17 ms·

For anyone who hasn't been following, the prevailing theory is that the largest Cryptocoin exchange "Bitfinex" also runs an altcoin called "Teather" which was m

by sine 8y ago

For anyone who hasn't been following, the prevailing theory is that the largest Cryptocoin exchange "Bitfinex" also runs an altcoin called "Teather" which was marketed as being backed 1:1 by USD. So far they've created 2.8 BILLION USDT and coincidently the times they create millions of these happens to be in the middle of extreme market crashes. See this chart: https://i.imgur.com/Uo07d1d.jpg https://i.imgur.com/Uo07d1d.jpg More details here: https://medium.com/cryptomedication/uncovering-the-real-cartel-in-bitcoin-65b56a7a00a2 https://medium.com/cryptomedication/uncovering-the-real-cart... https://medium.com/@bitfinexed/latest https://medium.com/@bitfinexed/latest https://medium.com/@mattcollburner/bitmex-insiders-caught-in-a-web-of-lies-6d9b90baa693 https://medium.com/@mattcollburner/bitmex-insiders-caught-in...

HyperTalk2 8y ago
They created another $250 million worth just one week ago. https://omniexplorer.info/address/3MbYQMMmSkC3AgWkj9FMo5LsPTW1zBTwXL https://omniexplorer.info/address/3MbYQMMmSkC3AgWkj9FMo5LsPT...
- ttul 8y ago
  So, who are “they” and where is all this fiat going? That’s a great and yet unanswered question. If Tether was real, then KPMG would be glad to audit them..
Entangled 8y ago
So, BTC created 16 million coins from air and nobody complained. Ripple created 100 billion coins from air and nobody complained. Tron, Stellar, Cardano, Iota, all in the billions. The top 1000 coins were created from air and nobody complained (most are scams). Why creating Tethers from thin air is now a cause of concern? That's a coin just like every coin out there, like Tron, Verge, EOS, they're created from nothing by a program, they have the value the market decides it has and the creator has all the right to print all the coins they want just like everybody else. And the market has decided USDT has more value than all other coins combined as it is number two in volume just behind BTC. People use USDT as a safe harbor when markets collapse, it has its use, a very valuable use. Of course they will print trillions if they could, everybody would print trillions of their shitty coins and cash out tanking the market if they could, that's the nature of cryptocurrencies. I fail to see why people complain about Tether (highly valuable) and not about the rest of the scam coins that are draining the market from stupid money.
- lambda 8y ago
  > Why creating Tethers from thin air is now a cause of concern? If you are claiming they are backed by USD, and you are creating them out of thin air, then that's a scam. Other coins are only valued based on how the market values them. There is no fraud there; you are not claiming that you will redeem them for something else, they just represent themselves and are valued based on how useful people find that particular kind of cryptocurrency, plus hype. MtGox was also a scam by the end, since they were trading on their exchange bitcoins and USD that they didn't actually have for people to cash out.
  - dTal 8y ago
    >MtGox was also a scam by the end, since they were trading on their exchange bitcoins and USD that they didn't actually have for people to cash out. Heh. When a bitcoin exchange does it, it's a "scam". When a bank does it, it's "fractional reserve".
    - danharaj 8y ago
      Banks don't pretend that they're not fractional reserve.
      - kevingadd 8y ago
        Fractional reserve is also regulated and deposits are insured up to a certain amount, so it's definitely not comparable to printing imaginary USDT - even if fractional reserve banking has many well-known issues.
        hapnin 8y ago
        That regulation didn't work so well 10 years ago. Regulation is for us, not the big dogs.
        jnwatson 8y ago
mFixman 8y ago
I'm lost. Why is it significant that they supposedly create Tether during market crashes?
- imeron 8y ago
  You can create Tether out of thin air and use it to move the market in a favourable direction.
  - mtgx 8y ago
    But assuming Tether was legitimate, wouldn't they also need to create new Tether units during extreme market crashes because that's when the highest demand for Tether would be, so they'd run out of the existing Tether? They wouldn't need to create new Tether during bull runs, because nobody cares about putting their money into Tether then.
    - laken 8y ago
      Day traders use Tether a lot, even during bull runs. Because the market never closes, many full-time traders put their crypto all into tether when they're done trading for the day.
      - vkou 8y ago
        Why not just put it into USD when they are done for the day?
        fastball 8y ago
        Crypto/Fiat transactions are much more expensive than Crpyto/Crypto transactions. Why impact your bottom line if you don't need to?
        laken 8y ago
        In addition, it's more "liquid" too. It's easier to turn tether into pretty much any altcoin on most exchanges vs turning USD back into altcoins. There's still a belief in some circles too that a crypto/crypto transaction isn't a taxable event, which isn't true anymore. Regardless, some either believe this or know it's not true but find it easier to tax-evade this way.
ploggingdev 8y ago
What happened to the bitfinexed guy, he's gone silent on social media?
- headsoup 8y ago
  My first guess would be perhaps he is helping with the investigation...
throwawaylolx 8y ago
They mint Tether during market crashes because that's when there is the highest volume on USDT pairs, and when Tether needs to create tokens to maintain the exchange rate around $1. Have you read their whitepaper? Further, there is more proof that Tether has the funding to back up the USDT than proof that Tether does not have the funds: https://blog.bitmex.com/tether/ https://blog.bitmex.com/tether/ https://blog.bitmex.com/tether-addendum-new-financial-data-released-from-puerto-rico/ https://blog.bitmex.com/tether-addendum-new-financial-data-r... Reddit memes, medium posts with no research, and "correlation implies causation" assumptions does not make rumours true.
