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> The attorney general said Bitfinex’s problems began in 2018, when it handed over $850 million to third-party payments processor Crypto Capital Corp. to handle

> The attorney general said Bitfinex’s problems began in 2018, when it handed over $850 million to third-party payments processor Crypto Capital Corp. to handle customers-withdrawal requests. Over the months that followed, Panama-based Crypto Capital failed to process the orders, the attorney general said. For all the noise about Tether being insolvent, it turns out that it was completely solvent? Then in 2018, Bitfinex got taken by Crypto Capital and raided the Tether reserves for $850M backing the Tether issuance? So if I'm reading this right: The holders of tether are now screwed and should be converting to bitcoin/litecoin/etc asap.

chx 8y ago
> For all the noise about Tether being insolvent, it turns out that it was completely solvent? what makes you think so?
- jpmattia 8y ago
  1. The primary suspicion about tether was lack of solvency, and the subpoena [edit: from CFTC] went out in late 2017. It would not have taken more than some weeks to determine if the assets were not present. Moreover, the NY AG would have hammered the point in the document if she knew. 2. It's hard to imagine bitfinex draining 100% of the tether reserves and thinking it wouldn't blow up. So I'd hazard a guess that they took only a fraction, with the expectation of replacement before getting caught. (Isn't that the embezzler's cliché?) Since that fraction amounted to $850M, it's probably not a bad guess that they were fully backed or at least pretty close, so that Tether could continue any redemption operations.
  - dragonwriter 8y ago
    > It would not have taken more than some weeks to determine if the assets were not present. The CFTC and DoJ were (and to all appearances still are, the latest news I can find on it is toward the end of 2018) conducting a wide ranging coordinated civil and criminal investigation of Bitfinex/Tether; there's no reason they would publicly release information before being prepared to take action, which wouldn't usually be when they first identify irregularities, but when they've chased down the responsibility and context issues enough to know the full range of charges they expect to file. The idea that the NY AG not saying something about he results of an ongoing federal investigation in a state filing implies that the federal investigation immediately found everything to be just fine even though it continued for at least a year afterward and hasn't visibly ended is...not warranted.
dragonwriter 8y ago
> For all the noise about Tether being insolvent, it turns out that it was completely solvent? I don't think this says that; it says that the ~$2bn in tether had at least $700 million in actual backing, because at least that much was transferred out of it's backing. It still could have been insufficiently backed to start with.
- jpmattia 8y ago
  To repeat the other reply: The primary suspicion about tether was lack of solvency, and the [edit: CFTC] subpoena went out in late 2017. It would not have taken more than some weeks to determine if the assets were not present. It's pretty hard to imagine the AG sat on tether insolvency for 18 months.
  - dragonwriter 8y ago
    > The primary suspicion about tether was lack of solvency, and the subpoena went out in late 2017 Per the court filing, the investigation of Bitfinex and Tether began in 2018 and the subpoena went out on November 27, 2018.
    - jpmattia 8y ago
      We're apparently talking about two different subpoenas. CFTC subpoenaed Tether back in 2017: See eg https://webcache.googleusercontent.com/search?q=cache:4hW_8LK03JcJ:https://www.bloomberg.com/news/articles/2018-01-30/crypto-exchange-bitfinex-tether-said-to-get-subpoenaed-by-cftc+&cd=1&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:4hW_8L...
      - dragonwriter 8y ago
        So...the CFTC isn't a State of New York agency, so what does this have to do with the reading into a New York AG action that Tether must have been solvent otherwise the AG wouldn't have sat on information since then? (Also, the CFTC and US DoJ investigations were still active at least as recently as November of 2018, which doesn't sound like they found that things were A-OK, more like they were—and presumably still are—trying to nail down the details and responsibility/liability issues surrounding identified irregularities.)

chx 8y ago

> For all the noise about Tether being insolvent, it turns out that it was completely solvent? what makes you think so?

jpmattia 8y ago
1. The primary suspicion about tether was lack of solvency, and the subpoena [edit: from CFTC] went out in late 2017. It would not have taken more than some weeks to determine if the assets were not present. Moreover, the NY AG would have hammered the point in the document if she knew. 2. It's hard to imagine bitfinex draining 100% of the tether reserves and thinking it wouldn't blow up. So I'd hazard a guess that they took only a fraction, with the expectation of replacement before getting caught. (Isn't that the embezzler's cliché?) Since that fraction amounted to $850M, it's probably not a bad guess that they were fully backed or at least pretty close, so that Tether could continue any redemption operations.
- dragonwriter 8y ago
  > It would not have taken more than some weeks to determine if the assets were not present. The CFTC and DoJ were (and to all appearances still are, the latest news I can find on it is toward the end of 2018) conducting a wide ranging coordinated civil and criminal investigation of Bitfinex/Tether; there's no reason they would publicly release information before being prepared to take action, which wouldn't usually be when they first identify irregularities, but when they've chased down the responsibility and context issues enough to know the full range of charges they expect to file. The idea that the NY AG not saying something about he results of an ongoing federal investigation in a state filing implies that the federal investigation immediately found everything to be just fine even though it continued for at least a year afterward and hasn't visibly ended is...not warranted.

dragonwriter 8y ago

> For all the noise about Tether being insolvent, it turns out that it was completely solvent? I don't think this says that; it says that the ~$2bn in tether had at least $700 million in actual backing, because at least that much was transferred out of it's backing. It still could have been insufficiently backed to start with.

jpmattia 8y ago
To repeat the other reply: The primary suspicion about tether was lack of solvency, and the [edit: CFTC] subpoena went out in late 2017. It would not have taken more than some weeks to determine if the assets were not present. It's pretty hard to imagine the AG sat on tether insolvency for 18 months.
- dragonwriter 8y ago
  > The primary suspicion about tether was lack of solvency, and the subpoena went out in late 2017 Per the court filing, the investigation of Bitfinex and Tether began in 2018 and the subpoena went out on November 27, 2018.
  - jpmattia 8y ago
    We're apparently talking about two different subpoenas. CFTC subpoenaed Tether back in 2017: See eg https://webcache.googleusercontent.com/search?q=cache:4hW_8LK03JcJ:https://www.bloomberg.com/news/articles/2018-01-30/crypto-exchange-bitfinex-tether-said-to-get-subpoenaed-by-cftc+&cd=1&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:4hW_8L...
    - dragonwriter 8y ago
      So...the CFTC isn't a State of New York agency, so what does this have to do with the reading into a New York AG action that Tether must have been solvent otherwise the AG wouldn't have sat on information since then? (Also, the CFTC and US DoJ investigations were still active at least as recently as November of 2018, which doesn't sound like they found that things were A-OK, more like they were—and presumably still are—trying to nail down the details and responsibility/liability issues surrounding identified irregularities.)