfinex, and it's possible some of these accusations are at least partially true, but there's really no evidence to confirm that. Don't buy into this type of FUD without doing your own research. Some of the claims he makes are disingenuous. Bitcoin Gold has nothing to do with Bitfinex, and is listed on a number of exchanges. It's definitely a pretty sketchy project, but it was a BTC fork and users tend to dislike when their exchange keeps forked tokens to themselves. EOS/IOTA are big projects with large market caps and real teams. Did some weird accounting happen after the Bitfinex hack? Maybe. Did most of the people end up getting their money back? Yes. Does it matter now? Not really. This is the largest BTC exchange (by volume) in the world. They generate tens of millions of revenue from exchange fees every month. There's no clear reason for them to engage in any weird, illegal money schemes at this point, they already have a money printing factory. https://tether.to/wp-content/uploads/2017/09/Final-Tether-Consulting-Report-9-15-17_Redacted.pdf https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co...
- ojr 9y ago
  They stole 15% of every users Bitcoin Cash, it was suppose to be a 1:1 split, but since they don't like bitcoin cash and lists it as bcash, that might be reason why, I expect more "technical difficulties" during the next fork https://news.bitcoin.com/bitfinex-bitcoin-cash-deposits-withdrawals-credits-15-less/ https://news.bitcoin.com/bitfinex-bitcoin-cash-deposits-with...
  - hedgedoops2 9y ago
    They didn't 'steal' this, they transferred it to lenders (and/or short sellers). Bitfinex (unwisely) specified that during the Bcash-Bitcoin fork, lenders would get Bcash for lent-out Bitcoin. However if Alice lends 1 Bitcoin to Bob before the fork and Bob sells it to Carol then Bitfinex will owe both Alice and Carol one Bcash after the fork, but they will only have one to distribute. So they split it up. This can get worse when Carol lends it out again, etc, etc, and in the end Zack withdraws the Bitcoin. Unbounded liability and potentially no assets. So them paying out 15% less than expected was a pretty good result.
pavlov 9y ago
I really wish that HN had a rule where it would be mandatory for commenters to disclose their holdings in any cryptocurrency threads. This would make it easier to flag comments that look like they're just pumping a coin to improve its search engine status. If you're praising Bitcoin, EOS, IOTA or whatever FooBarToken, please add a short note at the end to explain what you stand to gain. Either: "I'm long IOTA", or "I don't own IOTA and have no plans to initiate a position on the short term". Similar rules apply at forums where penny stocks and other volatile traditional securities are discussed, so it's absolutely not an unreasonable thing to ask.
- iso-8859-1 9y ago
  Useless since it is so easy to lie.
- pc86 9y ago
  It's not unreasonable to ask but it's completely unreasonable to expect that anyone pumping a coin on HN would have even the slightest inclination to be truthful about their position.
  - pavlov 9y ago
    The disclaimer (truthful or not) serves two purposes: 1) For the pumper poster, it makes them more conscious of the lie. Promoting a coin and forgetting to mention your holdings feels like a little white lie of omission. Actively lying about your holdings feels like deceit. 2) For the reader, it’s an important reminder that a seemingly objective technical-looking comment can be motivated by greed.
  - TallGuyShort 9y ago
    >> anyone pumping a coin on HN would have even the slightest inclination to be truthful about their position Which is why I already just assume everyone who doesn't do this but makes claims about a certain coin is talking out of their ass.
- conanbatt 9y ago
  Are people without coins barred from participating?
deleted 9y ago
[deleted]
ionwake 9y ago
my mtgox-spidey sense is a tinglin
darawk 9y ago
Bitfinex didn't force anyone to convert to equity. I was a bitfinex customer. I lost money in the hack. They certainly paid me back. These silly criticisms of them need to stop. They did the best they could with a bad situation. I wouldn't have wanted them to do anything differently than exactly what they did. They allowed people to convert to equity as an option. A choice. They paid back everyone who didn't choose to do that, in full, and quite quickly. Bitfinex's response to that hack should be considered a model for any future company in that situation. Hopefully such a thing won't happen, but if it does, there's no better way to respond than exactly how Bitfinex did.
- lawnchair_larry 9y ago
  All scams start with a "choice". That is not relevant, and the author is right to educate "choosers" by demonstrating the information asymmetry that leads to them going broke by choosing incorrectly. It's great for you that you were able to be repaid at the cost of other victims who were robbed and swindled, but that isn't a responsible way to handle these things, and is most definitely not a model for handling losses. It's illegal for a reason.
  - darawk 9y ago
    What information asymmetry? They didn't lie about anything. They offered people a choice between repayment and equity. Some people chose equity, and to be quite honest, I wish I had too. It seems like they're doing very well.
dmix 9y ago
The 112k bitcoins stolen were worth $72 million at the time, they are now worth $856 million (!). The loss they caused their customers is only getting worse and worse.

