28 ms·

Bitfinex, the Italian network behind the boss that makes Bitcoin tremble

208 points by graeme 6y ago

SethTro 6y ago
Over the last year Tether has looked more and more like fraud. I was reading this article covering some of the recent developments since Tether's failed attempt to suppress discovery by New York's Attorney General https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3 https://crypto-anonymous-2021.medium.com/the-bit-short-insid...
- gge 6y ago
  Here is a good piece explaining why the data backing that articles arguments is BS: https://medium.com/@nic__carter/assessing-bitcoins-liquidity-with-coinlib-data-is-indefensible-3e5fdad51646 https://medium.com/@nic__carter/assessing-bitcoins-liquidity...
  - phire 6y ago
    On top of the suspect data source, I notice I few more issues with that teather hit piece. 1. They are only looking on the buy sides. They don't even show the sell side with all the people selling their bitcoin back for teather. On most exchanges, the amount of teather buys is roughly equal to the amount of teather sells. People just sit there all day selling back and forwards between teather and bitcoin, trying to take advantages in short-term fluctuations in the price. But by only presenting one side of the trades, that hit piece implies (but never actually claims) that teather is being created out of thin air to buy bitcoin. 2. They misrepresent teather's reserve by implying (and once again not claiming) that it is all cash held in a single bank account in a single Bahamian bank account. (and then pointing out that the value of teather massively exceeds all Bahamian bank holding) In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. -------- Personally, I'm not a fan of teather, or cryptocurrencies in general. Teather even admit they don't hold full cash/cash-equivalent reserves, saying in April 2019 they only had 74% cash+equivalent reserves. But I hate misleading journalism way more than I dislike teather. That article is hugely misleading and feels like it's designed to drive the price of bitcoin down so the anonymous author can profit from a short position.
    - sillysaurusx 6y ago
      (Psst, it's tether, not teather. Carry on.)
    - arcticbull 6y ago
      > In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. They haven't burned a single token in the last year. Give or take zero banks in the world want to do business with Tether, they're totally and utterly toxic to USD banking. Tether got shut down by every major bank on the mainland US, one. By. One. It got so bad they started getting rejected by third and fourth tier banks. They had to purchase Noble bank in Puerto Rico to get them onboard. Once Noble's mainland US correspondent bank found out, they got shut down immediately and pushed into insolvency. So they found the sketchiest bank in the entire world, Deltec, chaired by the man who created the Inspector Gadget TV series, Jean Chalopin. Look, I'm not saying they don't have the money, I'm saying I don't believe them, neither should you, and neither should anyone else until they pony up an audit.
      - phire 6y ago
        > They haven't burned a single token in the last year. They burned 1 billion tokens 6 months ago, back in August. Besides, why do people act like not burning tokens is evidence of wrong-doing? That just shows ignorance for how tether have setup their accounts. They have a "treasury account" where tether tokens go when people redeem them, and where they can quickly issue tokens when people deposit cash. They only need to issue more tokens when the treasury account gets low, and they only need to burn tokens when they have an excess in treasury. It makes total sense that in the current bull market that they haven't had the need to burn many tokens. The burn in August only happened because they now have multiple tokens on multiple networks and their TRON treasury account had too much. ------------ All your remaining criticism about banking is 100% valid. And other peoples criticism about auditing and legal troubles. I don't want to write comments on hackernews rebutting claims about Teather. I want the crypto market to go bust again so I can afford a new GPU. But so many people just parrot invalid criticism without understanding it.
  - arcticbull 6y ago
    It actually doesn't really matter. Yes, The Bit Short isn't completely right, but it's right enough that even if you go back and make the corrections to the data, the point remains equally valid. Here's one follow-up piece worth reading that does some statistical analysis: [1]. Nic goes on for days about fake volume. Let's use Bitcoin Trade Volume, which I'm led to believe is a very generous pro-crypto take on the actual volume in the space. It shows 59% USD and 41% USDT. That's not the 75% USDT The Bit Short suggested, but who cares? It's huge. If you sub in those numbers when you're reading The Bit Short, it's just as compelling. Something Nic doesn't care to talk about, slamming the WSJ instead of who he should be pointed at, Paolo Arduino. [1] https://adrianbarwicki.medium.com/impact-of-tether-trading-on-the-bitcoin-price-f915e26c2c44 https://adrianbarwicki.medium.com/impact-of-tether-trading-o... [2] https://www.bitcointradevolume.com/ https://www.bitcointradevolume.com/
    - gge 6y ago
      Cope
      - creepto 6y ago
        Is that your reply? Cope? God damn do I love coiners.
    - 5600k 6y ago
      Bitcoin still feels like a house of cards. Does anyone remember what happened after everyone said “buy gold”?
      - nivenkos 6y ago
        The biggest tell IMO is that you still can't buy many things with Bitcoin. The transactions are extremely slow, and Steam etc. have even stopped accepting Bitcoin payments. Then where does the value come from? Sure there's a base layer of narcotics trading, etc. but that could switch to other cryptocurrencies too (like Monero). It just feels like a massive pump and dump built over some base layer of illegal transactions (drugs and money laundering).
  - thecupisblue 6y ago
    >I am the cofounder of Coin Metrics, a data business that licenses crypto market data to financial institutions, asset managers, and banks Oh, so his credentials are "my company depends on crypto and if it fails we fail". And he's saying "oh these exchanges arent legit by our metrics we wont count them". That's the exactly the problem and he's saying "put on a blindfold and its gone".
    - poontang1 6y ago
      This is a horrible take. Anyone who knows the crypto industry knows many exchanges fake volume and companies like CoinMetrics reduce the noise to get better figures on the actual nature of transactions and liquidity in the industry. Nic Carter knows the data is bullshit because he has a company that specializes in proving such things.
      - nwah1 6y ago
        The false data from exchanges likely is key to the belief that these coins have value, and thus affects the data even from exchanges that aren't noticeably faking data.
    - karaterobot 6y ago
      I appreciate skepticism, but attacking someone's credibility isn't as useful as attacking their argument on its merits. Are there points he makes or facts he uses in his article which are themselves invalid or in bad faith?
      - thecupisblue 6y ago
        The basis itself of the article is invalid and it is in "bad faith". I'm not attacking their credibility, I am attacking the thesis in itself. But since the author attacks the author of the original article and the WSJ in their rebuttal, I apply the same here and note that they have a large piece of cake in the play they are talking about and are thus also not objective. So to go to the arguments: 1. Total crypto market isn't just US, on which this rebuttal seems to focus. 2. Is bitcoin price determined only by fiat inflow via "whitelisted" exchanges? Are they the only part of the whole crypto community that matters? The answer is no, and thus we gotta count the whole market. 3. And again, the article completely avoids the problem by saying "there are problematic exchanges but we will ignore them". The problematic exchanges are exactly the problem. They are creating fiat-tied coins with no backing and putting that money into market - which is valued by the amount of money in it. So the "whitehat" exchanges, even tho not directly involved in dirty money, are involved and profit off of the same ecosystem the dirty money is in. Thus, they are not an isolated system and cannot be observed as such and the market cannot be judged on the behaviour of these isolated systems alone. Imagine if this was about gambling and illegal casinos (which in a way, it is). So this article would be written by someone working in Vegas saying "Well, yeah if we're looking at all casinos there is illegal stuff going on and people are printing their own chips and trading them for real Vegas chips, but as a company that counts chips, we only count chips sold in Vegas casinos and we haven't found such problems in Vegas casinos". Would you say "hey but there is a bunch of illegal casinos you are not looking at that print chips which are exchanged at your place for money" or "oh okay this makes sense"?
- Zamicol 6y ago
  For years I've told loved ones, friends, and anyone with a passing interest in the nascent space to avoid Tether like the plague. In my opinion, it's only a matter of time until it blows up.
  - randomopining 6y ago
