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That is an interesting question. Digital "currency" is unregulated so the question is which law is violated. If, in purchasing a tether, there is some underly

That is an interesting question. Digital "currency" is unregulated so the question is which law is violated. If, in purchasing a tether, there is some underlying contract that says the tether is backed by a dollar, then you might claim a violation of the contract. You may have to look at the fine print. Who was the counter party? What were the terms? Who is on the hook for it? Is it an entity that is outside the US? However, if there isn't such a contract and someone makes the claim, you might claim there was an implied contract. This is harder. Not being a lawyer, I won't even venture to guess how this would play out. In the absence of those two, I don't know if you can claim there was a violation of the law. Edit: There is one more law you can violate, and this is the obvious one: Fraud! In the US it is fraud if: - somebody misrepresents a material fact in order to obtain action or forbearance by another person, - the other person relies upon the misrepresentation, and - the other person suffers injury as a result of the act or forbearance taken in reliance upon the misrepresentation. So now the question is where is the injury? Especially if they are able to sell of Bitcoin and actually back up the Tether? Now it might be a question of: the buyer took a risk they had not intended on taking.

LargeWu 9y ago
If they say Tether is backed 1:1 by USD, and it's not (allegedly by a wide margin), then it's clearly fraud.
- inputcoffee 9y ago
  Yes, I forgot about fraud. That's the obvious one.
cagenut 9y ago
dead center, first row of their home page: Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.
- rebuilder 9y ago
  Interestingly, that doesn't actually say it's backed by USD reserves, any "traditional currency" in sufficient amounts would satisfy their claims.
  - JonnyNova 9y ago
    It still needs to add up to the worth of the dollars they claim to have in circulation. One 100 trillion Zimbabwe note isn't going to cut it.
  - paulmd 9y ago
    Tether doesn't have $2.3 billion Euros in reserve either.
Nursie 9y ago
>> Digital "currency" is unregulated so the question is which law is violated. I think the SEC and various other bodies are disputing that at the moment. They may not be specifically regulated, but they may come under a variety of existing laws, if a convincing argument can be made about them being a good match for the financial product/asset class/security/whatever that those laws apply to already.
roywiggins 9y ago
If it looks like a duck and quacks like a duck, the SEC can probably decide to regulate it like a duck. > It has been asserted that cryptocurrencies are not securities and that the offer and sale of cryptocurrencies are beyond the SEC’s jurisdiction. Whether that assertion proves correct with respect to any digital asset that is labeled as a cryptocurrency will depend on the characteristics and use of that particular asset. In any event, it is clear that, just as the SEC has a sharp focus on how U.S. dollar, euro and Japanese yen transactions affect our securities markets, we have the same interests and responsibilities with respect to cryptocurrencies. https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11 https://www.sec.gov/news/public-statement/statement-clayton-...

LargeWu 9y ago

If they say Tether is backed 1:1 by USD, and it's not (allegedly by a wide margin), then it's clearly fraud.

inputcoffee 9y ago
Yes, I forgot about fraud. That's the obvious one.

cagenut 9y ago

dead center, first row of their home page: Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.

rebuilder 9y ago
Interestingly, that doesn't actually say it's backed by USD reserves, any "traditional currency" in sufficient amounts would satisfy their claims.
- JonnyNova 9y ago
  It still needs to add up to the worth of the dollars they claim to have in circulation. One 100 trillion Zimbabwe note isn't going to cut it.
- paulmd 9y ago
  Tether doesn't have $2.3 billion Euros in reserve either.

Nursie 9y ago

>> Digital "currency" is unregulated so the question is which law is violated. I think the SEC and various other bodies are disputing that at the moment. They may not be specifically regulated, but they may come under a variety of existing laws, if a convincing argument can be made about them being a good match for the financial product/asset class/security/whatever that those laws apply to already.

roywiggins 9y ago

If it looks like a duck and quacks like a duck, the SEC can probably decide to regulate it like a duck. > It has been asserted that cryptocurrencies are not securities and that the offer and sale of cryptocurrencies are beyond the SEC’s jurisdiction. Whether that assertion proves correct with respect to any digital asset that is labeled as a cryptocurrency will depend on the characteristics and use of that particular asset. In any event, it is clear that, just as the SEC has a sharp focus on how U.S. dollar, euro and Japanese yen transactions affect our securities markets, we have the same interests and responsibilities with respect to cryptocurrencies. https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11 https://www.sec.gov/news/public-statement/statement-clayton-...