209 points by mbgaxyz 9y ago

ISL 9y ago

Cache: https://webcache.googleusercontent.com/search?q=cache:Hpndb2l0FX8J:https://medium.com/%40bitfinexed/bitfinex-never-repaid-their-tokens-bitfinex-started-a-ponzi-scheme-86a9291add29+&cd=1&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:Hpndb2...

raverbashing 9y ago

LOL Even better than a Ponzi Scheme, let's just sell "shares" of this "company" (which by the way has a paper value of a very round and big ZERO) for cash Toilet paper provides better value Oh wait, he "buys low and sells high", that explains it.

keypusher 9y ago
Bitfinex is the largest BTC exchange in the world, over $500 million per day in volume today. Big days are multi-billion dollar volume. Like most exchanges, they take a percentage cut of every transaction. This is not a company with zero value. The "buy low sell high" arbitrage thing is from a previous, unrelated business idea posted 5 years ago to a btc forum by the founder of bitfinex. As far as I know, it never went anywhere.
- martinko 9y ago
  Funny that comments that defend BFX, even on objective grounds, are immediately downvoted. Brigading is strong with this one.
bearjaws 9y ago
Are you 15? Shares in a company entitle you to a piece of that company, they can profit share with dividends, enable you the right to vote in corporate matters. If the company were to go bankrupt you also get money from the liquidation. What does your ICO give you?
- ceejayoz 9y ago
  There has to be profit to give dividends, there's such a thing as non-voting shares, and bankruptcy liquidations tend to pay out nothing to shareholders.
- raverbashing 9y ago
  > they can profit share with dividends Can, but not all of them do it > enable you the right to vote in corporate matters Can, but not all shares allow you to do that > If the company were to go bankrupt you also get money from the liquidation. https://i.imgur.com/seh6p.gif https://i.imgur.com/seh6p.gif > What does your ICO give you? Where did I mention ICO?

thisisit 9y ago

> As Bitfinex has become more and more desperate, they have listed more and more crypto-currencies of questionable value, such as EOS/IOTA/ETP and so on. As per coinmarketcap.com: EOS is ranked 19, 442 million in marketcap IOTA is ranked 11, 950 million in marketcap ETP is ranked 70, 73 million in marketcap Anyone can throw some light on what these coins really are? Additionally, BTC markets: https://coinmarketcap.com/currencies/bitcoin/#markets https://coinmarketcap.com/currencies/bitcoin/#markets shows Bitfinex raking in over 15% of the current market volume. I wonder what will happen to the price if they go under. While I agree to most of the article, specially the Tethers part, Debt to Equity swap is a real thing and not a Ponzi scheme: http://www.investopedia.com/terms/d/debtequityswap.asp http://www.investopedia.com/terms/d/debtequityswap.asp Though whether the equity shares are worth as much as Bitfinex is claiming them to be is an another question.

raverbashing 9y ago
> Debt to Equity swap is a real thing and not a Ponzi scheme Is it when your equity's value does not match the face value If you disagree I'll sell you 1% of equity in my lemonade stand for $1000
- thisisit 9y ago
  Hence, the caveat: > Though whether the equity shares are worth as much as Bitfinex is claiming them to be is an another question. I am not sure but they might be restricting the IOUs or shares to trade on their platform. So they are raking in commissions on the shares being traded. In which case it is surely a scam. But to be pedantic it is not a Ponzi scheme.
  - mannykannot 9y ago
    As the author has made a strong argument that the equity shares are in fact worthless, the caveat is not much of one. To be precise, it is not the debt-to-equity swap that the author is comparing to a Ponzi scheme, but the part where it is suggested they get their money back by selling on to a second round of 'investors' - but pedantic arguments over what to call it can only distract from the central issue of fraud.

