5 ms·

...except that Tether long predates Bitfinex's wire issues. They're usable on many of the major exchanges (Bittrex, Poloniex, for example). Tether was explicitl

by darawk 9y ago

...except that Tether long predates Bitfinex's wire issues. They're usable on many of the major exchanges (Bittrex, Poloniex, for example). Tether was explicitly created for the purpose of equalizing prices across exchanges. It's indeed possible that they're insolvent, but there is no real evidence of that, just lots of people speculating incessantly without much justification. Basically everything about the parent comment is factually incorrect. I'm not sure why it's so upvoted. I guess people just like scandal in the cryptocurrency world and would prefer to believe what comports with their preconceptions.

askmike 9y ago
Just because tether predates the big USD wire problems does not mean it's creation was unrelated. One of the biggest risk any exchange has is compliance, specifically with the US regulators (and banks). Even if BFX did not know this before they build their exchange, this most likely became clear from day 1. Tether is a great hedge against this (politics aside). Could you address anything that you think is "factually incorrect"?
- darawk 9y ago
  The post I was responding to claimed Tether was specifically created to address Bitfinex's wire issues. That is false. It may be that they created it to address theoretical, speculative wire issues that they might someday encounter in the future, but there is no evidence to support that hypothesis. Secondly, there is plenty of reason to create something like Tether independently of any wire issues (specifically: to normalize prices between exchanges).
  - askmike 9y ago
    Come on man.. > The post I was responding to claimed Tether was specifically created to address Bitfinex's wire issues. That is false. It does not claim that it was "specifically created for that", it claims that "Their solution" to the wire problems was "Tether". It does not state anything about why Tether was created in the first place. > Secondly, there is plenty of reason to create something like Tether independently of any wire issues (specifically: to normalize prices between exchanges). People will arb the effiencies away anyway, regardless of what tools the exchanges provide them. Besides tether a lot of people in Taiwan are arbing through the traditional banking system [0]. But you are right, it IS important that there are ways to flow money in and out. Which is exactly what Tether is for according to OP's argument. [0] https://steemit.com/bitcoin/@kingscrown/living-in-thaiwan-you-have-huge-opportunity-to-make-almost-risk-free-money https://steemit.com/bitcoin/@kingscrown/living-in-thaiwan-yo...
    - kobeya 9y ago
      I read the patio11 post as implying very strongly that Bitfinex was responsible in some way for Tether, when in fact that couldn’t be further from the truth.
      - patio11 9y ago
        https://twitter.com/Bitfinexed/status/932139909237833728 https://twitter.com/Bitfinexed/status/932139909237833728
      - Jasper_ 9y ago
        http://article78againstnydfs.com/docs/317-cv-01882-BitfinexCase/09-DeclarationJKVanDerVelde/9-main.pdf http://article78againstnydfs.com/docs/317-cv-01882-BitfinexC... > I, J.L. van der Velde, hereby declare as follows: > 1. I am the Chief Executive Officer for iFinex Inc. (“iFinex”), BFXNA Inc. (“BFXNA”), BFXWW Inc. (“BFXWW”), and Tether Limited (“Tether”). I have personal knowledge of the facts set forth below, and if called and sworn as a witness, I could and would testify competently thereto. > 2. iFinex, through its subsidiaries BFXNA and BFXWW, owns and operates a leading global Virtual Currency platform called Bitfinex. Bitfinex is responsible for Tether.
    - darawk 9y ago
      > It does not claim that it was "specifically created for that", it claims that "Their solution" to the wire problems was "Tether". It does not state anything about why Tether was created in the first place. Read the post, man, very first paragraph: > Bitfinex was cut off from the US financial system, which makes it impossible for them to clear USD-denominated wires...Their solution: issue a cryptocurrency which is claimed to be 100% backed by USD and say that it is redeemable 1-to-1 for dollars... we just can't actually physically give you the dollars. > People will arb the effiencies away anyway, regardless of what tools the exchanges provide them. Besides tether a lot of people in Taiwan are arbing through the traditional banking system [0]. That's true, except you probably have never tried to actually execute that kind of arbitrage before. I have, so let me tell you the problem tether solves: speed. If you do arbitrage through the banking system, you have to wait for wire transfers to clear. That can take days to weeks. That means you have to wait for the spreads to be large enough and stable enough to compensate you for the enormous risk of being exposed to the vicissitudes of the crypto markets during that time. And that's assuming you already have the accounts setup in the right countries. Tether makes all that instantaneous. That is an enormous benefit to arbitrageurs equalizing prices, and inter-exchange liquidity.
iamthirsty 9y ago
> without much justification. Well, they've never proved it. Just a literal: "Hey, we promise we have the money." So, can't really say; it's basically a Schrödinger's cat to everyone on the outside. We will only know when it booms — or busts.
- darawk 9y ago
  You're absolutely right. I'm not saying they're solvent. There just isn't any evidence that they aren't.
