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Don't forget that someone has been using Tether to wash trade bitcoin on bitfinex... https://medium.com/@bitfinexed/are-fraudulent-tethers-being-used-for-margi

Don't forget that someone has been using Tether to wash trade bitcoin on bitfinex... https://medium.com/@bitfinexed/are-fraudulent-tethers-being-used-for-margin-lending-on-bitfinex-5de9dd80f330 https://medium.com/@bitfinexed/are-fraudulent-tethers-being-... https://medium.com/@bitfinexed/wash-trading-bitcoin-part-ii-who-and-why-is-someone-wash-trading-on-bitfinex-e1c7b5e0b3bb https://medium.com/@bitfinexed/wash-trading-bitcoin-part-ii-... It was widely believed that the tethers being "sold" weren't really backed by anything and were being used to inflate BTC prices. Now they are claiming 30M were stolen? I'm betting it's going to end up being a lot higher. They are using 30M to soften the blow of the higher number. I believe this tactic has been using by Yahoo and others in announcing the number of stolen accounts as well.

ActsJuvenile 9y ago
We also have some proof of this belief now. Wells Fargo stopped Wires to Tether on March 30, 2017 and Taiwanese banks stopped all international wires from Tether on April 18, 2017. Tether has since issued 600 mill new tokens. Source: https://tether.to/announcement/ https://tether.to/announcement/
- Yizahi 9y ago
  I noticed that NYT wrote "Since then, it has moved between a series of banks in other countries, without telling customers where the exchange’s money is stored." but afaik there is zero evidence that there was any bank that interacted with Bitfinex after Wells Fargo dropped them.
  - CamelCaseName 9y ago
    But the comment above suggests that Taiwanese banks worked with them after Wells Fargo. Is it sloppy research on NYT's part or is BFX's claim unverifiable?
    - racont 9y ago
      NP@NYT summarized a long-standing Twitter discussion - he's put in little to no independent work on the story. Tether has claimed to have audited bank statements from the start. To date, they've never performed a real audit from an internationally recognized auditor. In Sep '17, Tether paid for Friedman to state that they had ~$350m in USD in certain bank accounts. The bank names and locations were blacked out. If you know how to read audit statements, Friedman bent over backwards to make sure they're not culpable for fraud (whereas normally their function is to rubber-stamp for authenticity). Over the past two months, Tether has issued another $300m in USDT while transparency remains opaque
      - wdewind 9y ago
        > If you know how to read audit statements, Friedman bent over backwards to make sure they're not culpable for fraud (whereas normally their function is to rubber-stamp for authenticity). Can you expand on this?
        racont 9y ago
        Auditors sell trust. If an auditor says that the company has $XX in their bank, you're more likely to believe the company. If an auditor is found to lie, you get Arthur Anderson. In a full audit, the auditor bears the risk of fraud, and they get paid for assuming that risk. In the note (not a formal audit, but literally just a letter) they gave Tether, Friedman consistently uses language like this: - "We have not performed any procedures or make any conclusion for activity prior to or subsequent to September 15, 2017." [note: audits are usually for periods of time, not snapshots at a certain point in time] - "Screenshots from the Client of the balances in each Tether address purportedly controlled by the Client". - "FLLP ... makes no representations about the Client's ability to access funds from the accounts or whether the funds are committed for purposes other than token redemptions." Basically, Tether is representing to the world and their clients that Friedman has rubber-stamped the USDT-USD relationship Tether claims. On their website, Tether claimed their bank balances are audited (they're not), and Friedman happens to be an auditor who sent them a letter. Friedman is saying that "all we know is that Tether had matching funds attributed to their names in certain banks on a certain date." Tether could very well just have placed those funds in there temporarily, or have a side-letter with these unnamed banks to move funds in and out of the account for a snapshot in exchange for a fee, or have an arrangement via which they've borrowed using the funds as collateral. These are scenarios that either a full audit or a regulatory body would protect against. - Note: looks like Tether took down all references to their past audit issues from their website, but they forgot to remove the Friedman letter: 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....
jraines 9y ago
Tether has a blockchain so you can see for yourself how much was stolen. Also, they blacklisted the hacker's address^. The @bitfinexed narrative is so flaky, especially the chart "proving" that Tether issuance pumps BTC. I could post a similar chart showing that my trips to Costco pump BTC. There are legitimate concerns around Bitfinex and Tether^^ but the FUD has gotten out of hand. Things to keep in mind if you disagree: 1) There is increased demand for Tether mostly from exchanges other than Bitfinex. They aren't even the largest holder of Tether by a long shot. This explains increased issuance as much as any conspiracy. 2) There are no widespread complaints about being able to withdraw from Bitfinex 3) There is no premium on BTC price on Bitfinex as there would be if there were problems withdrawing in things other than BTC, a la Mt. Gox. All this being said -- all this would go away if they would prove they had the funds backing Tether. ^https://twitter.com/petertoddbtc/status/932862730415017984 https://twitter.com/petertoddbtc/status/932862730415017984 ^^Mostly, IMO, around 1) making themselves a target for FinCEN, 2) the market not pricing a proper risk premium into Tether
- noitsnot 9y ago
  /r/bitfinex has quite a lot of people claiming both ways. The people having problems withdrawing say support is non-existent.
  - jraines 9y ago
    This is why I qualified with "widespread". All the exchanges have poor support, and all of them have haters. It wasn't long ago that even seemingly knowledgeable people were urging people to get out of Poloniex because they were about to be the next Gox. Nothing yet, in fact they've gotten better likely because the exodus of many traders eased the support and scaling burden. Again, I don't mean to defend any exchange in particular, it is still the wild west and I'm sure a lot of shady stuff goes on. There's just a lot about the Bitfinex narrative that doesn't make a lot of sense, and it seems mostly because one guy has built a successful brand around beating his drum the loudest.
    - lazyasciiart 9y ago
dkural 9y ago
Although you're right that if tethers are not backed by anything they'd inflate BTC, keep in mind this is likely an extremely small effect, because a lot of the inbound also occurred throughout time, and at any given time, the vast majority of trading and volume was outside of any trade involving tethers. It should be well below single digit % - a lot less than the daily volatility, hence any influence on BTC price is negligible unless I am missing something (which is entirely possible, I'm new to this stuff).
- kobeya 9y ago
  The Tether liability is about the same size as MtGox was, in dollar terms, when things started to unravel. That wasn’t a small effect.
  - dmichulke 9y ago
    In order to equate those, you would have to 1. either divide it by the market cap then and now 2. or divide it by the size of the order book(s) then and now The first should give you a longer term view of the effect (I'd guess maybe a month?), the second a short-term view of it (within hours).
    - kobeya 9y ago
      The first is rediculous. Market cap is meaningless, especially in bitcoin where it isn’t even known well how much coin is accessible, and velocity of those coins in circulation is so low and order books so thin by comparison. The effect is exactly comparable to how much value will disappear. That’s how many lives will be affected, people disillusioned, etc. I honestly don’t know what you’re trying to argue in the last paragraph.
      - dmichulke 9y ago
        > The first is rediculous So you're saying the same amount of money in 2013 will have the same impact today? I don't think so, market cap is a proxy for this. It's not a good one but it is one. > The effect is exactly comparable to how much value will disappear. Yes but it will be shouldered by many more coins and many more dollars. > I honestly don’t know what you’re trying to argue in the last paragraph. You can compare the 600 mn mtgox impact using either of the two proxies, liquidity will give you a view of what will happen in the short-term, market cap will give you a glimpse of what will happen after the initial shockwave went through the orderbooks. PS: It's "ridiculous" not rediculous.
csomar 9y ago
You might want to get more info. Not a single dollar was stolen. Their “blockchain” was hacked. It can distrube them but not bankrupt them. The USD will be always on their bank accounts if they are holding full reserves.
virgilp 9y ago
> I believe this tactic has been using by Yahoo and others in announcing the number of stolen accounts as well. "We lost personal information of 57M users, but no credit card leaked and we paid the hackers to delete it"