csomar 9y ago

While I'd enjoy a good detective journalism, this article is just making claims out of thin air. And here is one: > However, this doesn’t stop Bitfinex from tripping over their shoelaces to immediately list a fork which doesn’t exist, in order to make money off of suckers. That is not correct. Bitfinex didn't list Bitcoin Gold. They listed a future contract of Bitcoin Gold (though the naming "token" is a bit confusing). You can create a future contract about anything, like the weather or soccer. > Prior to publishing this post I was informed that Tethers are on the rise. Today, at the time of this post there has been another 25,000,000 USDT printed. First, a new creation of Tether doesn't result in a pump. That would be too obvious for traders to arb the effect. Second, Tether is not used by Bitfinex heavily. Tether biggest clients are Polonix and Bittrex. And there is blockchain proof for that: https://wallet.tether.to/richlist https://wallet.tether.to/richlist

deleted 9y ago
[deleted]
al_chemist 9y ago
> Tether is not used by Bitfinex heavily Tether is issued by Bitfinex-related company. There is no reason for USA to stockpile US dollars if they can print it. China would be the biggest client of US dollar and first place at dollar richlist.
banderman 9y ago
Who owns Poloniex and Bittrex? How are they licensed? Do they segregate customer funds from operating funds?
einarvollset 9y ago
>First, a new creation of Tether doesn't result in a pump. That would be too obvious for traders to arb the effect. Orly? -> https://www.dropbox.com/sh/lylx2da2vobps8h/AAAN0q62s1X_Wl0H-j3W7KGDa?dl=0 https://www.dropbox.com/sh/lylx2da2vobps8h/AAAN0q62s1X_Wl0H-...
- mbgaxyz 9y ago
  There is interesting linear regression analysis in the folder above, between issuance of Tethers and the price of Bitcoin.

martinko 9y ago

Lots of bullshit. Just a few points: A) Iota is a legit currency trying to do something new in the crypto space. B) The listing Bitcoin gold did not 'create' 2 bn usd - if you tried to liquidate even a fraction of that, you would drive the price to 0. There was significant demand from trader and speculators for its listing (not that I agree with it, but anyway). C) Saying that a company that generates 30 mil. usd in revenues each month is worthless is really laughable. D) This author has had a bone to pick with bitfinex for a long time. I consider him a shill with an agenda, and it is surprising that he is given so much space (even on HN) to spew his BS. edit: formatting

the_stc 9y ago
IOTA made their own crypto, then when got called on it they denied it mattered at first. Then they backed down and said it was intentional! So that they could destroy anyone else using their open source code. When pressed to promise that they had not left more backdoors in, they refused. Of course they had to refuse, these were accidental bugs rolling their own stuff. That looks totally incompetent to me. Then mention centralized coordinator and they throw fits. Refuse to discuss it because it is only temporary. But judge for yourselves. Look at this nice comment by Vitalik Buterin (Ethereum) and the childish retorts from the IOTA people: https://www.reddit.com/r/CryptoCurrency/comments/72l7kp/why_i_find_iota_deeply_alarming_eth_core_dev/dnk2zdy/ https://www.reddit.com/r/CryptoCurrency/comments/72l7kp/why_...
- martinko 9y ago
  Fair enough, the currency has questionable potential. However, the article seems to imply that bfx lists some questionable currencies, and I feel that that characterization is misleading.

dnautics 9y ago

Maybe I misunderstood this, but basically you got 1 bfx token for each dollar that was stolen due to the hack. As people sold bfx tokens at lower prices than $1, (in part, because the us announced this was not ok, in part due to varying confidence in bfx ability to repay,) bitfinex could rebuy some of those tokens at a discount, and clear them to itself at a fraction of the cost There were also occasionally rolling rebuys of bfx tokens at the face value of $1.