  - ActsJuvenile 9y ago
    They just got hacked for $30 mil. Pretty safe to say they are in the red at this time.
    - darawk 9y ago
      They may not be. $30 mil is a small percentage though. Bitfinex makes a few million per day in volume. It's not unreasonable to think they might still be solvent, even with a 30 million dollar loss. But they also might not. However, they definitely won't be if their fix to block the stolen Tethers goes through.
      - ActsJuvenile 9y ago
        Bitfinex got hacked for 119,756 BTC last year, and Tether got hacked for $30 mil today. Both are owned by iFinex LTD, and had the same CEO till earlier this year. Total amount they have lost comes out to $1 Billion. How are you still claiming "They may not be"?
        darawk 9y ago
        I was a Bitfinex customer when they got hacked. I lost 30% of my funds on that day. I couldn't be happier with how they handled it. They paid me back in full and did the best they could with the situation they had. People being upset with them over it is insane to me. As far as I can tell, it's mostly people who had nothing to do with it spectating from the sidelines. If an exchange you use ever gets hacked, I certainly hope they do exactly what Bitfinex did, for your sake. And you should too.
repomies691 9y ago
> Basically everything about the parent comment is factually incorrect. I'm not sure why it's so upvoted. patio11 is well respected in this community, so I guess the post is upvoted just because of the author. I personally respect patio11 on quite many topics as a very knowledgeable, but when it comes to Bitcoin and cryptocurrencies he seems to have some personal issue with them, which makes his posts on the topic not that objective.
- FreeRadical 9y ago
  He has been a bitcoin bear for a long time. Like many people that have been anti bitcoin, they keep jumping on new reasons why it’s a scam or not going to work when their old reasons become irrelevant.
  - repomies691 9y ago
    It is probably very painful following it closely and not investing from the around $10 prices or so. Makes you mentally even more tied to the non-investment, and makes you invent better arguments on why you didn't invest.
    - dsacco 9y ago
      Regardless of your feelings towards patio11 and his views on Bitcoin, this is not appropriate. Speculating about his emotions like this is a misdirection that dances around de-legitimizing his views without a real rebuttal to his point. Moreover, he’s on this forum, so you don’t need to talk about him like this, as if he isn’t here. If you have a substantive rebuttal to make, do that instead of engaging in passive aggressive character assassination. What you’re doing is probably satisfying, but it doesn’t convince anyone else that you’re correct who doesn’t already side with you, and it’s insidious in that it steers the course of the conversation away from an individual’s point and onto their identity.
BLanen 9y ago
And their previous CEO just 'forgot' to update his twitter status for two years of not being the CEO. And the company officers are currently actually bitfinex people? Total coincidence.
banderman 9y ago
Who owns and operates Bittrex and Poloniex? How are the licensed? Do they keep customer funds segregated from operating funds?
- darawk 9y ago
  Bittrex is owned and operated by US actors. You can go talk to them in their slack. They're on their with their real names, and they all have linkedin profiles with real work histories at US companies. Poloniex is owned by a guy named Tristan D'Agosta. He's a little bit less easy to track down, but does seem to be a real, known person with a real history and life. I don't know how they each separate customer and operating funds, but i'm sure the Bittrex guys at least would probably be happy to tell you if you ask in their Slack channel, assuming they don't consider it a security risk.
3pt14159 9y ago
I've been in Bitcoin for over 7 years. This type of back and forth is exactly what happened to Mt Gox. And you know what? My friend got the fuck out of Mt Gox before it burst. When you have to choose between following a pre-bankrun rumour or following unsubstantiated pushback, follow the rumour. It costs you maybe 5% to get out vs 100% if you're wrong and banks / money holders compete on assuring people that there is less risk with their solution so if Tether can't provide assurance then that is their problem. Cut and run.
- geofft 9y ago
  On a side note, the fact that bank runs are rational decisions and that no FDIC-style agency exists to change the incentives seems bad for cryptocurrency in general. (Possible responses include both "the traditional financial system and fiat currency is actually pretty good" and "someone should run a reliable FDIC equivalent as a business for new exchanges and new coins".)
  - Ajedi32 9y ago
    Isn't a bank run only an issue if the bank is using a fractional reserve? Cryptocurrency exchanges aren't banks; they're not supposed to keep a fractional reserve. If everyone suddenly demands all their coins at once, the exchange should have no trouble complying with that. The only problem is that there's no way to know for sure whether an exchange is running on a fractional reserve or not.
    - 3pt14159 9y ago
      The issue is that they do run fractional reserves, even if they aren't supposed to. Much like banks of the 1600s.
      - darawk 9y ago
        They claim that they don't. If they do, that is a serious problem. Some of the exchanges have, but there is no evidence i'm aware of that points to any of the current major exchanges running a fractional reserve.

