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It's frustrating to read these allegations as somebody who has spent the better part of the past year studying various exchange trade execution data feeds, and

It's frustrating to read these allegations as somebody who has spent the better part of the past year studying various exchange trade execution data feeds, and writing an algorithmic trading bot. Yes, Bitfinex lead the market a lot of the time in the 2017 Bitcoin bull run. Yes, Bitfinex "printed" hundreds of millions of dollars worth of tether, which was initially distributed to large players on Bitfinex and Bittrex exchanges, also poloniex I believe was in on the issuance contracts. But that doesn't mean that Bitfinex fraudulently pumped up the price of Bitcoin. In fact, that would be impossible, even if they tried to fake the price higher... as they would lose tons of real money to arbitrageurs in the process... The (nano)second that any one single exchange gets out of line in terms of price, there are trading bots out there that notice that, immediately buy up as much BTC as they can on every other exchange that is below that price, and then immediately dump 100% of what they just bought on the exchange that is out of whack (Bitfinex). And if they weren't losing real money to the arbitrageurs, (presumably because they restricted USDT withdrawals which has never happened for more than a few days straight at most), then the arbitrageurs wouldn't be buying up Bitcoin on every other exchange that is not Bitfinex and selling it for USDT or USD fiat... they would simply ignore bitfinex as a fake volume exchange.. like 50% of the exchanges listed on coinmarketcap currently are. There is a reason that Bitfinex was leading the price pumps... they were the main gateway to millionaires the world over buying into the crypto ecosystem. You had to give iFinex at least $100,000 cash wire in exchange for USDT to get into the game, and there was a waiting list for that "privilege". Some exchanges shut down their registration page for months because the KYC processing backup was so severe. There was real demand for Bitcoin back in 2017. Finance is difficult for most people to understand. High frequecy traded crypto finance ecosystem with synthetic-USD, USDT, USD, TUSD, USDC, etc. is especially so.

aidanlister 7y ago
I'm not sure what you're understanding what the article claims - Bitfinex wasn't just increasing the price on their exchange by showing a fake price. They created money out of thin air and handed this out to players to buy BTC with. Those players then bought BTC in quantities that drove the price up. They created price-inelastic demand out of nothing (you don't care about the price as much if you're buying them for free).
- qtplatypus 7y ago
  I am reminded of the South Seas Traiding Company.
xibalba 7y ago
As I read the article, the claim is not that the alleged fraud occurred exclusively through the Bitfinex exchange. Rather, as is stated fairly early on: > Working with partners, flood those Tethers onto crypto exchanges all around the world
- flyGuyOnTheSly 7y ago
  Yes, that's exactly what happened, but there was a massive lineup and waiting list for a lot of rich people to buy tether in late 2017. I spoke with the exchanges personally, and the delays in being able to register to the exchanges and purchase massive amounts of tether were indeed real.
bitfinexthrow 7y ago
Thanks for sharing your thoughts! I don't know much about finance but isn't the argument that "USDT isn't really backed by 1usd = 1usdt" therefore whenever you are using USDT is like buying bitcoin with nothing (or close to it)? That seems a pretty straightforward way to prop up the price if there are not enough checks in place to make sure that every order has a balance to back it up and every balance has whatever asset deposited somewhere to back it up. Bitfinex would be losing relative to other exchanges but would make a killing anyways. I'd like to believe they are regulated somehow so that they couldn't get away with something like this. Is there any info available regarding this?

aidanlister 7y ago

I'm not sure what you're understanding what the article claims - Bitfinex wasn't just increasing the price on their exchange by showing a fake price. They created money out of thin air and handed this out to players to buy BTC with. Those players then bought BTC in quantities that drove the price up. They created price-inelastic demand out of nothing (you don't care about the price as much if you're buying them for free).

qtplatypus 7y ago
I am reminded of the South Seas Traiding Company.

xibalba 7y ago

As I read the article, the claim is not that the alleged fraud occurred exclusively through the Bitfinex exchange. Rather, as is stated fairly early on: > Working with partners, flood those Tethers onto crypto exchanges all around the world

flyGuyOnTheSly 7y ago
Yes, that's exactly what happened, but there was a massive lineup and waiting list for a lot of rich people to buy tether in late 2017. I spoke with the exchanges personally, and the delays in being able to register to the exchanges and purchase massive amounts of tether were indeed real.

bitfinexthrow 7y ago

Thanks for sharing your thoughts! I don't know much about finance but isn't the argument that "USDT isn't really backed by 1usd = 1usdt" therefore whenever you are using USDT is like buying bitcoin with nothing (or close to it)? That seems a pretty straightforward way to prop up the price if there are not enough checks in place to make sure that every order has a balance to back it up and every balance has whatever asset deposited somewhere to back it up. Bitfinex would be losing relative to other exchanges but would make a killing anyways. I'd like to believe they are regulated somehow so that they couldn't get away with something like this. Is there any info available regarding this?