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Bitcoin-Rigging Criminal Probe Focused on Tie to Tether
- hummingurban 8y agoIf DOJ can show evidence of cartels, terrorist cells, and other unsavory entities laundering their money through bitcoin, ICOs, ethereum, altcoins and tether, then anyone who has ever taken crypto to work on a project, anyone who handled the influx of cash to exchange it for crypto by selling Tether (which is all of the major exchanges), are headed for a storm of hurt. We are no longer in SEC turf and DOJ has a conviction rate of 93% as of 2012, a trend which has been increasing. It's one thing to argue against Howey Test or hide money from the Taxman. It's a whole new level of shit storm to be accused of laundering money for terrorists and drug cartels. https://medium.com/@justsomeperson/uncovering-the-real-cartel-in-bitcoin-814427d00f54 https://medium.com/@justsomeperson/uncovering-the-real-carte...
- ForHackernews 8y agoIt worked out fine for HSBC. AFAIK, nobody there went to jail for being the personal bankers to Mexican cartels. https://www.reuters.com/article/us-hsbc-probe/hsbc-became-bank-to-drug-cartels-pays-big-for-lapses-idUSBRE8BA05M20121212 https://www.reuters.com/article/us-hsbc-probe/hsbc-became-ba...
- yasp 8y agoWorked out fine for Citigroup as well. https://www.bloomberg.com/news/articles/2018-11-16/gett-is-said-to-court-buyers-as-ride-hailing-apps-battle-it-out https://www.bloomberg.com/news/articles/2018-11-16/gett-is-s...
- jondubois 8y agoIt worked out fine for all the people who sold toxic assets for a profit leading up to the 2008 crisis. The government has already made its stance clear. Crime is OK if it's done in a complex way. They just need to formalize it into a law that way citizens are aware of the complexity threshold that is required for a crime to be legal.
- pathseeker 8y agoWell not fine from a business perspective. The fines were larger than the money made from such activities. If HSBC were primarily a front for the cartels, it would have gone bankrupt.
- yasp 8y ago> If DOJ can show evidence of cartels, terrorist cells, and other unsavory entities laundering their money through bitcoin, ICOs, ethereum, altcoins and tether, then anyone who has ever taken crypto to work on a project, anyone who handled the influx of cash to exchange it for crypto by selling Tether (which is all of the major exchanges), are headed for a storm of hurt. Oh no, the cartels and terrorist cells would have to go back to conducting all their illegal activities in physical US dollars. > We are no longer in SEC turf and DOJ has a conviction rate of 93% as of 2012 DOJ has such a high conviction rate because they only prosecute cases they expect to win.
- tyingq 8y ago"DOJ has such a high conviction rate because they only prosecute cases they expect to win." Things like kingpin laws (continuing criminal enterprise) and RICO probably help the conviction rate.
- pavel_lishin 8y ago> then anyone who has ever taken crypto to work on a project, anyone who handled the influx of cash to exchange it for crypto by selling Tether (which is all of the major exchanges), are headed for a storm of hurt. Why would all cryptocurrency transactions be tainted by this? Or are you saying that the value (relative to real money) would plummet?
- nyolfen 8y agopresumably it would foreshadow a regulatory crackdown
- gibsons77 8y agoSounds like torrents all over again, i.e. a giant waste of resources. Criminals will always be one step ahead of the DOJ or any other regulatory body.
- dralley 8y agoWhether a "giant waste of resources" or not, the torrent ecosystem nowadays is nowhere close to what it was a few years ago.
- gibsons77 8y agoRight, but that's thanks to innovation in the digital media space and subscription models, not necessarily regulatory pressure.
- pavel_lishin 8y agoWell, it's a little different. Torrent sites didn't have centralized websites that would literally trade large sums of money for torrents.
- r00fus 8y agoTorrents couldn't be used to launder money for corrupt purposes. Anyone in crypto who didn't see this coming was blind or willfully ignorant.
- craftyguy 8y agoCartels, terrorist cells, and other unsavory entities also use cash, but you don't see the DOJ prosecuting everyone who has accepted cash as payment.
- api 8y agoYou definitely see them prosecuting people who accept cash from cartels and terrorist cells or engineering financial entities explicitly to do so. Tether looks a whole whole lot like one of those.
- wgerard 8y agoWait, isn't that basically the basis for civil forfeiture? "We don't know why you would have this much cash, so prove it isn't related to drugs/laundering"?