by darawk 9y ago

askmike 9y ago

Just because tether predates the big USD wire problems does not mean it's creation was unrelated. One of the biggest risk any exchange has is compliance, specifically with the US regulators (and banks). Even if BFX did not know this before they build their exchange, this most likely became clear from day 1. Tether is a great hedge against this (politics aside). Could you address anything that you think is "factually incorrect"?

darawk 9y ago
The post I was responding to claimed Tether was specifically created to address Bitfinex's wire issues. That is false. It may be that they created it to address theoretical, speculative wire issues that they might someday encounter in the future, but there is no evidence to support that hypothesis. Secondly, there is plenty of reason to create something like Tether independently of any wire issues (specifically: to normalize prices between exchanges).
- askmike 9y ago
  Come on man.. > The post I was responding to claimed Tether was specifically created to address Bitfinex's wire issues. That is false. It does not claim that it was "specifically created for that", it claims that "Their solution" to the wire problems was "Tether". It does not state anything about why Tether was created in the first place. > Secondly, there is plenty of reason to create something like Tether independently of any wire issues (specifically: to normalize prices between exchanges). People will arb the effiencies away anyway, regardless of what tools the exchanges provide them. Besides tether a lot of people in Taiwan are arbing through the traditional banking system [0]. But you are right, it IS important that there are ways to flow money in and out. Which is exactly what Tether is for according to OP's argument. [0] https://steemit.com/bitcoin/@kingscrown/living-in-thaiwan-you-have-huge-opportunity-to-make-almost-risk-free-money https://steemit.com/bitcoin/@kingscrown/living-in-thaiwan-yo...
  - kobeya 9y ago
    I read the patio11 post as implying very strongly that Bitfinex was responsible in some way for Tether, when in fact that couldn’t be further from the truth.
    - patio11 9y ago
      https://twitter.com/Bitfinexed/status/932139909237833728 https://twitter.com/Bitfinexed/status/932139909237833728
    - Jasper_ 9y ago
      http://article78againstnydfs.com/docs/317-cv-01882-BitfinexCase/09-DeclarationJKVanDerVelde/9-main.pdf http://article78againstnydfs.com/docs/317-cv-01882-BitfinexC... > I, J.L. van der Velde, hereby declare as follows: > 1. I am the Chief Executive Officer for iFinex Inc. (“iFinex”), BFXNA Inc. (“BFXNA”), BFXWW Inc. (“BFXWW”), and Tether Limited (“Tether”). I have personal knowledge of the facts set forth below, and if called and sworn as a witness, I could and would testify competently thereto. > 2. iFinex, through its subsidiaries BFXNA and BFXWW, owns and operates a leading global Virtual Currency platform called Bitfinex. Bitfinex is responsible for Tether.
  - darawk 9y ago
    > It does not claim that it was "specifically created for that", it claims that "Their solution" to the wire problems was "Tether". It does not state anything about why Tether was created in the first place. Read the post, man, very first paragraph: > Bitfinex was cut off from the US financial system, which makes it impossible for them to clear USD-denominated wires...Their solution: issue a cryptocurrency which is claimed to be 100% backed by USD and say that it is redeemable 1-to-1 for dollars... we just can't actually physically give you the dollars. > People will arb the effiencies away anyway, regardless of what tools the exchanges provide them. Besides tether a lot of people in Taiwan are arbing through the traditional banking system [0]. That's true, except you probably have never tried to actually execute that kind of arbitrage before. I have, so let me tell you the problem tether solves: speed. If you do arbitrage through the banking system, you have to wait for wire transfers to clear. That can take days to weeks. That means you have to wait for the spreads to be large enough and stable enough to compensate you for the enormous risk of being exposed to the vicissitudes of the crypto markets during that time. And that's assuming you already have the accounts setup in the right countries. Tether makes all that instantaneous. That is an enormous benefit to arbitrageurs equalizing prices, and inter-exchange liquidity.

iamthirsty 9y ago

> without much justification. Well, they've never proved it. Just a literal: "Hey, we promise we have the money." So, can't really say; it's basically a Schrödinger's cat to everyone on the outside. We will only know when it booms — or busts.