- lagadu 8y ago
  Well, right on tether.to they say, and I quote: > Our reserve holdings are published daily and subject to frequent professional audits. All tethers in circulation always match our reserves. They've been around for years and the grand total of independents audits is 0 (zero). Sure, assumptions don't make rumors true but them flat-out lying about audits and transparency speaks louder than anything else and we're not even getting into how it took the Panama papers leak for the public to find out that several of the people in charge of Tether and the people in charge of Bitfinex being the same.
  - carrja99 8y ago
    Their cheerleaders usually reply claiming that they're under no obligation to publish audits and pretend that statement doesn't exist on the website, or is an old outdated webpage they forgot to remove.
  - anonymouz 8y ago
    Even worse, they tried to get an audit, but it ended up with them and their auditor ending the process without producing an audit. Apparently they weren't too happy the auditor wanted to actually take a close look: “We confirm that the relationship with Friedman is dissolved. Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame. As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success.” - Tether spokesperson See https://medium.com/@bitfinexed/bitfinex-and-tether-is-unauditable-why-they-will-never-do-a-real-audit-3324e002b185 https://medium.com/@bitfinexed/bitfinex-and-tether-is-unaudi...
DINKDINK 8y ago
If there was a problem redeeming Tether for USD, you'd expect that the market price distortion of Tether. But it hasn't[1] https://www.tradingview.com/chart/?symbol=POLONIEX:USDTUSD https://www.tradingview.com/chart/?symbol=POLONIEX:USDTUSD >they've created 2.8 BILLION USDT Absolute numbers are meaningless and less eye catching when they're compared to the entire market. 2.8 ~~Billion~~ USDT is only 0.5%-0.8% of the market. Do you really think that a 300-500 billion dollar market is being propped up by less than pennies on the dollar? What can be said about Tether: it's a trusted third party that's vulnerable to fractional reserve (like all other exchanges). I wouldn't recommend people use it but to point to the tether creation as proof positive of manipulation rather than discussion fractional reserve issues I think is people confusing lurid facts with silent evidence threats. Other reading: https://medium.com/crypto-punks/tether-misconceptions-2984430e7e48 https://medium.com/crypto-punks/tether-misconceptions-298443...
- tptacek 8y ago
  No, not necessarily. Ponzi schemes can survive redemptions for years or even decades; they blow up when there's finally a run.
  - DINKDINK 8y ago
    You're confusing a Ponzi scheme and fractional reserve. Two very different systems.
    - deleted 8y ago
      [deleted]
    - coinme 8y ago
      Tether is claimed to be fully backed by USD. If it is not then it quickly ends up being an effective Ponzi scheme.
      - DINKDINK 8y ago
        Ponzi schemes are 'investment' promises that require ever growing layers of patsies to be recruited for each patsies' pay off to occur. Fractional Reserve is a practice where an institution leverages themselves by only keeping the expected liquidity needs in reserve and using the other capital for other means. Eventually they blowing up, when the market demands the apparent liquidity.
tomp 8y ago
Don't you have it the wrong way round? The value (in $) of USDT crashes after they create more of it, because they create more of it (i.e. supply increases). I mean, surely it doesn't make sense to increase supply after USDT crashes (and hence depress the value further)?!
- ceejayoz 8y ago
  If Tether is a scam, they'd care more about the value of Bitcoin and the altcoins being propped up with it (as that's where they'd be actually making their money) than the value of Tether.
  - tomp 8y ago
    Ah, I get it. I thought the parent was implying USDT/USD market crashes, but I didn't notice the `.jpg` that shows BTC/USD price.
zby 8y ago
For anyone who hasn't read the article - I wish Tether was investigated too - but this article is not about that: "The illicit tactics that the Justice Department is looking into include spoofing and wash trading"
- api 8y ago
  This could be working up to that.
  - arcticfox 8y ago
    Also the same people running Tether and Bitfinex are highly suspected of also spoofing / wash trading.
seppel 8y ago
> So far they've created 2.8 BILLION USDT Who bought all these USDT? Who is holding them? Why would you hold them?
- qiqing 8y ago
  My understanding is that there was a confusing UI where people who intended to sell bitcoin for USD actually selected USDT by default. And one reason they might hold them is because they can't figure out how to exchange them for USD. I mean, I'm sure there must be some people who bought USDT when that was their intention, but there are also a bunch who bought it by accident.
  - seppel 8y ago
    But you can easily buy BTC using USDT and then sell the BTC somewhere for real USD. Where are the reports of people stuck with USDT?
    - ttul 8y ago
      Nobody will be stuck with USDT until the Ponzi scheme is finally revealed in the form of an indictment. Until then, investors don’t hesitate to hold a few USDT now and then, because the likelihood of being stuck with them when it all goes to hell is small.
      - seppel 8y ago
        > investors don’t hesitate to hold a few USDT now and then But it is not "now and then". It is 2.8 billion all the time! Maybe they are hold by different people at different times. Yet, they have to be held somewhere by someone all the time, who think that it is a good idea to have USDT instead of USD or BTC.
    - CyberDildonics 8y ago
      You lose a percentage of what you exchange
loeg 8y ago
Tether, not "teather." As in, tethered to USD (nominally).
stordoff 8y ago
What is the author of the first article attempting to show by including "An actual picture of the area where this account is registered"? That just feels irrelevant.