    How do you invest in Tether? I thought it was just like a dollar peg for btc for inter-exchange operations.
    - birdyrooster 6y ago
      I am guessing people park their money in tether during periods of instability without needing to pay a broker to transfer into fiat. It looks like a place for temporarily hedging against crypto generally.
    - rawtxapp 6y ago
      They don't invest in tether, it's just a means of moving money between exchanges like you say or temporary hold between trades.
    - ac29 6y ago
      In theory, if you give Tether some dollars, they will store those dollars in reserve and issue you new Tethers. In practice, there is no evidence that any part of that happens aside from the minting new tethers part. Most likely there is some amount of money and/or crypto held in reserve, but despite allegedly having several tens of billions of dollars in reserve, they refuse to do an audit. I think the currently most plausible answer for how Tether works is: 1 )Tether issues tokens to OTC exchanges in exchange for an IOU 2) The exchange buys BTC with it 3) The exchange sells that bitcoin for dollars, and pays off that IOU. This almost certainly wont fly with regulators, and has many ways it could explode, hence the investigations.
      - dillondoyle 6y ago
        What's the best guess on where the actual cash sits in the meantime, or long term?
- snomad 6y ago
  The whole thing feels like scammy / tulip mania, but I think it is worth pointing out that Bitfinex repaid $550 million Feb 5. Though nothing comes up right away, I think the next trial date w/New York is Sept 2021.
  - nanmen 6y ago
    Why do you think next trial will be only in Autumn?
- fny 6y ago
  Tether isn't a fraud perse... In the worst case it's a severely overleveraged bank that operates outside of traditional regulatory regimes akin to many eurodollar banks. My bet is they hold something around 5% in reserves. Reserve requirements in the US have dropped from 10% to 0% thanks to the fed, so our fractional reserve system has turned into an inverted ponzi scheme of sorts. The biggest risk for tether is a liquidity event. If everyone cashes in for dollars at once, tether is probably dead. But honestly, I might consider buying the dip.
  - phire 6y ago
    The problem is that Teather advertises themselves as 'non-fractional'. They are meant to hold 100% reserves. As for their actual holdings: "On 30 April 2019 Tether Limited's lawyer claimed that each tether was backed by only $0.74 in cash and cash equivalents"* That's better than your pessimistic 5% estimate, assuming their statements can be trusted.
    - arcticbull 6y ago
      That was really, really old data lol. That was from when they had about $3B in market cap. Today they have $33B in market cap. What a difference a year or two makes! In fact, they printed in the last week the entire market cap they had when that statement was made, in $1B USDT increments. That figure comes from the time when Bitfinex reached into the Tether kitty and snagged $850M (leaving an IOU) to make up for the money seized by world governments as being the proceeds of money laundering. That happened when their money launderer, CryptoCapital, got shut down. CryptoCapital was run by former NFL player Reginald Fowler [1] whose lawyers just withdrew from his case because he's broke. Luckily Tether has since moved on, and they bank with Deltec in the Bahamas, whose chairman is the guy who created inspector fucking gadget. [2] I'm not sure 5% is all that far off, given the 33 billion USD they're supposed to have is more than the entire Bahamian banking system has on deposit in USD according to regulators. By like, a lot. [1] https://coingeek.com/crypto-capital-ny-court-grants-reginald-fowler-lawyers-motion-to-withdraw/ https://coingeek.com/crypto-capital-ny-court-grants-reginald... [2] https://en.wikipedia.org/wiki/Jean_Chalopin https://en.wikipedia.org/wiki/Jean_Chalopin
    - 6y ago
EGreg 6y ago
I posted this a few days ago: https://news.ycombinator.com/item?id=26106281 https://news.ycombinator.com/item?id=26106281
- Clewza313 6y ago
  The problem with doing a DAI-USDT short is that they're correlated: if Tether implodes, it may take down DAI as well.
  - betwixthewires 6y ago
    How are they correlated in such a way that this mechanism exists? The only correlation they have is that they're pegged to the same asset. Tether, if it truly has 1 to 1 backing, has no fear of losing value. DAI can lose its peg. I'd still put my money on DAI because I understand its mechanics and they're very good and I don't think for a second Tether has 1:1 USD backing. But aside from the USD hyperinflating or something, what other mechanism exists between the two?
    - Clewza313 6y ago
      Your Tether-DAI bet has to be made on an exchange, many of which are shady and unregulated; for example, we know Bitfinex is closely tied to Tether itself. When the tide goes out, we'll also find which exchanges have been putting their hands in the cookie jar, and many will implode Mt Gox style.
      - graeme 6y ago
        You’d at most lose what you staked, right? Like if the bet is truly 100:1, and you bet $100 and win but the exchange implodes, you only lose the $100 correct? Mind you not sure how it can be a risk free 100:1. I think this assumes the leverage is on the same exchange that goes bust.
  - deleted 6y ago
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- 6y ago
pope_meat 6y ago
It's kind of mind boggling that anyone who spends any amount of time looking at Tether comes away with the same exact conclusion: this seems like scam... and yet there's a billions of tethers flowing around. Luckily for me, I have no money, so I don't need to worry about losing it.
- ChainOfFools 6y ago
  > and yet there's a billions of tethers flowing around. It may simply be to make hay while the sun shines? As I understand it Tether creates liquidity, facilitates inter-exchange transfers without incurring huge on-chain Tx fees, which greases the day trading gears all while providing a thin psychological security blanket to people who may believe that the downside risk doesn't exceed the opportunity for enormous gains. Everyone thinks they'll be the first into the lifeboats when the ship starts to sink. The extreme reliance on a centralized token like Tether, like the existence of centralized exchanges in general, is a tacit admission that blockchains are completely unsuited to the pace of financial activity and need these informal crutches to work effectively at all. Real ideologues who care about decentralization are thin on the ground, and rationalize these shortcomings away as readily as the most degen speculator when 10x profits are on the table.
- deleted 6y ago
  [deleted]
- ranger207 6y ago
  If everyone trusts it regardless of what's actually backing it, then that makes it a de facto fiat currency.
  - WA 6y ago
    ...with a private unregulated overlord. Small difference to USD.
    - gillesjacobs 6y ago
      You probably knew this but the Federal Reserve is mixed public and privately owned. USD monetary policy is for a significant part in private hands.
rawtxapp 6y ago
I believe it's an open secret that tether is not backed by $ 1 to 1. If I remember correctly, they admitted that somewhere around 80% was backed by cash and the rest in collateral. Not sure how much you can trust what they say anyways. In the meantime, avoid tether at all cost, alternatives like USDC and DAI are much better and trustworthy.
- Tenoke 6y ago
  Even 80% seems like enough to make a bank run very unlikely, especially if some of the rest is mostly in easy to liquidize crypto.
  - Clewza313 6y ago
    If there is a "bank run" (price collapse) on BTC, the value of that crypto collateral will collapse and it will be very hard to "liquidize" it (because everybody else is selling too).
    - rawtxapp 6y ago
      Unless it's overcollateralized similar to what maker does with DAI. And if there was a bank run, that would a bank run by people trying to exit tether, so you'd expect to see a temporary increase in BTC price.
      - NomeChomsky 6y ago
        I've seen many people say this. But the reality is that the significant part of BTCs trading volume is in tether. When that dries up it's price will nose dive and the only route out will be into fiat. And if BTCs price is declining, no one is buying. So tether collapsing means BTC will collapse.
        dekz 6y ago
        If Tether untethers there will be a rush to other assets, pushing them higher. Shorts denominated in USDT will get absolutely decimated, pushing other assets higher. Exchanges using Tether will enforce a maximum withdrawal, pushing other assets higher. Smart money will buy USDT at a discount once their reserve details are made publicly available. If it's FUD they'll make an absolute killing. There's 3 possibilities here: 1. Tether is completely backed 1:$1 (highly unlikely) 2. Tether is partially backed, the reserves are greater than the outstanding 3. Tether is partially backed, the reserves are less than outstanding Only 3) will have a downward price correction. If they've been buying BTC like everyone here has suggested then 2) is the most probable, since you know BTC is at yet another ATH. If it becomes public that tether has excess reserves, the FUD will disappear silently. Worst case Tether says they will slowly sell off to reach 1:$1 over the next 12 months.
Tenoke 6y ago