darawk 9y ago
You're absolutely right. I'm not saying they're solvent. There just isn't any evidence that they aren't.
- ActsJuvenile 9y ago
  They just got hacked for $30 mil. Pretty safe to say they are in the red at this time.
  - darawk 9y ago
    They may not be. $30 mil is a small percentage though. Bitfinex makes a few million per day in volume. It's not unreasonable to think they might still be solvent, even with a 30 million dollar loss. But they also might not. However, they definitely won't be if their fix to block the stolen Tethers goes through.
    - ActsJuvenile 9y ago
      Bitfinex got hacked for 119,756 BTC last year, and Tether got hacked for $30 mil today. Both are owned by iFinex LTD, and had the same CEO till earlier this year. Total amount they have lost comes out to $1 Billion. How are you still claiming "They may not be"?
      - darawk 9y ago
        I was a Bitfinex customer when they got hacked. I lost 30% of my funds on that day. I couldn't be happier with how they handled it. They paid me back in full and did the best they could with the situation they had. People being upset with them over it is insane to me. As far as I can tell, it's mostly people who had nothing to do with it spectating from the sidelines. If an exchange you use ever gets hacked, I certainly hope they do exactly what Bitfinex did, for your sake. And you should too.

repomies691 9y ago

> Basically everything about the parent comment is factually incorrect. I'm not sure why it's so upvoted. patio11 is well respected in this community, so I guess the post is upvoted just because of the author. I personally respect patio11 on quite many topics as a very knowledgeable, but when it comes to Bitcoin and cryptocurrencies he seems to have some personal issue with them, which makes his posts on the topic not that objective.

FreeRadical 9y ago
He has been a bitcoin bear for a long time. Like many people that have been anti bitcoin, they keep jumping on new reasons why it’s a scam or not going to work when their old reasons become irrelevant.
- repomies691 9y ago
  It is probably very painful following it closely and not investing from the around $10 prices or so. Makes you mentally even more tied to the non-investment, and makes you invent better arguments on why you didn't invest.
  - dsacco 9y ago
    Regardless of your feelings towards patio11 and his views on Bitcoin, this is not appropriate. Speculating about his emotions like this is a misdirection that dances around de-legitimizing his views without a real rebuttal to his point. Moreover, he’s on this forum, so you don’t need to talk about him like this, as if he isn’t here. If you have a substantive rebuttal to make, do that instead of engaging in passive aggressive character assassination. What you’re doing is probably satisfying, but it doesn’t convince anyone else that you’re correct who doesn’t already side with you, and it’s insidious in that it steers the course of the conversation away from an individual’s point and onto their identity.

BLanen 9y ago

And their previous CEO just 'forgot' to update his twitter status for two years of not being the CEO. And the company officers are currently actually bitfinex people? Total coincidence.

banderman 9y ago

Who owns and operates Bittrex and Poloniex? How are the licensed? Do they keep customer funds segregated from operating funds?

darawk 9y ago
Bittrex is owned and operated by US actors. You can go talk to them in their slack. They're on their with their real names, and they all have linkedin profiles with real work histories at US companies. Poloniex is owned by a guy named Tristan D'Agosta. He's a little bit less easy to track down, but does seem to be a real, known person with a real history and life. I don't know how they each separate customer and operating funds, but i'm sure the Bittrex guys at least would probably be happy to tell you if you ask in their Slack channel, assuming they don't consider it a security risk.

3pt14159 9y ago

I've been in Bitcoin for over 7 years. This type of back and forth is exactly what happened to Mt Gox. And you know what? My friend got the fuck out of Mt Gox before it burst. When you have to choose between following a pre-bankrun rumour or following unsubstantiated pushback, follow the rumour. It costs you maybe 5% to get out vs 100% if you're wrong and banks / money holders compete on assuring people that there is less risk with their solution so if Tether can't provide assurance then that is their problem. Cut and run.

geofft 9y ago
On a side note, the fact that bank runs are rational decisions and that no FDIC-style agency exists to change the incentives seems bad for cryptocurrency in general. (Possible responses include both "the traditional financial system and fiat currency is actually pretty good" and "someone should run a reliable FDIC equivalent as a business for new exchanges and new coins".)
- Ajedi32 9y ago
  Isn't a bank run only an issue if the bank is using a fractional reserve? Cryptocurrency exchanges aren't banks; they're not supposed to keep a fractional reserve. If everyone suddenly demands all their coins at once, the exchange should have no trouble complying with that. The only problem is that there's no way to know for sure whether an exchange is running on a fractional reserve or not.
  - 3pt14159 9y ago
    The issue is that they do run fractional reserves, even if they aren't supposed to. Much like banks of the 1600s.
    - darawk 9y ago
      They claim that they don't. If they do, that is a serious problem. Some of the exchanges have, but there is no evidence i'm aware of that points to any of the current major exchanges running a fractional reserve.