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- calciphus 8y agoIn fairness, if I set up a bank which, by accident or by design, made it exceedingly easy to launder millions in cash relatively quickly, you can bet the DOJ would have a problem with that. Transporting millions in cash is risky (either you trust the courier with that and risk their life, or you do it yourself and risk yours), and doing so internationally is extremely challenging and/or expensive. By contrast, doing it digitally is quite easy and fast. It feels a bit disingenuous to insist the two are the same.
- stef25 8y agoHSBC cooperated with cartels to launder money, apparently they even opened special counters for them to deposit cash at. https://en.m.wikipedia.org/wiki/HSBC_Mexico#Money_laundering https://en.m.wikipedia.org/wiki/HSBC_Mexico#Money_laundering
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- ryanlol 8y agoFrom your link: >f. People/exchanges/entities rarely use shell companies for legitimate purposes. And by rarely, I mean almost never.
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- Devils_Avocado 8y agoOOOOOOOOOOOOHHHHHHHHHHHHHHHHHH SHHHHHHHHHHHHHHHIIIIIIIIIIIIIIIIIITTTTTTTTTTTTTTTTTTTTT - watch out for your US Dollars y'all, I heard at least one physical paper $20 bill was used to buy an 8th of reefer in Rhode Island this one time... the Fed is winding up its operations as we speak...
- dang 8y agoPlease don't do this here.
- empath75 8y agoBitcoin has never been anything but a money laundering scheme for drug dealers and tax cheats and various other criminals. It’s literally the only valid use case for it.
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- DINKDINK 8y ago>It’s literally the only valid use case for it. Use case: a currency with better inflation characteristics than even gold.
- sdinsn 8y agoGold isn't a currency, and price fluctuations are TERRIBLE for currency.
- DINKDINK 8y agoPrice fluctuations are normal for markets. No one expects the exchange rate between food and oil to be constant, why expect it to be constant between a money and food? If you need down-side risk insurance, by a put option. When letting a government have a monopoly of the risk management of a money, you are essentially buying a collar (long stock + long put + short call) trade which is expensive for people who don't need that exposure.
- spookthesunset 8y ago> why expect it to be constant between a money and food? Because sometimes all I want to do is buy a bigmac with some cash and not worry about put options or hedging risk in currency fluctuations? Why expect the government to keep a predictable exchange rate between money and food? Because then I don't have to worry about that and neither does anybody else. That adds incredible value to an economy.
- rando444 8y agoEric Holder neutered the DOJ because he was too afraid to lose cases. The only reason their conviction rate is so high is because they don't bother to prosecute the majority of crimes anymore. These days if you can pay an arbitrary fine, you can get away with pretty much any financial crime.. (laundering money for drug cartels, etc.)
- antocv 8y agoThe terrorists in Syria were funded by US Governement, both by CIA and Armed forces. They didnt need bitcoin to do it.
- stale2002 8y agoPeople have used USD to fund crimes, but it would be ridiculous to say that unrelated restaurant owners would get in trouble for the mere act of accepting USD. The US has already given guidance on this. They have already stated that BTC and other cryptos are a commodity, and legal. The SEC itself disagrees with your absurd notion that anyone who even accept crypto as payment could be in trouble.
- prolikewh0a 8y agoIf this is true, will there have been any major rise of Bitcoin that hasn't been caused by illegal & unethical manipulation? Serious question.
- bdcravens 8y agoDo you think a market that is easily manipulated would ever not be?
- coding123 8y agoI'm almost certain it is being manipulated, so glad an actual investigation is happening. Many people have been duped into crypto.
- gibsons77 8y agoDuped? I use gitcoin now to build software projects. Is that use case a figment of my imagination? And nice concern troll. I think there are two types of people in crypto. Some like me, who are building things and see the huge potential in decentralized infrastructure, and then speculators that will dump money into anything as long as they see a positive return. Do you really feel that bad for the speculators? No ones forcing them to invest in shitty ICO's with tons of red flags.
- bdcravens 8y agoI think crypto is very manipulated, but people aren't being duped because of that manipulation. (aside from a few situations like Paycoin where the "founder" Josh Garza promised a price floor; he has been since prosecuted) Losses in cryptocurrencies like Bitcoin and ICOs are the result of individuals hyping each other up and smoking hopium. Opportunities have to at least pass a smell test before you can claim you've been "duped".