I've been wondering if shorting Tether (though dont think e.g. Binance has it on the list but some new dexs with leverage might allow it) isn't an extremely safe bet - no chance it will increase in value and a significant chance it will collapse eventually..
- zapdrive 6y ago
  Or it could just stay the same for years, and you bleed interest on the funding.
- rfd4sgmk8u 6y ago
  Let me tell you about the swiss franc. It held a government peg 1.20 to the EUR, until one day in 2015 it didn't. Many traders (and whole forex brokerages) who held positions, believing the 1.2 line could never be crossed were, as they say, rekt. There are several ways to take a short position on USDT. You can trade USD for USDT on Kraken exchange. A short position would be depositing USD and placing a limit order under 1:1. This involves locking up capital for the order. If it never loses the peg, you lock up capital forever for 0 gain. You can also borrow Tether via various defi loan markets, but you will have to provide collateral and interest payments. Both have costs, be it fees, interest rates or opportunity cost. No safe bets in this game, except buy and hold bitcoin for periods > halving period.
- rawtxapp 6y ago
  Considering how heavily manipulated these crypto markets are, I'd say there's no "extremely safe bet".
- graeme 6y ago
  You have some serious counterparty risk if the short is on something exposed to a btc/crypto drop
- mantap 6y ago
  I've been reading stories about tether's imminent demise for years and years. It's still going. Sure maybe one day it will collapse. Just don't bet on it happening any time soon.
- 6y ago
rfd4sgmk8u 6y ago
Starts with: "The lawless rollercoaster of bitcoin enriches few investors, while many often lose everything." Not true, It is another ATH day for BTC, so literally anyone that bought BTC in the past and held is in the money. "Many often lose everything" is absurd. There isn't anything radical or new discovered here, and is trying to drum up 2021 "Tether FUD". Heard it all before. Hasn't crashed. Works on several more cheap, smartcontract blockchains now than expensive ol' ether in '18. Powers billions in defi, loan and other radical new financial instruments. Few believe that there are literally bank accounts backing this 100% today, and you know what? Who cares? Do I trust an ECDSA signature more than I trust a nameless brick and mortar bank holding some corporate funds. Hell yes. Computational security. Hard laws of math. I'd rather not hold tether in general, but IMHO it is less at risk than funds in bank accounts. I know this might sound strange to you dear reader, but you may not have experienced a time where bank accounts got haircuts, or your bank started freezing your funds. You cannot trust a bank! Be your own bank! Too many folks are holding onto old ideas of what money is, and do not see what it is turning into. While I do not claim that tether itself is non-controversial, its behavior in the cryptomarkets general is non-controversial in that it holds a peg 1:1 with the USD, and is generally fungible and easily converted. Chill on the tether fud, next cycle you will probably be sick of it too.
- PragmaticPulp 6y ago
  > Not true, It is another ATH day for BTC, so literally anyone that bought BTC in the past and held is in the money. "Many often lose everything" is absurd. If we all only buy and never sell or spend or use it, the price can only go up! > I'd rather not hold tether in general, but IMHO it is less at risk than funds in bank accounts. That's not even remotely true. Funds in bank accounts are FDIC insured. Tether depends on the liquidity of exchanges to buy your Tethers, which would collapse across the board if problems with Tether were announced. > I know this might sound strange to you dear reader, but you may not have experienced a time where bank accounts got haircuts The linked article literally talks about the haircut that Bitfinex users had to take when they lost money. > Be your own bank! The reality is that people do not want to be their own bank, nor do they want to pay tens of dollars in transaction fees every time they want to make a deposit or withdrawal. They especially don't want to lose all of their money if they forget their password. That's why most retail investors just leave it in an exchange, which acts as their bank. Sure, they could technically withdraw to a Bitcoin mind wallet and walk around with the password in their head, but that's not a great solution for 99% of people out there. Banks are fine.
f430 6y ago
How would you short bitcoin right now the stock exchanges? Which ETF has options?
- rfd4sgmk8u 6y ago
  ledgerx.com is a US based futures and options market. Short bitcoin at your peril :-)
- rawtxapp 6y ago
  bybt.com should give you an aggregate across different exchanges where you can short. It's very risky, even if BTC was to fail eventually, you can never predict what it'll do in the short term.
- bigphishy 6y ago
  https://www.deribit.com/ https://www.deribit.com/ and there are a number of decentralized crypto options markets out there as well.
  - nullc 6y ago
    Deribit is bitcoin-settled and heavily leveraged-- IMO it's probably not the best way to short Bitcoin, esp for someone who is long term bitcoin-skeptical.
- minitoar 6y ago
  Future options would be the way to do it imo.
- nullc 6y ago
  I would recommend LedgerX -- A US based CFTC regulated derivatives clearing house and brokerage. They're available to US persons and organizations including retail. I believe non-US persons need to form a US company to use the platform currently. The swaps and options on LedgerX are fully collateralized and physically delivered. You can short Bitcoin there by depositing USD via wire transfer and buying puts. You can see the current list of contracts: https://trade.ledgerx.com/live https://trade.ledgerx.com/live The contract size is 0.01 BTC and prices are quoted per Bitcoin (similar to how equity options are usually 100 share contracts and quoted per share). I've been a customer since 2017 and have been pretty happy with them. If you have questions, I'd be glad to answer them: I'm a seller of puts and would always welcome more people taking the opposite side on the platform. :)
seibelj 6y ago
Nocoiner bingo - Tether Energy “waste” Can’t scale Useless tech that is better on a centralized DB Governments will surely ban it Just use transferwise! Ponzi
- rspeele 6y ago
  Coiner bingo - Limited supply means value must go up It's a store of value, not a medium of exchange Lightning network or some other yet-to-be-tested solution will fix scalability Crypto investors getting rich is proof crypto is good Security of network must be worth what is spent on mining Mining is mostly renewable energy so energy usage doesn't really count What about energy usage of entire rest of the world's economic activity?
  - CyberDildonics 6y ago
    The lightning network is very tested, it just isn't used because it is a nonsense idea that no one wants.
    - rfd4sgmk8u 6y ago
      Why do you assume nobody wants it? It works fine. Some people use it every day. It is new and unproven over time. People were saying bitcoin was a nonsense idea no one wants at one time too. I acknowledge you don't like bitcoin, but assuming others don't is a bad position.
      - CyberDildonics 6y ago
        The difference is that the people originally saying bitcoin was nonsense didn't understand it and the people saying lightning is nonsense are the people that do understand it. Why would someone use a secondary layer on top of $28 average transaction fees and 10 minute block times when they could use any other cryptocurrency and transact for almost nothing on the real chain?
        6y ago
v1k65 6y ago
It's been almost a month arguing with my wife not to invest in Bitcoin. I'm just fed up with positive (microstrategy, tesla and other banks) news and negative news (mostly on here). I believe institutional investors do their research before investing in Bitcoin. Why do they still invest if Tether & Bitfinex are fraud?
- rawtxapp 6y ago
  They make up an increasingly small % of the crypto exchange volumes. And it's not clear that it's a 100% fraud, they probably have some backing even if it's not at 100%. I'd say research Bitcoin itself instead of looking at news to decide whether you should hold some or not. It may go to 1M$, it may go to 0, but at least you'll understand what you were buying.
- paulryanrogers 6y ago
  Could it be the greater fool theory? If they believe future buyers exist despite bad fundamentals then it could be a gamble. An attempt to ride the wave and get out before it collapses.
  - gruez 6y ago
    Is gold the ultimate greater fool? Sure, it might have "intrinsic value" (eg. industrial use), but the current and historical price far exceeds that of comparable substances. Only about 7.5% of gold mined goes to industrial use, with the rest going to jewelry (48.5%), investment (29.2%), and central banks (14.8%). https://www.statista.com/statistics/299609/gold-demand-by-industry-sector-share/ https://www.statista.com/statistics/299609/gold-demand-by-in...
    - nly 6y ago