by sine 8y ago

HyperTalk2 8y ago

They created another $250 million worth just one week ago. https://omniexplorer.info/address/3MbYQMMmSkC3AgWkj9FMo5LsPTW1zBTwXL https://omniexplorer.info/address/3MbYQMMmSkC3AgWkj9FMo5LsPT...

ttul 8y ago
So, who are “they” and where is all this fiat going? That’s a great and yet unanswered question. If Tether was real, then KPMG would be glad to audit them..

Entangled 8y ago

So, BTC created 16 million coins from air and nobody complained. Ripple created 100 billion coins from air and nobody complained. Tron, Stellar, Cardano, Iota, all in the billions. The top 1000 coins were created from air and nobody complained (most are scams). Why creating Tethers from thin air is now a cause of concern? That's a coin just like every coin out there, like Tron, Verge, EOS, they're created from nothing by a program, they have the value the market decides it has and the creator has all the right to print all the coins they want just like everybody else. And the market has decided USDT has more value than all other coins combined as it is number two in volume just behind BTC. People use USDT as a safe harbor when markets collapse, it has its use, a very valuable use. Of course they will print trillions if they could, everybody would print trillions of their shitty coins and cash out tanking the market if they could, that's the nature of cryptocurrencies. I fail to see why people complain about Tether (highly valuable) and not about the rest of the scam coins that are draining the market from stupid money.