ActsJuvenile 9y ago

We also have some proof of this belief now. Wells Fargo stopped Wires to Tether on March 30, 2017 and Taiwanese banks stopped all international wires from Tether on April 18, 2017. Tether has since issued 600 mill new tokens. Source: https://tether.to/announcement/ https://tether.to/announcement/

Yizahi 9y ago
I noticed that NYT wrote "Since then, it has moved between a series of banks in other countries, without telling customers where the exchange’s money is stored." but afaik there is zero evidence that there was any bank that interacted with Bitfinex after Wells Fargo dropped them.
- CamelCaseName 9y ago
  But the comment above suggests that Taiwanese banks worked with them after Wells Fargo. Is it sloppy research on NYT's part or is BFX's claim unverifiable?
  - racont 9y ago
    NP@NYT summarized a long-standing Twitter discussion - he's put in little to no independent work on the story. Tether has claimed to have audited bank statements from the start. To date, they've never performed a real audit from an internationally recognized auditor. In Sep '17, Tether paid for Friedman to state that they had ~$350m in USD in certain bank accounts. The bank names and locations were blacked out. If you know how to read audit statements, Friedman bent over backwards to make sure they're not culpable for fraud (whereas normally their function is to rubber-stamp for authenticity). Over the past two months, Tether has issued another $300m in USDT while transparency remains opaque
    - wdewind 9y ago
      > If you know how to read audit statements, Friedman bent over backwards to make sure they're not culpable for fraud (whereas normally their function is to rubber-stamp for authenticity). Can you expand on this?
      - racont 9y ago
        Auditors sell trust. If an auditor says that the company has $XX in their bank, you're more likely to believe the company. If an auditor is found to lie, you get Arthur Anderson. In a full audit, the auditor bears the risk of fraud, and they get paid for assuming that risk. In the note (not a formal audit, but literally just a letter) they gave Tether, Friedman consistently uses language like this: - "We have not performed any procedures or make any conclusion for activity prior to or subsequent to September 15, 2017." [note: audits are usually for periods of time, not snapshots at a certain point in time] - "Screenshots from the Client of the balances in each Tether address purportedly controlled by the Client". - "FLLP ... makes no representations about the Client's ability to access funds from the accounts or whether the funds are committed for purposes other than token redemptions." Basically, Tether is representing to the world and their clients that Friedman has rubber-stamped the USDT-USD relationship Tether claims. On their website, Tether claimed their bank balances are audited (they're not), and Friedman happens to be an auditor who sent them a letter. Friedman is saying that "all we know is that Tether had matching funds attributed to their names in certain banks on a certain date." Tether could very well just have placed those funds in there temporarily, or have a side-letter with these unnamed banks to move funds in and out of the account for a snapshot in exchange for a fee, or have an arrangement via which they've borrowed using the funds as collateral. These are scenarios that either a full audit or a regulatory body would protect against. - Note: looks like Tether took down all references to their past audit issues from their website, but they forgot to remove the Friedman letter: 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....