      If your numbers are accurate >=55% of the demand for Gold is completely organic and because of the desire of human beings to wear it. The rest is largely as a hedge against other assets under the belief that the demand for Gold will endure a crisis. This sounds healthy. Contrast this to Bitcoin where it has already been established in other comment threads that the vast majority of Bitcoin trading volume on dozens of exchanges might be fake ( see Bitwise/SEC presentation) and that a huge amount of volume is via the BTC/USDT pair and USDT may be fraudulent. Sounds pretty unhealthy.
aero-glide2 6y ago
Tether is highly sus and needs to be immediately investigated. Around $30B of Tether exists. Its unknown how much is actually backed by real USD. This could single handedly crash the crypto markets. https://en.wikipedia.org/wiki/Tether_(cryptocurrency) https://en.wikipedia.org/wiki/Tether_(cryptocurrency)
- TacticalCoder 6y ago
  It may be the case that USDT is a fraud, but that it's not a fraud big enough to crash anything else but USDT itself (heck, the "exit" may see USDT bag holder buy frantically Bitcoin at any price they could, creating a pump on Bitcoin's price). For comparison there are 7.5 bn USDC circulating and these are emitted by Centre/Coinbase and these are known to be real (Coinbase being an HN unicorn to soon do its IPO). Tesla also just bought 1.5 bn of Bitcoin. Then are regular people buying directly with non USD currencies like EUR / JPY etc. (for which I take it there are no USDC emitted). So it's a known fact that money is flowing, by the billions, into Bitcoin. The question is: is iFinex/Bitfinex/tether printing USDT out of thin air by so many billions that they are actually manipulating the entire market?
  - tehlike 6y ago
    The argument only provides support for the lows. Tether backing is not just dollar. They recursively use bitcoin as part of their reserve. Bitcoin price rises, and they print more usdt to buy more btc. It's hard to say how much btc would drop or pump. Tether bootstrapped crypto demand, even if it was done so fraudulently
    - rawtxapp 6y ago
      For what it's worth makerdao also created DAI backed by crypto collateral (and stablecoins) and right now the outstanding debt from maker alone is like 2B+ and growing pretty rapidly (daistats.com). I know for a fact that many traders are using makerdao to leverage their crypto holdings to buy even more crypto, so there's definitely a circular money pump that happens (for example: WBTC-A vaults have an outstanding 240M$ debt, presumably significant chunk is used to buy back more BTC).
keiraarts 6y ago
Tether was supposed to show documents to the district attorneys general in January — but I can’t seem to find any details about it anymore. Anyone aware of any upcoming cases trying to uncover their books?
- sibeliuss 6y ago
  According to this, there was a Jan 15th date for documents that was pushed back 30 days: https://www.ft.com/content/3ac4809e-7c4d-4d9f-83ea-7112bfd3480a https://www.ft.com/content/3ac4809e-7c4d-4d9f-83ea-7112bfd34...
- sibeliuss 6y ago
  Can follow this: https://twitter.com/RealWillyBot https://twitter.com/RealWillyBot
NomeChomsky 6y ago
I just want to say, thay given how tense this conversation can be, the quality of the conversation in this thread (as of right now) is amongst the highest I've ever seen. Excellent thread.
TekMol 6y ago
People often say that if Tether collapes, it will make Bitcoin crash as well. But why? If people want to sell their Tether for $1 and do not get it - why would that lower the price of Bitcoin?
- space_rock 6y ago
  Tether funds the buy orders and bids. Without them the market price falls
  - TekMol 6y ago
    How so? The Bitcoin/USD exchange ratio is from orders that trade Bitcoin for USD. How does Tether have an impact on this?
    - space_rock 6y ago
      Tether is a USD token used by many exchanges and accounts for much of the volume
      - LMYahooTFY 6y ago
        Citation is definitely needed here.
        anonymoushn 6y ago
        For example Binance and gate.io USD pairs are actually USDT pairs.
        space_rock 6y ago
        Well you could Google it. The amount of tether in circulation is within the billions. Thought it was common knowledge
        space_rock 6y ago
        For people not aware of Bitcoin trading $136,273,340,188.23 Tether 24hr volume Volume on Chinese exchanges is unreliable But the trading volume is obviously significant $33,139,949,239.15 in tether tokens https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/
aearm 6y ago
should I trust bitfinex
ghego1 6y ago
Just wow. All these times hearing that it's probably the Chinese pumping and manipulating BTC prices and it turns out there are so many italians involved in key positions in Tether. As an Italian I guess I'm feeling pretty proud! :-D
- deleted 6y ago
  [deleted]
atian 6y ago
It’s worth noting that there exists some confidence in the tremendous operational liquidity that Bitfinex & Tether have from Bitfinex’s repayment of a $550 MM loan to Tether just this month. https://www.coindesk.com/bitfinex-says-its-repaid-tether-for-550m-loan-at-center-of-nyag-probe https://www.coindesk.com/bitfinex-says-its-repaid-tether-for...
- JumpCrisscross 6y ago
  Why is affiliates transferring cash amongst themselves reassuring?
  - gruez 6y ago
    AFAIK the 550M loan was because bitfinex lost that money somehow (not sure whether it was because of a hack or their accounts got frozen). Them repaying it back would mean they were able to cover up that hole with their profits, which means tether is more capitalized than before.
    - qeternity 6y ago
      It means absolutely nothing. The "loan" was made many months after the funds were transferred. In reality, Bitfinex does not treat Tether as an segregated account...it's just part of Bitfinex. When they lost money, they just used Tether funds and later on they formalized it as a loan when they started to be investigated. It's like saying you gave yourself a $1k loan and then repaid it. It's just going from one pocket to the other. It's meaningless.
      - atian 6y ago
        Bitfinex makes a tremendous profit from being the most liquid spot exchange. It's meaningful in the fact that they have strong cashflow to back a stablecoin.
teekert 6y ago
First sentence: "The lawless rollercoaster of bitcoin enriches few investors, while many often lose everything." How can they start with this sentence even though it has been only up, up and up. All you had to do was wait and not freak out upon some nosedives. Who lost money? People that bought end 2017 thinking the sky was the limit and sold in February? Sure, but that can happen anywhere. You know where you loose money? In the normal economy, because the government likes inflation. And we should all like it because money creation is debt based. But imo that is what is causing us normals to loose constantly (enriching the rich, who have dibs on the fresh printed money to make it happen).
- mrfinn 6y ago
  Even if I don't like Bitcoin as a cryptocurrency (I think it did a great job but now really should be put to rest) I completely agree with that. That paragraph is plain silly, trying to avoid a stronger word.
- ertian 6y ago
  Yeah, that seems a bit unfair. You could start any article on the stock market the same way, but it would sound gratuitous.
- puranjay 6y ago
  I can't think of a single individual who held bitcoin and lost money in the long run
  - creepto 6y ago
    They held it so well they threw their hard drive in the trash.
  - Slartie 6y ago
    Not yet, because the cake is still growing. Wait until the cake has reached its peak size and starts shrinking (not for a short intermediate timeframe like 2017-2020, but for a timeframe long enough to consider it "the end game" for humans with finite lifespans) and see whether your assumption is still true then. The problem will be that realizing that we're finally in the "cake-shrinking" phase will only be possible after watching it shrink for decades.
neals 6y ago
Ah yes, an 'All time high' attracts new people and new research and, as with every cycle, people find out Tether is a big risk. And as strange new financial products are hyped and the market drops in a few months, people flee to Tether, but less so and maybe more to DAI or what ever the flavor of the month is. Then, the price is low enough and some company tweets something and the Matrix is reborn and everything old is new again. And someone, somewhere, who is currently just ignoring the whole Crypto thing, will limp in and at some point, discover Tether, do some research and report about it. As I then read the headline on HN, I shall gaze out the broken window and take in, one last time, the burning remnants of a once thriving civilization. And smile.
albybisy 6y ago
I will invest something in Bitcoin only when this "tether / bitfinex" thing will blow up.
shawnz 6y ago
I can't wait until the Tether situation finally comes to pass. Then we can finally stop hearing about how Tether's fraud is some kind of argument against Bitcoin, and also those with a legitimate interest in Bitcoin might be able to purchase it at a cheaper price once Tether's influence is gone.
kelvinstones31 6y ago
I think AxisOption wallet and exchange platform is the best. For one, I earn passively while holding my crypto on the axisoption from their wallet systems and when I sell bitcoins on their platform, I receive very fast payments.
kelvinstones31 6y ago
I earn as high as 10% interests for holding my bitcoins on the AxisOption bitcoin wallet platform.
ad31mar 6y ago
"The amount of energy necessary to refute bullshit is an order of magnitude bigger than to produce it." – Paul Kedrosky