salemoz 9y ago

Bitfinex has a big pie chunk of bitcoin trading volume https://www.coingecko.com/en/coins/bitcoin/trading_exchanges https://www.coingecko.com/en/coins/bitcoin/trading_exchanges Not going to afford another mtgox are we?

thisisit 9y ago

Reading this article made me wonder - how much of the bitcoin rally is due to counterparty risks? If I remember correctly the last ramp up happened during Mt. Gox era. They were having USD withdrawal issues which resulted in BTC prices being very high on the exchange. But it din't deter them from publishing prices and making markets. Now is the case of Bitfinex suffered from a hack like Mt. Gox and are trying to stay afloat. As per coinmarketcap, has nearly 15% of bitcoin volume which is pretty high to ensure market follows in-step to their market making. A quick search on Google turns up pages of people asking about Bitfinex withdrawals. For people who are curious about this, there was an article yesterday about Zimbabwean Bitcoin soaring to 12k USD, which obviously hinges a lot on counterparty risks and resulting low liquidity: https://news.ycombinator.com/item?id=15627608 https://news.ycombinator.com/item?id=15627608

cm2187 9y ago
I am not sure I follow. Counterparty risk should push the price down, not up. This thing is not worth as much because there is a significant risk your investment may go away because of a bug or a mistake.
- nosuchthing 9y ago
  That assumes there's an immediate withdraw method on the exchange with higher rates. MTGox abused the latency of withdraws in an attempt to attract BTC desposits (after their original deposits were stolen) on their exchange and presumably sell those back for cash via other outlets to slowly pay off customers and appear solvent. MTGox also manipulated the market with trader bots. https://willyreport.wordpress.com/2014/05/25/the-willy-report-proof-of-massive-fraudulent-trading-activity-at-mt-gox-and-how-it-has-affected-the-price-of-bitcoin/ https://willyreport.wordpress.com/2014/05/25/the-willy-repor... https://www.theguardian.com/technology/2014/may/29/bitcoin-bots-bought-millions-in-the-last-days-of-mt-gox https://www.theguardian.com/technology/2014/may/29/bitcoin-b...
- thisisit 9y ago
  It is in exchanges favor to offer increased prices so as to shore up their balances using BTC commissions earned per trade. This inversely leads to them serving an increased percentage of daily trades. Add to the fact that, increased risks means people want more out of their BTC. So, if x is a fair price in other exchange, they want x + y% for the same BTC on exchange with issues. Some of these people become aware of withdrawal issues later or buy some other crypto currency, move to another exchange to cash out.

Geee 9y ago

Every exchange has their own "virtual dollars", i.e. the user deposits. How do you know they are real? Tether is just a way to securely transfer user deposits between exchanges, and it's not more or less trustworthy.

nosuchthing 9y ago
If the alligation is true that the supply of Tethers is created from nothing, they would have the ability to trade their millions of "dollars" for other cryptocurrencies, taking control of the supply of other blockchains.
- Geee 9y ago
  Every exchange can fake their user deposits in the same way. Tether doesn't change that. We have to trust their audits.

themanual 9y ago

> As Bitfinex has become more and more desperate, they have listed more and more crypto-currencies of questionable value, such as EOS/IOTA/ETP and so on. EOS and IOTA are legit!

keypusher 9y ago

This guy has been trying to spread doubt about bitfinex for a long time, but never has much to back it up. A few months ago he went on a big campaign against Tether (tokens associated with Bitfinex), claiming they were created out of thin air. Tether then completed and released an audit by a professional, accredited team of their bank balances (1). I don't personally use Bitfinex, and it's possible some of these accusations are at least partially true, but there's really no evidence to confirm that. Don't buy into this type of FUD without doing your own research. Some of the claims he makes are disingenuous. Bitcoin Gold has nothing to do with Bitfinex, and is listed on a number of exchanges. It's definitely a pretty sketchy project, but it was a BTC fork and users tend to dislike when their exchange keeps forked tokens to themselves. EOS/IOTA are big projects with large market caps and real teams. Did some weird accounting happen after the Bitfinex hack? Maybe. Did most of the people end up getting their money back? Yes. Does it matter now? Not really. This is the largest BTC exchange (by volume) in the world. They generate tens of millions of revenue from exchange fees every month. There's no clear reason for them to engage in any weird, illegal money schemes at this point, they already have a money printing factory. https://tether.to/wp-content/uploads/2017/09/Final-Tether-Consulting-Report-9-15-17_Redacted.pdf https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co...

