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And yet people are so bought into crypto hype they look the other way. These dudes have been running this scam in plain sight for years now. It always amazes m

And yet people are so bought into crypto hype they look the other way. These dudes have been running this scam in plain sight for years now. It always amazes me that the whole house of cards continues to stand and hasn’t completely blown up.

Semaphor 5y ago
Probably because most people don’t care much? Tether always seemed like a thing for day-traders and whales.
deepvibrations 5y ago
We don't truly know the severity of it yet, but we do know that money has been moving over to other stablecoins such as USDC over the past year or so and so risk is slowly decreasing. There is a huge amount of innovation in the space and i think to gloss over it as a 'house of cards' is a bit naive - there is no denying it is a volatile market, but it is here to stay, so best to embrace it and see if there are actually projects that resonate with you.
- Marazan 5y ago
  Yes, money started moving over to USDC at exactly the same time they reduced transparency over their reserves and stopped being fully dollar backed. The risk is still right there.
  - onlyrealcuzzo 5y ago
    Is there an article about USDC that describes what/when the major changes happened. My understanding was that Coinbase was 1:1 dollars, and they actually had that money in banks, etc. Then, they ended transparency and the 1:1 peg. This is when people suspect they started getting debt to buy BTC - but this is presumably legal, right? Do they have any obligation to be transparent - being a publicly traded company?
- deleted 5y ago
  [deleted]
- bostonsre 5y ago
  I'm not sure lots of innovation means it's not a house of cards. We don't know how many fraudulent companies there are in this space. It seems possible that a few pieces of information could lead to a crash and that would definitely mean it's a house of cards if it was the case.
- lottin 5y ago
  There is literally no innovation in the crypto "space".
  - arcticbull 5y ago
    Sure there is! Innovating new ways to separate suckers from their money. It's a tough pill to swallow for the laser-eyed, I know. The problem is there's a lot for the HN community to like in it, if you're willfully blind to it's hypercapitalist and manipulative nature: fun technical challenges, little-guy-vs-the-world. I get it, I really do.
    - deepvibrations 5y ago
      I agree there is a lot of this in the space, but if you look past the laser eyes, there is some really awesome stuff happening in defi.
      - arcticbull 5y ago
        I don't disagree there's some cool technology, and in particular in the DeFi space - the problem is it's all fruit of the poison tree at the moment. It's all dependent on price action and the price action is dependent on Tether, on sketchy exchanges, on crime and criminality, on 125X leverage, on manipulation. And of course, there's so many problems with smart contracts - even the core idea of permanent, irrevocable transactions where bugs can leave you destitute and without anyone to speak to. And no way to unwind them. [1] Unless you're big enough, I guess, and can just fork the chain like Vitalik did with the DAO. [1] https://www.rekt.news/ https://www.rekt.news/
        ryanobjc 5y ago
        Man I’d hate for you to learn actual us history then…
        arcticbull 5y ago
        Haha, the history is past, ideally we should learn from those mistakes not facilitate re-creating them!
- NicoJuicy 5y ago
  Calling it innovation seems pretty naive. - defi: images hosted on url's that can disappear - eth sites: exists since 1970? - eth auth: a step back, lose keys, lose account. No recovery possible. ... Can you say what exactly was "innovated"?
  - deepvibrations 5y ago
    Sure - some problems being solved right now: What problems does DeFi solve? There are a few straightforward ones when looking at financial systems - Inefficiency - Banks and financial institutions spend billions on opex (ex. BoA spent $53 billion on SG&A and occupancy/equipment in 2020). Well written protocols and decentralized trust can increase efficiency and collapse this number Permissioned access - For better or for worse, anyone can create financial products and a whole market for it without asking the SEC Opacity - Instead of using paper/hidden digital ledgers, open source contracts lets one easily follow money flow through code and transactions Access - Turns out the world is very big and lots of people are either locked out from traditional financial institutions or their preexisting ones just really suck. (some examples taken from article https://parthchopra.substack.com/p/part-2-why-defi-is-not-a-ponzi-scheme https://parthchopra.substack.com/p/part-2-why-defi-is-not-a-...)
    - NicoJuicy 5y ago
      But they don't really solve any of that. That are inefficient too, slow and costly. 51% was possible from China anytime until they banned it. Insane workarounds are proposed for easy problems. Instead of the SEC, some sharks/influencers are ruling the markets. Not a week goes bye without a new hack or malicious ownership of the cloud solution or an on purpose malicious contract or extreme scams ( eg. Tether, USDT, ...). Within a second, all their money is away. People just hide money with currencies that hide their money trail. The nr. 1 problem for access to banks is internet access, look at El Salvador. They are suddenly creating internet access that hasn't been there before, creating a fake dogma. They had access to banks, it was just a long drive away. Transferwise could reduce transfer costs, but a big problem is also a faulty governement or eg. In case of Libanon: stable electricity. Crypto doesn't solve any of that. In the end, it's all about the hype and a lot of the end-users don't understand how it works and aren't protected from their own stupidity. Which is exactly where eg. Opex helps. Ps. Copy pasting your answer without a minor edit even just shows how mindless this thing has become.
- bluecalm 5y ago
  Any evidence of that happening? I mean there is still about the same amount of Tether in circulation (granted they stopped printing it). For the money to really move out it we would need to either see Tether supply shrinking or being moved to Tether own (or Bitfinex or any other of their sister companies) accounts. I am not following closely enough to know if that's the case, do you?
knownjorbist 5y ago
I'd err on the side of you not fully understanding the crypto picture rather than it being an enormous scam.
xenadu02 5y ago
Game theory predicts that market participants who discover Tether is a scam would publicly praise it while simultaneously moving away from it slowly and quietly to avoid spooking the market - leave some other sucker holding the bag. We also know people can be irrational so those who depend on Tether to operate simply cannot acknowledge it is a scam.
- boc 5y ago
  Yeah it's actually quite clever. Once you realize you've been trapped in a scam, the only way out is by hyping bitcoin so much that enough liquidity enters Bitfinex and allows you to liquidate your holdings. If you blow the whistle you get nothing out. If you ask for your money immediately, the exchange tells you they can't honor that request currently, but could if the price rises enough from new entrants. It's basically like a pyramid scheme where you can buy your way out by shilling hard enough for Bitcoin.
- deleted 5y ago
  [deleted]