208 points by graeme 6y ago

Over the last year Tether has looked more and more like fraud. I was reading this article covering some of the recent developments since Tether's failed attempt to suppress discovery by New York's Attorney General https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3 https://crypto-anonymous-2021.medium.com/the-bit-short-insid...

gge 6y ago
Here is a good piece explaining why the data backing that articles arguments is BS: https://medium.com/@nic__carter/assessing-bitcoins-liquidity-with-coinlib-data-is-indefensible-3e5fdad51646 https://medium.com/@nic__carter/assessing-bitcoins-liquidity...
- phire 6y ago
  On top of the suspect data source, I notice I few more issues with that teather hit piece. 1. They are only looking on the buy sides. They don't even show the sell side with all the people selling their bitcoin back for teather. On most exchanges, the amount of teather buys is roughly equal to the amount of teather sells. People just sit there all day selling back and forwards between teather and bitcoin, trying to take advantages in short-term fluctuations in the price. But by only presenting one side of the trades, that hit piece implies (but never actually claims) that teather is being created out of thin air to buy bitcoin. 2. They misrepresent teather's reserve by implying (and once again not claiming) that it is all cash held in a single bank account in a single Bahamian bank account. (and then pointing out that the value of teather massively exceeds all Bahamian bank holding) In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. -------- Personally, I'm not a fan of teather, or cryptocurrencies in general. Teather even admit they don't hold full cash/cash-equivalent reserves, saying in April 2019 they only had 74% cash+equivalent reserves. But I hate misleading journalism way more than I dislike teather. That article is hugely misleading and feels like it's designed to drive the price of bitcoin down so the anonymous author can profit from a short position.
  - sillysaurusx 6y ago
    (Psst, it's tether, not teather. Carry on.)
  - arcticbull 6y ago
    > In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. They haven't burned a single token in the last year. Give or take zero banks in the world want to do business with Tether, they're totally and utterly toxic to USD banking. Tether got shut down by every major bank on the mainland US, one. By. One. It got so bad they started getting rejected by third and fourth tier banks. They had to purchase Noble bank in Puerto Rico to get them onboard. Once Noble's mainland US correspondent bank found out, they got shut down immediately and pushed into insolvency. So they found the sketchiest bank in the entire world, Deltec, chaired by the man who created the Inspector Gadget TV series, Jean Chalopin. Look, I'm not saying they don't have the money, I'm saying I don't believe them, neither should you, and neither should anyone else until they pony up an audit.
    - phire 6y ago
      > They haven't burned a single token in the last year. They burned 1 billion tokens 6 months ago, back in August. Besides, why do people act like not burning tokens is evidence of wrong-doing? That just shows ignorance for how tether have setup their accounts. They have a "treasury account" where tether tokens go when people redeem them, and where they can quickly issue tokens when people deposit cash. They only need to issue more tokens when the treasury account gets low, and they only need to burn tokens when they have an excess in treasury. It makes total sense that in the current bull market that they haven't had the need to burn many tokens. The burn in August only happened because they now have multiple tokens on multiple networks and their TRON treasury account had too much. ------------ All your remaining criticism about banking is 100% valid. And other peoples criticism about auditing and legal troubles. I don't want to write comments on hackernews rebutting claims about Teather. I want the crypto market to go bust again so I can afford a new GPU. But so many people just parrot invalid criticism without understanding it.
- arcticbull 6y ago
  It actually doesn't really matter. Yes, The Bit Short isn't completely right, but it's right enough that even if you go back and make the corrections to the data, the point remains equally valid. Here's one follow-up piece worth reading that does some statistical analysis: [1]. Nic goes on for days about fake volume. Let's use Bitcoin Trade Volume, which I'm led to believe is a very generous pro-crypto take on the actual volume in the space. It shows 59% USD and 41% USDT. That's not the 75% USDT The Bit Short suggested, but who cares? It's huge. If you sub in those numbers when you're reading The Bit Short, it's just as compelling. Something Nic doesn't care to talk about, slamming the WSJ instead of who he should be pointed at, Paolo Arduino. [1] https://adrianbarwicki.medium.com/impact-of-tether-trading-on-the-bitcoin-price-f915e26c2c44 https://adrianbarwicki.medium.com/impact-of-tether-trading-o... [2] https://www.bitcointradevolume.com/ https://www.bitcointradevolume.com/
  - gge 6y ago
    Cope
    - creepto 6y ago
      Is that your reply? Cope? God damn do I love coiners.
  - 5600k 6y ago
    Bitcoin still feels like a house of cards. Does anyone remember what happened after everyone said “buy gold”?
    - nivenkos 6y ago
      The biggest tell IMO is that you still can't buy many things with Bitcoin. The transactions are extremely slow, and Steam etc. have even stopped accepting Bitcoin payments. Then where does the value come from? Sure there's a base layer of narcotics trading, etc. but that could switch to other cryptocurrencies too (like Monero). It just feels like a massive pump and dump built over some base layer of illegal transactions (drugs and money laundering).
- thecupisblue 6y ago
  >I am the cofounder of Coin Metrics, a data business that licenses crypto market data to financial institutions, asset managers, and banks Oh, so his credentials are "my company depends on crypto and if it fails we fail". And he's saying "oh these exchanges arent legit by our metrics we wont count them". That's the exactly the problem and he's saying "put on a blindfold and its gone".
  - poontang1 6y ago
    This is a horrible take. Anyone who knows the crypto industry knows many exchanges fake volume and companies like CoinMetrics reduce the noise to get better figures on the actual nature of transactions and liquidity in the industry. Nic Carter knows the data is bullshit because he has a company that specializes in proving such things.
    - nwah1 6y ago
      The false data from exchanges likely is key to the belief that these coins have value, and thus affects the data even from exchanges that aren't noticeably faking data.
  - karaterobot 6y ago
    I appreciate skepticism, but attacking someone's credibility isn't as useful as attacking their argument on its merits. Are there points he makes or facts he uses in his article which are themselves invalid or in bad faith?
    - thecupisblue 6y ago
      The basis itself of the article is invalid and it is in "bad faith". I'm not attacking their credibility, I am attacking the thesis in itself. But since the author attacks the author of the original article and the WSJ in their rebuttal, I apply the same here and note that they have a large piece of cake in the play they are talking about and are thus also not objective. So to go to the arguments: 1. Total crypto market isn't just US, on which this rebuttal seems to focus. 2. Is bitcoin price determined only by fiat inflow via "whitelisted" exchanges? Are they the only part of the whole crypto community that matters? The answer is no, and thus we gotta count the whole market. 3. And again, the article completely avoids the problem by saying "there are problematic exchanges but we will ignore them". The problematic exchanges are exactly the problem. They are creating fiat-tied coins with no backing and putting that money into market - which is valued by the amount of money in it. So the "whitehat" exchanges, even tho not directly involved in dirty money, are involved and profit off of the same ecosystem the dirty money is in. Thus, they are not an isolated system and cannot be observed as such and the market cannot be judged on the behaviour of these isolated systems alone. Imagine if this was about gambling and illegal casinos (which in a way, it is). So this article would be written by someone working in Vegas saying "Well, yeah if we're looking at all casinos there is illegal stuff going on and people are printing their own chips and trading them for real Vegas chips, but as a company that counts chips, we only count chips sold in Vegas casinos and we haven't found such problems in Vegas casinos". Would you say "hey but there is a bunch of illegal casinos you are not looking at that print chips which are exchanged at your place for money" or "oh okay this makes sense"?
Zamicol 6y ago
For years I've told loved ones, friends, and anyone with a passing interest in the nascent space to avoid Tether like the plague. In my opinion, it's only a matter of time until it blows up.
- randomopining 6y ago
  How do you invest in Tether? I thought it was just like a dollar peg for btc for inter-exchange operations.
  - birdyrooster 6y ago
    I am guessing people park their money in tether during periods of instability without needing to pay a broker to transfer into fiat. It looks like a place for temporarily hedging against crypto generally.
  - rawtxapp 6y ago
    They don't invest in tether, it's just a means of moving money between exchanges like you say or temporary hold between trades.
  - ac29 6y ago
    In theory, if you give Tether some dollars, they will store those dollars in reserve and issue you new Tethers. In practice, there is no evidence that any part of that happens aside from the minting new tethers part. Most likely there is some amount of money and/or crypto held in reserve, but despite allegedly having several tens of billions of dollars in reserve, they refuse to do an audit. I think the currently most plausible answer for how Tether works is: 1 )Tether issues tokens to OTC exchanges in exchange for an IOU 2) The exchange buys BTC with it 3) The exchange sells that bitcoin for dollars, and pays off that IOU. This almost certainly wont fly with regulators, and has many ways it could explode, hence the investigations.
    - dillondoyle 6y ago
      What's the best guess on where the actual cash sits in the meantime, or long term?
snomad 6y ago
The whole thing feels like scammy / tulip mania, but I think it is worth pointing out that Bitfinex repaid $550 million Feb 5. Though nothing comes up right away, I think the next trial date w/New York is Sept 2021.
- nanmen 6y ago
  Why do you think next trial will be only in Autumn?
fny 6y ago
Tether isn't a fraud perse... In the worst case it's a severely overleveraged bank that operates outside of traditional regulatory regimes akin to many eurodollar banks. My bet is they hold something around 5% in reserves. Reserve requirements in the US have dropped from 10% to 0% thanks to the fed, so our fractional reserve system has turned into an inverted ponzi scheme of sorts. The biggest risk for tether is a liquidity event. If everyone cashes in for dollars at once, tether is probably dead. But honestly, I might consider buying the dip.
- phire 6y ago
  The problem is that Teather advertises themselves as 'non-fractional'. They are meant to hold 100% reserves. As for their actual holdings: "On 30 April 2019 Tether Limited's lawyer claimed that each tether was backed by only $0.74 in cash and cash equivalents"* That's better than your pessimistic 5% estimate, assuming their statements can be trusted.
  - arcticbull 6y ago
    That was really, really old data lol. That was from when they had about $3B in market cap. Today they have $33B in market cap. What a difference a year or two makes! In fact, they printed in the last week the entire market cap they had when that statement was made, in $1B USDT increments. That figure comes from the time when Bitfinex reached into the Tether kitty and snagged $850M (leaving an IOU) to make up for the money seized by world governments as being the proceeds of money laundering. That happened when their money launderer, CryptoCapital, got shut down. CryptoCapital was run by former NFL player Reginald Fowler [1] whose lawyers just withdrew from his case because he's broke. Luckily Tether has since moved on, and they bank with Deltec in the Bahamas, whose chairman is the guy who created inspector fucking gadget. [2] I'm not sure 5% is all that far off, given the 33 billion USD they're supposed to have is more than the entire Bahamian banking system has on deposit in USD according to regulators. By like, a lot. [1] https://coingeek.com/crypto-capital-ny-court-grants-reginald-fowler-lawyers-motion-to-withdraw/ https://coingeek.com/crypto-capital-ny-court-grants-reginald... [2] https://en.wikipedia.org/wiki/Jean_Chalopin https://en.wikipedia.org/wiki/Jean_Chalopin
  - 6y ago