jraines 9y ago

Tether has a blockchain so you can see for yourself how much was stolen. Also, they blacklisted the hacker's address^. The @bitfinexed narrative is so flaky, especially the chart "proving" that Tether issuance pumps BTC. I could post a similar chart showing that my trips to Costco pump BTC. There are legitimate concerns around Bitfinex and Tether^^ but the FUD has gotten out of hand. Things to keep in mind if you disagree: 1) There is increased demand for Tether mostly from exchanges other than Bitfinex. They aren't even the largest holder of Tether by a long shot. This explains increased issuance as much as any conspiracy. 2) There are no widespread complaints about being able to withdraw from Bitfinex 3) There is no premium on BTC price on Bitfinex as there would be if there were problems withdrawing in things other than BTC, a la Mt. Gox. All this being said -- all this would go away if they would prove they had the funds backing Tether. ^https://twitter.com/petertoddbtc/status/932862730415017984 https://twitter.com/petertoddbtc/status/932862730415017984 ^^Mostly, IMO, around 1) making themselves a target for FinCEN, 2) the market not pricing a proper risk premium into Tether

noitsnot 9y ago
/r/bitfinex has quite a lot of people claiming both ways. The people having problems withdrawing say support is non-existent.
- jraines 9y ago
  This is why I qualified with "widespread". All the exchanges have poor support, and all of them have haters. It wasn't long ago that even seemingly knowledgeable people were urging people to get out of Poloniex because they were about to be the next Gox. Nothing yet, in fact they've gotten better likely because the exodus of many traders eased the support and scaling burden. Again, I don't mean to defend any exchange in particular, it is still the wild west and I'm sure a lot of shady stuff goes on. There's just a lot about the Bitfinex narrative that doesn't make a lot of sense, and it seems mostly because one guy has built a successful brand around beating his drum the loudest.
  - lazyasciiart 9y ago

dkural 9y ago

Although you're right that if tethers are not backed by anything they'd inflate BTC, keep in mind this is likely an extremely small effect, because a lot of the inbound also occurred throughout time, and at any given time, the vast majority of trading and volume was outside of any trade involving tethers. It should be well below single digit % - a lot less than the daily volatility, hence any influence on BTC price is negligible unless I am missing something (which is entirely possible, I'm new to this stuff).

kobeya 9y ago
The Tether liability is about the same size as MtGox was, in dollar terms, when things started to unravel. That wasn’t a small effect.
- dmichulke 9y ago
  In order to equate those, you would have to 1. either divide it by the market cap then and now 2. or divide it by the size of the order book(s) then and now The first should give you a longer term view of the effect (I'd guess maybe a month?), the second a short-term view of it (within hours).
  - kobeya 9y ago
    The first is rediculous. Market cap is meaningless, especially in bitcoin where it isn’t even known well how much coin is accessible, and velocity of those coins in circulation is so low and order books so thin by comparison. The effect is exactly comparable to how much value will disappear. That’s how many lives will be affected, people disillusioned, etc. I honestly don’t know what you’re trying to argue in the last paragraph.
    - dmichulke 9y ago
      > The first is rediculous So you're saying the same amount of money in 2013 will have the same impact today? I don't think so, market cap is a proxy for this. It's not a good one but it is one. > The effect is exactly comparable to how much value will disappear. Yes but it will be shouldered by many more coins and many more dollars. > I honestly don’t know what you’re trying to argue in the last paragraph. You can compare the 600 mn mtgox impact using either of the two proxies, liquidity will give you a view of what will happen in the short-term, market cap will give you a glimpse of what will happen after the initial shockwave went through the orderbooks. PS: It's "ridiculous" not rediculous.

csomar 9y ago

You might want to get more info. Not a single dollar was stolen. Their “blockchain” was hacked. It can distrube them but not bankrupt them. The USD will be always on their bank accounts if they are holding full reserves.

virgilp 9y ago

> I believe this tactic has been using by Yahoo and others in announcing the number of stolen accounts as well. "We lost personal information of 57M users, but no credit card leaked and we paid the hackers to delete it"