ojr 9y ago
They stole 15% of every users Bitcoin Cash, it was suppose to be a 1:1 split, but since they don't like bitcoin cash and lists it as bcash, that might be reason why, I expect more "technical difficulties" during the next fork https://news.bitcoin.com/bitfinex-bitcoin-cash-deposits-withdrawals-credits-15-less/ https://news.bitcoin.com/bitfinex-bitcoin-cash-deposits-with...
- hedgedoops2 9y ago
  They didn't 'steal' this, they transferred it to lenders (and/or short sellers). Bitfinex (unwisely) specified that during the Bcash-Bitcoin fork, lenders would get Bcash for lent-out Bitcoin. However if Alice lends 1 Bitcoin to Bob before the fork and Bob sells it to Carol then Bitfinex will owe both Alice and Carol one Bcash after the fork, but they will only have one to distribute. So they split it up. This can get worse when Carol lends it out again, etc, etc, and in the end Zack withdraws the Bitcoin. Unbounded liability and potentially no assets. So them paying out 15% less than expected was a pretty good result.

pavlov 9y ago

I really wish that HN had a rule where it would be mandatory for commenters to disclose their holdings in any cryptocurrency threads. This would make it easier to flag comments that look like they're just pumping a coin to improve its search engine status. If you're praising Bitcoin, EOS, IOTA or whatever FooBarToken, please add a short note at the end to explain what you stand to gain. Either: "I'm long IOTA", or "I don't own IOTA and have no plans to initiate a position on the short term". Similar rules apply at forums where penny stocks and other volatile traditional securities are discussed, so it's absolutely not an unreasonable thing to ask.

iso-8859-1 9y ago
Useless since it is so easy to lie.
pc86 9y ago
It's not unreasonable to ask but it's completely unreasonable to expect that anyone pumping a coin on HN would have even the slightest inclination to be truthful about their position.
- pavlov 9y ago
  The disclaimer (truthful or not) serves two purposes: 1) For the pumper poster, it makes them more conscious of the lie. Promoting a coin and forgetting to mention your holdings feels like a little white lie of omission. Actively lying about your holdings feels like deceit. 2) For the reader, it’s an important reminder that a seemingly objective technical-looking comment can be motivated by greed.
- TallGuyShort 9y ago
  >> anyone pumping a coin on HN would have even the slightest inclination to be truthful about their position Which is why I already just assume everyone who doesn't do this but makes claims about a certain coin is talking out of their ass.
conanbatt 9y ago
Are people without coins barred from participating?

deleted 9y ago

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ionwake 9y ago

my mtgox-spidey sense is a tinglin

darawk 9y ago

Bitfinex didn't force anyone to convert to equity. I was a bitfinex customer. I lost money in the hack. They certainly paid me back. These silly criticisms of them need to stop. They did the best they could with a bad situation. I wouldn't have wanted them to do anything differently than exactly what they did. They allowed people to convert to equity as an option. A choice. They paid back everyone who didn't choose to do that, in full, and quite quickly. Bitfinex's response to that hack should be considered a model for any future company in that situation. Hopefully such a thing won't happen, but if it does, there's no better way to respond than exactly how Bitfinex did.

lawnchair_larry 9y ago
All scams start with a "choice". That is not relevant, and the author is right to educate "choosers" by demonstrating the information asymmetry that leads to them going broke by choosing incorrectly. It's great for you that you were able to be repaid at the cost of other victims who were robbed and swindled, but that isn't a responsible way to handle these things, and is most definitely not a model for handling losses. It's illegal for a reason.
- darawk 9y ago
  What information asymmetry? They didn't lie about anything. They offered people a choice between repayment and equity. Some people chose equity, and to be quite honest, I wish I had too. It seems like they're doing very well.

dmix 9y ago

The 112k bitcoins stolen were worth $72 million at the time, they are now worth $856 million (!). The loss they caused their customers is only getting worse and worse.