EGreg 6y ago

I posted this a few days ago: https://news.ycombinator.com/item?id=26106281 https://news.ycombinator.com/item?id=26106281

Clewza313 6y ago
The problem with doing a DAI-USDT short is that they're correlated: if Tether implodes, it may take down DAI as well.
- betwixthewires 6y ago
  How are they correlated in such a way that this mechanism exists? The only correlation they have is that they're pegged to the same asset. Tether, if it truly has 1 to 1 backing, has no fear of losing value. DAI can lose its peg. I'd still put my money on DAI because I understand its mechanics and they're very good and I don't think for a second Tether has 1:1 USD backing. But aside from the USD hyperinflating or something, what other mechanism exists between the two?
  - Clewza313 6y ago
    Your Tether-DAI bet has to be made on an exchange, many of which are shady and unregulated; for example, we know Bitfinex is closely tied to Tether itself. When the tide goes out, we'll also find which exchanges have been putting their hands in the cookie jar, and many will implode Mt Gox style.
    - graeme 6y ago
      You’d at most lose what you staked, right? Like if the bet is truly 100:1, and you bet $100 and win but the exchange implodes, you only lose the $100 correct? Mind you not sure how it can be a risk free 100:1. I think this assumes the leverage is on the same exchange that goes bust.
- deleted 6y ago
  [deleted]
6y ago

pope_meat 6y ago

It's kind of mind boggling that anyone who spends any amount of time looking at Tether comes away with the same exact conclusion: this seems like scam... and yet there's a billions of tethers flowing around. Luckily for me, I have no money, so I don't need to worry about losing it.

ChainOfFools 6y ago
> and yet there's a billions of tethers flowing around. It may simply be to make hay while the sun shines? As I understand it Tether creates liquidity, facilitates inter-exchange transfers without incurring huge on-chain Tx fees, which greases the day trading gears all while providing a thin psychological security blanket to people who may believe that the downside risk doesn't exceed the opportunity for enormous gains. Everyone thinks they'll be the first into the lifeboats when the ship starts to sink. The extreme reliance on a centralized token like Tether, like the existence of centralized exchanges in general, is a tacit admission that blockchains are completely unsuited to the pace of financial activity and need these informal crutches to work effectively at all. Real ideologues who care about decentralization are thin on the ground, and rationalize these shortcomings away as readily as the most degen speculator when 10x profits are on the table.
deleted 6y ago
[deleted]
ranger207 6y ago
If everyone trusts it regardless of what's actually backing it, then that makes it a de facto fiat currency.
- WA 6y ago
  ...with a private unregulated overlord. Small difference to USD.
  - gillesjacobs 6y ago
    You probably knew this but the Federal Reserve is mixed public and privately owned. USD monetary policy is for a significant part in private hands.

rawtxapp 6y ago

I believe it's an open secret that tether is not backed by $ 1 to 1. If I remember correctly, they admitted that somewhere around 80% was backed by cash and the rest in collateral. Not sure how much you can trust what they say anyways. In the meantime, avoid tether at all cost, alternatives like USDC and DAI are much better and trustworthy.

Tenoke 6y ago
Even 80% seems like enough to make a bank run very unlikely, especially if some of the rest is mostly in easy to liquidize crypto.
- Clewza313 6y ago
  If there is a "bank run" (price collapse) on BTC, the value of that crypto collateral will collapse and it will be very hard to "liquidize" it (because everybody else is selling too).
  - rawtxapp 6y ago
    Unless it's overcollateralized similar to what maker does with DAI. And if there was a bank run, that would a bank run by people trying to exit tether, so you'd expect to see a temporary increase in BTC price.
    - NomeChomsky 6y ago
      I've seen many people say this. But the reality is that the significant part of BTCs trading volume is in tether. When that dries up it's price will nose dive and the only route out will be into fiat. And if BTCs price is declining, no one is buying. So tether collapsing means BTC will collapse.
      - dekz 6y ago
        If Tether untethers there will be a rush to other assets, pushing them higher. Shorts denominated in USDT will get absolutely decimated, pushing other assets higher. Exchanges using Tether will enforce a maximum withdrawal, pushing other assets higher. Smart money will buy USDT at a discount once their reserve details are made publicly available. If it's FUD they'll make an absolute killing. There's 3 possibilities here: 1. Tether is completely backed 1:$1 (highly unlikely) 2. Tether is partially backed, the reserves are greater than the outstanding 3. Tether is partially backed, the reserves are less than outstanding Only 3) will have a downward price correction. If they've been buying BTC like everyone here has suggested then 2) is the most probable, since you know BTC is at yet another ATH. If it becomes public that tether has excess reserves, the FUD will disappear silently. Worst case Tether says they will slowly sell off to reach 1:$1 over the next 12 months.