lambda 8y ago
> Why creating Tethers from thin air is now a cause of concern? If you are claiming they are backed by USD, and you are creating them out of thin air, then that's a scam. Other coins are only valued based on how the market values them. There is no fraud there; you are not claiming that you will redeem them for something else, they just represent themselves and are valued based on how useful people find that particular kind of cryptocurrency, plus hype. MtGox was also a scam by the end, since they were trading on their exchange bitcoins and USD that they didn't actually have for people to cash out.
- dTal 8y ago
  >MtGox was also a scam by the end, since they were trading on their exchange bitcoins and USD that they didn't actually have for people to cash out. Heh. When a bitcoin exchange does it, it's a "scam". When a bank does it, it's "fractional reserve".
  - danharaj 8y ago
    Banks don't pretend that they're not fractional reserve.
    - kevingadd 8y ago
      Fractional reserve is also regulated and deposits are insured up to a certain amount, so it's definitely not comparable to printing imaginary USDT - even if fractional reserve banking has many well-known issues.
      - hapnin 8y ago
        That regulation didn't work so well 10 years ago. Regulation is for us, not the big dogs.
        jnwatson 8y ago

mFixman 8y ago

I'm lost. Why is it significant that they supposedly create Tether during market crashes?

imeron 8y ago
You can create Tether out of thin air and use it to move the market in a favourable direction.
- mtgx 8y ago
  But assuming Tether was legitimate, wouldn't they also need to create new Tether units during extreme market crashes because that's when the highest demand for Tether would be, so they'd run out of the existing Tether? They wouldn't need to create new Tether during bull runs, because nobody cares about putting their money into Tether then.
  - laken 8y ago
    Day traders use Tether a lot, even during bull runs. Because the market never closes, many full-time traders put their crypto all into tether when they're done trading for the day.
    - vkou 8y ago
      Why not just put it into USD when they are done for the day?
      - fastball 8y ago
        Crypto/Fiat transactions are much more expensive than Crpyto/Crypto transactions. Why impact your bottom line if you don't need to?
        laken 8y ago
        In addition, it's more "liquid" too. It's easier to turn tether into pretty much any altcoin on most exchanges vs turning USD back into altcoins. There's still a belief in some circles too that a crypto/crypto transaction isn't a taxable event, which isn't true anymore. Regardless, some either believe this or know it's not true but find it easier to tax-evade this way.

ploggingdev 8y ago

What happened to the bitfinexed guy, he's gone silent on social media?

headsoup 8y ago
My first guess would be perhaps he is helping with the investigation...

throwawaylolx 8y ago

They mint Tether during market crashes because that's when there is the highest volume on USDT pairs, and when Tether needs to create tokens to maintain the exchange rate around $1. Have you read their whitepaper? Further, there is more proof that Tether has the funding to back up the USDT than proof that Tether does not have the funds: https://blog.bitmex.com/tether/ https://blog.bitmex.com/tether/ https://blog.bitmex.com/tether-addendum-new-financial-data-released-from-puerto-rico/ https://blog.bitmex.com/tether-addendum-new-financial-data-r... Reddit memes, medium posts with no research, and "correlation implies causation" assumptions does not make rumours true.

lagadu 8y ago
Well, right on tether.to they say, and I quote: > Our reserve holdings are published daily and subject to frequent professional audits. All tethers in circulation always match our reserves. They've been around for years and the grand total of independents audits is 0 (zero). Sure, assumptions don't make rumors true but them flat-out lying about audits and transparency speaks louder than anything else and we're not even getting into how it took the Panama papers leak for the public to find out that several of the people in charge of Tether and the people in charge of Bitfinex being the same.
- carrja99 8y ago
  Their cheerleaders usually reply claiming that they're under no obligation to publish audits and pretend that statement doesn't exist on the website, or is an old outdated webpage they forgot to remove.
- anonymouz 8y ago
  Even worse, they tried to get an audit, but it ended up with them and their auditor ending the process without producing an audit. Apparently they weren't too happy the auditor wanted to actually take a close look: “We confirm that the relationship with Friedman is dissolved. Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame. As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success.” - Tether spokesperson See https://medium.com/@bitfinexed/bitfinex-and-tether-is-unauditable-why-they-will-never-do-a-real-audit-3324e002b185 https://medium.com/@bitfinexed/bitfinex-and-tether-is-unaudi...