- lowdest 8y agoYes, the underlying idea has always been sound enough to attract large investment without manipulation. Even if the legal and ethical true price is under $1000, that's still more natural growth than, say, an additional 20x added on by manipulation.
- OnlyRepliesToBS 8y agoas good a shoe in as anything else better than the electricity tax angle anyway
- i_am_proteus 8y agoThis doesn't seem like an inherent flaw in crypocurrencies as much as a feature of an entirely unregulated secondary market (BTC to USD). Obvious counterpoint: a viable secondary market is a necessary step to adoption of a cryptocurrency.
- gibsons77 8y agoThere's a decentralized peg to USD called DAI which is backed by ETH as collateral. It's maintained the 1$ USD peg throughout the entire crypto bear market. MakerDAO is quite impressive, and I hope to see it absorb the liquidity away from tether.
- sidko 8y agoHow do you define "1$ USD peg"? As of right now, the price of DAI is $0.98, 2% off its "peg". Asking as a serious question, since I see this statement a lot.
- wmf 8y agoI guess if it doesn't drop 10% in one day that's considered "stable" by cryptocurrency standards.
- arcticbull 8y agoThat’s objectively bad
- gibsons77 8y agoAnd also not accurate.
- gibsons77 8y agoThat's just due to liquidity. The peg is maintained through arbitrage, so of course if you have low liquidity you're going to have fluctuations around the peg.
- shittyadmin 8y agoAs we've seen many times in the past, when the price falls, so do the scammers - this will be interesting.
- Scoundreller 8y agoAgreed. It will be fun to see who has gone fractional.
- lawn 8y agoTether is very much not a cryptocurrency. It's centrally controlled. They can freeze transactions and mint new coins at will.
- arcticbull 8y agoSo is USDC and XRP right? And MIOTA. Where do you suggest we draw the line? I’m curious what the general thinking is on this.
- gibsons77 8y agoIOTA is moving towards an open source coordinator (released today on github), and eventually coordicide (which is what it sounds like). It's been the goal of the project from day one. Bitcoin had checkpoints when it started; the coordinator is analogous to checkpoints. Wouldn't touch XRP with a ten foot pole, though.
- lawn 8y agoCheckpoints prevents the chain from being reorganized after a large number of confirmations have already passed. This is to prevent several days of transactions from being reversed. IOTA's coordinator in contrast defines when a transaction can be considered confirmed. They are nothing alike.
- rednerrus 8y agoIf only someone had something about this a year ago...
- Havoc 8y agoFrankly I'm surprised Tether hasn't gone nuclear already.
- antocv 8y agoHilarious, on the bubble chart "Why did the government let this happen", we are now at this point "pls g-men step in and dont let this disaster happen" and "put those responsible behind bars" etc.
- habosa 8y agoSo Tether seems to have been hanging out at about 0.97 lately ... isn't that a massive problem? If anyone really believe they were worth 1.00 USD we'd be vacuuming up those 3 pennies.
- Qworg 8y agoThere could also be 3 pennies of friction in getting the money into or out of Tether.
- discodave 8y agoI have a feeling that the friction is very directional. There are lots and lots of stories about individuals losing money in bitcoin and tether, this is one way they do it.
- Scoundreller 8y agoTether’s market cap has been going down on coinmarketcap.com Possibly they’re using their fiat dollars to redeem tethers at a discount? (Or to try and enforce the peg)?
- JumpCrisscross 8y ago> Possibly they’re using their fiat dollars to redeem tethers at a discount? Doesn’t Coinmarketcap use exchanges’ self-reported data? What prevents Bitfinex from wash trading at $1?
- carrja99 8y agoNothing... they can also print them at will too, there's no true proof of funds. The site is a joke, I've been watching it since it launched and you can never create an account. Only way to obtain USDT is second hand on exchanges.
- Scoundreller 8y agoThat would inflate volume, but have minimal impact on market cap. I dunno if Tether’s ledger is public or not. I would assume it would have to be for anyone to know how many are in existence.
- chrisco255 8y agoIsn't this like, one year old news at this point?
- chrisco255 8y agoFrom January 30 of this year: https://www.bloomberg.com/news/articles/2018-01-30/crypto-exchange-bitfinex-tether-said-to-get-subpoenaed-by-cftc https://www.bloomberg.com/news/articles/2018-01-30/crypto-ex...