Tenoke 6y ago

I've been wondering if shorting Tether (though dont think e.g. Binance has it on the list but some new dexs with leverage might allow it) isn't an extremely safe bet - no chance it will increase in value and a significant chance it will collapse eventually..

zapdrive 6y ago
Or it could just stay the same for years, and you bleed interest on the funding.
rfd4sgmk8u 6y ago
Let me tell you about the swiss franc. It held a government peg 1.20 to the EUR, until one day in 2015 it didn't. Many traders (and whole forex brokerages) who held positions, believing the 1.2 line could never be crossed were, as they say, rekt. There are several ways to take a short position on USDT. You can trade USD for USDT on Kraken exchange. A short position would be depositing USD and placing a limit order under 1:1. This involves locking up capital for the order. If it never loses the peg, you lock up capital forever for 0 gain. You can also borrow Tether via various defi loan markets, but you will have to provide collateral and interest payments. Both have costs, be it fees, interest rates or opportunity cost. No safe bets in this game, except buy and hold bitcoin for periods > halving period.
rawtxapp 6y ago
Considering how heavily manipulated these crypto markets are, I'd say there's no "extremely safe bet".
graeme 6y ago
You have some serious counterparty risk if the short is on something exposed to a btc/crypto drop
mantap 6y ago
I've been reading stories about tether's imminent demise for years and years. It's still going. Sure maybe one day it will collapse. Just don't bet on it happening any time soon.
6y ago

rfd4sgmk8u 6y ago

Starts with: "The lawless rollercoaster of bitcoin enriches few investors, while many often lose everything." Not true, It is another ATH day for BTC, so literally anyone that bought BTC in the past and held is in the money. "Many often lose everything" is absurd. There isn't anything radical or new discovered here, and is trying to drum up 2021 "Tether FUD". Heard it all before. Hasn't crashed. Works on several more cheap, smartcontract blockchains now than expensive ol' ether in '18. Powers billions in defi, loan and other radical new financial instruments. Few believe that there are literally bank accounts backing this 100% today, and you know what? Who cares? Do I trust an ECDSA signature more than I trust a nameless brick and mortar bank holding some corporate funds. Hell yes. Computational security. Hard laws of math. I'd rather not hold tether in general, but IMHO it is less at risk than funds in bank accounts. I know this might sound strange to you dear reader, but you may not have experienced a time where bank accounts got haircuts, or your bank started freezing your funds. You cannot trust a bank! Be your own bank! Too many folks are holding onto old ideas of what money is, and do not see what it is turning into. While I do not claim that tether itself is non-controversial, its behavior in the cryptomarkets general is non-controversial in that it holds a peg 1:1 with the USD, and is generally fungible and easily converted. Chill on the tether fud, next cycle you will probably be sick of it too.

PragmaticPulp 6y ago
> Not true, It is another ATH day for BTC, so literally anyone that bought BTC in the past and held is in the money. "Many often lose everything" is absurd. If we all only buy and never sell or spend or use it, the price can only go up! > I'd rather not hold tether in general, but IMHO it is less at risk than funds in bank accounts. That's not even remotely true. Funds in bank accounts are FDIC insured. Tether depends on the liquidity of exchanges to buy your Tethers, which would collapse across the board if problems with Tether were announced. > I know this might sound strange to you dear reader, but you may not have experienced a time where bank accounts got haircuts The linked article literally talks about the haircut that Bitfinex users had to take when they lost money. > Be your own bank! The reality is that people do not want to be their own bank, nor do they want to pay tens of dollars in transaction fees every time they want to make a deposit or withdrawal. They especially don't want to lose all of their money if they forget their password. That's why most retail investors just leave it in an exchange, which acts as their bank. Sure, they could technically withdraw to a Bitcoin mind wallet and walk around with the password in their head, but that's not a great solution for 99% of people out there. Banks are fine.

f430 6y ago

How would you short bitcoin right now the stock exchanges? Which ETF has options?

rfd4sgmk8u 6y ago
ledgerx.com is a US based futures and options market. Short bitcoin at your peril :-)
rawtxapp 6y ago
bybt.com should give you an aggregate across different exchanges where you can short. It's very risky, even if BTC was to fail eventually, you can never predict what it'll do in the short term.
bigphishy 6y ago
https://www.deribit.com/ https://www.deribit.com/ and there are a number of decentralized crypto options markets out there as well.
- nullc 6y ago
  Deribit is bitcoin-settled and heavily leveraged-- IMO it's probably not the best way to short Bitcoin, esp for someone who is long term bitcoin-skeptical.
minitoar 6y ago
Future options would be the way to do it imo.
nullc 6y ago
I would recommend LedgerX -- A US based CFTC regulated derivatives clearing house and brokerage. They're available to US persons and organizations including retail. I believe non-US persons need to form a US company to use the platform currently. The swaps and options on LedgerX are fully collateralized and physically delivered. You can short Bitcoin there by depositing USD via wire transfer and buying puts. You can see the current list of contracts: https://trade.ledgerx.com/live https://trade.ledgerx.com/live The contract size is 0.01 BTC and prices are quoted per Bitcoin (similar to how equity options are usually 100 share contracts and quoted per share). I've been a customer since 2017 and have been pretty happy with them. If you have questions, I'd be glad to answer them: I'm a seller of puts and would always welcome more people taking the opposite side on the platform. :)

seibelj 6y ago

Nocoiner bingo - Tether Energy “waste” Can’t scale Useless tech that is better on a centralized DB Governments will surely ban it Just use transferwise! Ponzi

rspeele 6y ago
Coiner bingo - Limited supply means value must go up It's a store of value, not a medium of exchange Lightning network or some other yet-to-be-tested solution will fix scalability Crypto investors getting rich is proof crypto is good Security of network must be worth what is spent on mining Mining is mostly renewable energy so energy usage doesn't really count What about energy usage of entire rest of the world's economic activity?
- CyberDildonics 6y ago
  The lightning network is very tested, it just isn't used because it is a nonsense idea that no one wants.
  - rfd4sgmk8u 6y ago
    Why do you assume nobody wants it? It works fine. Some people use it every day. It is new and unproven over time. People were saying bitcoin was a nonsense idea no one wants at one time too. I acknowledge you don't like bitcoin, but assuming others don't is a bad position.
    - CyberDildonics 6y ago
      The difference is that the people originally saying bitcoin was nonsense didn't understand it and the people saying lightning is nonsense are the people that do understand it. Why would someone use a secondary layer on top of $28 average transaction fees and 10 minute block times when they could use any other cryptocurrency and transact for almost nothing on the real chain?
      - 6y ago

v1k65 6y ago

It's been almost a month arguing with my wife not to invest in Bitcoin. I'm just fed up with positive (microstrategy, tesla and other banks) news and negative news (mostly on here). I believe institutional investors do their research before investing in Bitcoin. Why do they still invest if Tether & Bitfinex are fraud?

rawtxapp 6y ago
They make up an increasingly small % of the crypto exchange volumes. And it's not clear that it's a 100% fraud, they probably have some backing even if it's not at 100%. I'd say research Bitcoin itself instead of looking at news to decide whether you should hold some or not. It may go to 1M$, it may go to 0, but at least you'll understand what you were buying.
paulryanrogers 6y ago
Could it be the greater fool theory? If they believe future buyers exist despite bad fundamentals then it could be a gamble. An attempt to ride the wave and get out before it collapses.
- gruez 6y ago
  Is gold the ultimate greater fool? Sure, it might have "intrinsic value" (eg. industrial use), but the current and historical price far exceeds that of comparable substances. Only about 7.5% of gold mined goes to industrial use, with the rest going to jewelry (48.5%), investment (29.2%), and central banks (14.8%). https://www.statista.com/statistics/299609/gold-demand-by-industry-sector-share/ https://www.statista.com/statistics/299609/gold-demand-by-in...
  - nly 6y ago
    If your numbers are accurate >=55% of the demand for Gold is completely organic and because of the desire of human beings to wear it. The rest is largely as a hedge against other assets under the belief that the demand for Gold will endure a crisis. This sounds healthy. Contrast this to Bitcoin where it has already been established in other comment threads that the vast majority of Bitcoin trading volume on dozens of exchanges might be fake ( see Bitwise/SEC presentation) and that a huge amount of volume is via the BTC/USDT pair and USDT may be fraudulent. Sounds pretty unhealthy.