DINKDINK 8y ago

If there was a problem redeeming Tether for USD, you'd expect that the market price distortion of Tether. But it hasn't[1] https://www.tradingview.com/chart/?symbol=POLONIEX:USDTUSD https://www.tradingview.com/chart/?symbol=POLONIEX:USDTUSD >they've created 2.8 BILLION USDT Absolute numbers are meaningless and less eye catching when they're compared to the entire market. 2.8 ~~Billion~~ USDT is only 0.5%-0.8% of the market. Do you really think that a 300-500 billion dollar market is being propped up by less than pennies on the dollar? What can be said about Tether: it's a trusted third party that's vulnerable to fractional reserve (like all other exchanges). I wouldn't recommend people use it but to point to the tether creation as proof positive of manipulation rather than discussion fractional reserve issues I think is people confusing lurid facts with silent evidence threats. Other reading: https://medium.com/crypto-punks/tether-misconceptions-2984430e7e48 https://medium.com/crypto-punks/tether-misconceptions-298443...

tptacek 8y ago
No, not necessarily. Ponzi schemes can survive redemptions for years or even decades; they blow up when there's finally a run.
- DINKDINK 8y ago
  You're confusing a Ponzi scheme and fractional reserve. Two very different systems.
  - deleted 8y ago
    [deleted]
  - coinme 8y ago
    Tether is claimed to be fully backed by USD. If it is not then it quickly ends up being an effective Ponzi scheme.
    - DINKDINK 8y ago
      Ponzi schemes are 'investment' promises that require ever growing layers of patsies to be recruited for each patsies' pay off to occur. Fractional Reserve is a practice where an institution leverages themselves by only keeping the expected liquidity needs in reserve and using the other capital for other means. Eventually they blowing up, when the market demands the apparent liquidity.

tomp 8y ago

Don't you have it the wrong way round? The value (in $) of USDT crashes after they create more of it, because they create more of it (i.e. supply increases). I mean, surely it doesn't make sense to increase supply after USDT crashes (and hence depress the value further)?!

ceejayoz 8y ago
If Tether is a scam, they'd care more about the value of Bitcoin and the altcoins being propped up with it (as that's where they'd be actually making their money) than the value of Tether.
- tomp 8y ago
  Ah, I get it. I thought the parent was implying USDT/USD market crashes, but I didn't notice the `.jpg` that shows BTC/USD price.

zby 8y ago

For anyone who hasn't read the article - I wish Tether was investigated too - but this article is not about that: "The illicit tactics that the Justice Department is looking into include spoofing and wash trading"

api 8y ago
This could be working up to that.
- arcticfox 8y ago
  Also the same people running Tether and Bitfinex are highly suspected of also spoofing / wash trading.

seppel 8y ago

> So far they've created 2.8 BILLION USDT Who bought all these USDT? Who is holding them? Why would you hold them?

qiqing 8y ago
My understanding is that there was a confusing UI where people who intended to sell bitcoin for USD actually selected USDT by default. And one reason they might hold them is because they can't figure out how to exchange them for USD. I mean, I'm sure there must be some people who bought USDT when that was their intention, but there are also a bunch who bought it by accident.
- seppel 8y ago
  But you can easily buy BTC using USDT and then sell the BTC somewhere for real USD. Where are the reports of people stuck with USDT?
  - ttul 8y ago
    Nobody will be stuck with USDT until the Ponzi scheme is finally revealed in the form of an indictment. Until then, investors don’t hesitate to hold a few USDT now and then, because the likelihood of being stuck with them when it all goes to hell is small.
    - seppel 8y ago
      > investors don’t hesitate to hold a few USDT now and then But it is not "now and then". It is 2.8 billion all the time! Maybe they are hold by different people at different times. Yet, they have to be held somewhere by someone all the time, who think that it is a good idea to have USDT instead of USD or BTC.
  - CyberDildonics 8y ago
    You lose a percentage of what you exchange

loeg 8y ago

Tether, not "teather." As in, tethered to USD (nominally).

stordoff 8y ago

What is the author of the first article attempting to show by including "An actual picture of the area where this account is registered"? That just feels irrelevant.