aero-glide2 6y ago

Tether is highly sus and needs to be immediately investigated. Around $30B of Tether exists. Its unknown how much is actually backed by real USD. This could single handedly crash the crypto markets. https://en.wikipedia.org/wiki/Tether_(cryptocurrency) https://en.wikipedia.org/wiki/Tether_(cryptocurrency)

TacticalCoder 6y ago
It may be the case that USDT is a fraud, but that it's not a fraud big enough to crash anything else but USDT itself (heck, the "exit" may see USDT bag holder buy frantically Bitcoin at any price they could, creating a pump on Bitcoin's price). For comparison there are 7.5 bn USDC circulating and these are emitted by Centre/Coinbase and these are known to be real (Coinbase being an HN unicorn to soon do its IPO). Tesla also just bought 1.5 bn of Bitcoin. Then are regular people buying directly with non USD currencies like EUR / JPY etc. (for which I take it there are no USDC emitted). So it's a known fact that money is flowing, by the billions, into Bitcoin. The question is: is iFinex/Bitfinex/tether printing USDT out of thin air by so many billions that they are actually manipulating the entire market?
- tehlike 6y ago
  The argument only provides support for the lows. Tether backing is not just dollar. They recursively use bitcoin as part of their reserve. Bitcoin price rises, and they print more usdt to buy more btc. It's hard to say how much btc would drop or pump. Tether bootstrapped crypto demand, even if it was done so fraudulently
  - rawtxapp 6y ago
    For what it's worth makerdao also created DAI backed by crypto collateral (and stablecoins) and right now the outstanding debt from maker alone is like 2B+ and growing pretty rapidly (daistats.com). I know for a fact that many traders are using makerdao to leverage their crypto holdings to buy even more crypto, so there's definitely a circular money pump that happens (for example: WBTC-A vaults have an outstanding 240M$ debt, presumably significant chunk is used to buy back more BTC).

keiraarts 6y ago

Tether was supposed to show documents to the district attorneys general in January — but I can’t seem to find any details about it anymore. Anyone aware of any upcoming cases trying to uncover their books?

sibeliuss 6y ago
According to this, there was a Jan 15th date for documents that was pushed back 30 days: https://www.ft.com/content/3ac4809e-7c4d-4d9f-83ea-7112bfd3480a https://www.ft.com/content/3ac4809e-7c4d-4d9f-83ea-7112bfd34...
sibeliuss 6y ago
Can follow this: https://twitter.com/RealWillyBot https://twitter.com/RealWillyBot

NomeChomsky 6y ago

I just want to say, thay given how tense this conversation can be, the quality of the conversation in this thread (as of right now) is amongst the highest I've ever seen. Excellent thread.

TekMol 6y ago

People often say that if Tether collapes, it will make Bitcoin crash as well. But why? If people want to sell their Tether for $1 and do not get it - why would that lower the price of Bitcoin?

space_rock 6y ago
Tether funds the buy orders and bids. Without them the market price falls
- TekMol 6y ago
  How so? The Bitcoin/USD exchange ratio is from orders that trade Bitcoin for USD. How does Tether have an impact on this?
  - space_rock 6y ago
    Tether is a USD token used by many exchanges and accounts for much of the volume
    - LMYahooTFY 6y ago
      Citation is definitely needed here.
      - anonymoushn 6y ago
        For example Binance and gate.io USD pairs are actually USDT pairs.
      - space_rock 6y ago
        Well you could Google it. The amount of tether in circulation is within the billions. Thought it was common knowledge
      - space_rock 6y ago
        For people not aware of Bitcoin trading $136,273,340,188.23 Tether 24hr volume Volume on Chinese exchanges is unreliable But the trading volume is obviously significant $33,139,949,239.15 in tether tokens https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/

aearm 6y ago

should I trust bitfinex

ghego1 6y ago

Just wow. All these times hearing that it's probably the Chinese pumping and manipulating BTC prices and it turns out there are so many italians involved in key positions in Tether. As an Italian I guess I'm feeling pretty proud! :-D

deleted 6y ago
[deleted]

atian 6y ago

It’s worth noting that there exists some confidence in the tremendous operational liquidity that Bitfinex & Tether have from Bitfinex’s repayment of a $550 MM loan to Tether just this month. https://www.coindesk.com/bitfinex-says-its-repaid-tether-for-550m-loan-at-center-of-nyag-probe https://www.coindesk.com/bitfinex-says-its-repaid-tether-for...

JumpCrisscross 6y ago
Why is affiliates transferring cash amongst themselves reassuring?
- gruez 6y ago
  AFAIK the 550M loan was because bitfinex lost that money somehow (not sure whether it was because of a hack or their accounts got frozen). Them repaying it back would mean they were able to cover up that hole with their profits, which means tether is more capitalized than before.
  - qeternity 6y ago
    It means absolutely nothing. The "loan" was made many months after the funds were transferred. In reality, Bitfinex does not treat Tether as an segregated account...it's just part of Bitfinex. When they lost money, they just used Tether funds and later on they formalized it as a loan when they started to be investigated. It's like saying you gave yourself a $1k loan and then repaid it. It's just going from one pocket to the other. It's meaningless.
    - atian 6y ago
      Bitfinex makes a tremendous profit from being the most liquid spot exchange. It's meaningful in the fact that they have strong cashflow to back a stablecoin.

teekert 6y ago

First sentence: "The lawless rollercoaster of bitcoin enriches few investors, while many often lose everything." How can they start with this sentence even though it has been only up, up and up. All you had to do was wait and not freak out upon some nosedives. Who lost money? People that bought end 2017 thinking the sky was the limit and sold in February? Sure, but that can happen anywhere. You know where you loose money? In the normal economy, because the government likes inflation. And we should all like it because money creation is debt based. But imo that is what is causing us normals to loose constantly (enriching the rich, who have dibs on the fresh printed money to make it happen).

mrfinn 6y ago
Even if I don't like Bitcoin as a cryptocurrency (I think it did a great job but now really should be put to rest) I completely agree with that. That paragraph is plain silly, trying to avoid a stronger word.
ertian 6y ago
Yeah, that seems a bit unfair. You could start any article on the stock market the same way, but it would sound gratuitous.
puranjay 6y ago
I can't think of a single individual who held bitcoin and lost money in the long run
- creepto 6y ago
  They held it so well they threw their hard drive in the trash.
- Slartie 6y ago
  Not yet, because the cake is still growing. Wait until the cake has reached its peak size and starts shrinking (not for a short intermediate timeframe like 2017-2020, but for a timeframe long enough to consider it "the end game" for humans with finite lifespans) and see whether your assumption is still true then. The problem will be that realizing that we're finally in the "cake-shrinking" phase will only be possible after watching it shrink for decades.

neals 6y ago

Ah yes, an 'All time high' attracts new people and new research and, as with every cycle, people find out Tether is a big risk. And as strange new financial products are hyped and the market drops in a few months, people flee to Tether, but less so and maybe more to DAI or what ever the flavor of the month is. Then, the price is low enough and some company tweets something and the Matrix is reborn and everything old is new again. And someone, somewhere, who is currently just ignoring the whole Crypto thing, will limp in and at some point, discover Tether, do some research and report about it. As I then read the headline on HN, I shall gaze out the broken window and take in, one last time, the burning remnants of a once thriving civilization. And smile.

albybisy 6y ago

I will invest something in Bitcoin only when this "tether / bitfinex" thing will blow up.

shawnz 6y ago

I can't wait until the Tether situation finally comes to pass. Then we can finally stop hearing about how Tether's fraud is some kind of argument against Bitcoin, and also those with a legitimate interest in Bitcoin might be able to purchase it at a cheaper price once Tether's influence is gone.

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kelvinstones31 6y ago

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ad31mar 6y ago

"The amount of energy necessary to refute bullshit is an order of magnitude bigger than to produce it." – Paul Kedrosky