Semaphor 5y ago

Probably because most people don’t care much? Tether always seemed like a thing for day-traders and whales.

deepvibrations 5y ago

We don't truly know the severity of it yet, but we do know that money has been moving over to other stablecoins such as USDC over the past year or so and so risk is slowly decreasing. There is a huge amount of innovation in the space and i think to gloss over it as a 'house of cards' is a bit naive - there is no denying it is a volatile market, but it is here to stay, so best to embrace it and see if there are actually projects that resonate with you.

Marazan 5y ago
Yes, money started moving over to USDC at exactly the same time they reduced transparency over their reserves and stopped being fully dollar backed. The risk is still right there.
- onlyrealcuzzo 5y ago
  Is there an article about USDC that describes what/when the major changes happened. My understanding was that Coinbase was 1:1 dollars, and they actually had that money in banks, etc. Then, they ended transparency and the 1:1 peg. This is when people suspect they started getting debt to buy BTC - but this is presumably legal, right? Do they have any obligation to be transparent - being a publicly traded company?
deleted 5y ago
[deleted]
bostonsre 5y ago
I'm not sure lots of innovation means it's not a house of cards. We don't know how many fraudulent companies there are in this space. It seems possible that a few pieces of information could lead to a crash and that would definitely mean it's a house of cards if it was the case.
lottin 5y ago
There is literally no innovation in the crypto "space".
- arcticbull 5y ago
  Sure there is! Innovating new ways to separate suckers from their money. It's a tough pill to swallow for the laser-eyed, I know. The problem is there's a lot for the HN community to like in it, if you're willfully blind to it's hypercapitalist and manipulative nature: fun technical challenges, little-guy-vs-the-world. I get it, I really do.
  - deepvibrations 5y ago
    I agree there is a lot of this in the space, but if you look past the laser eyes, there is some really awesome stuff happening in defi.
    - arcticbull 5y ago
      I don't disagree there's some cool technology, and in particular in the DeFi space - the problem is it's all fruit of the poison tree at the moment. It's all dependent on price action and the price action is dependent on Tether, on sketchy exchanges, on crime and criminality, on 125X leverage, on manipulation. And of course, there's so many problems with smart contracts - even the core idea of permanent, irrevocable transactions where bugs can leave you destitute and without anyone to speak to. And no way to unwind them. [1] Unless you're big enough, I guess, and can just fork the chain like Vitalik did with the DAO. [1] https://www.rekt.news/ https://www.rekt.news/
      - ryanobjc 5y ago
        Man I’d hate for you to learn actual us history then…
        arcticbull 5y ago
        Haha, the history is past, ideally we should learn from those mistakes not facilitate re-creating them!
NicoJuicy 5y ago
Calling it innovation seems pretty naive. - defi: images hosted on url's that can disappear - eth sites: exists since 1970? - eth auth: a step back, lose keys, lose account. No recovery possible. ... Can you say what exactly was "innovated"?
- deepvibrations 5y ago
  Sure - some problems being solved right now: What problems does DeFi solve? There are a few straightforward ones when looking at financial systems - Inefficiency - Banks and financial institutions spend billions on opex (ex. BoA spent $53 billion on SG&A and occupancy/equipment in 2020). Well written protocols and decentralized trust can increase efficiency and collapse this number Permissioned access - For better or for worse, anyone can create financial products and a whole market for it without asking the SEC Opacity - Instead of using paper/hidden digital ledgers, open source contracts lets one easily follow money flow through code and transactions Access - Turns out the world is very big and lots of people are either locked out from traditional financial institutions or their preexisting ones just really suck. (some examples taken from article https://parthchopra.substack.com/p/part-2-why-defi-is-not-a-ponzi-scheme https://parthchopra.substack.com/p/part-2-why-defi-is-not-a-...)
  - NicoJuicy 5y ago
    But they don't really solve any of that. That are inefficient too, slow and costly. 51% was possible from China anytime until they banned it. Insane workarounds are proposed for easy problems. Instead of the SEC, some sharks/influencers are ruling the markets. Not a week goes bye without a new hack or malicious ownership of the cloud solution or an on purpose malicious contract or extreme scams ( eg. Tether, USDT, ...). Within a second, all their money is away. People just hide money with currencies that hide their money trail. The nr. 1 problem for access to banks is internet access, look at El Salvador. They are suddenly creating internet access that hasn't been there before, creating a fake dogma. They had access to banks, it was just a long drive away. Transferwise could reduce transfer costs, but a big problem is also a faulty governement or eg. In case of Libanon: stable electricity. Crypto doesn't solve any of that. In the end, it's all about the hype and a lot of the end-users don't understand how it works and aren't protected from their own stupidity. Which is exactly where eg. Opex helps. Ps. Copy pasting your answer without a minor edit even just shows how mindless this thing has become.
bluecalm 5y ago
Any evidence of that happening? I mean there is still about the same amount of Tether in circulation (granted they stopped printing it). For the money to really move out it we would need to either see Tether supply shrinking or being moved to Tether own (or Bitfinex or any other of their sister companies) accounts. I am not following closely enough to know if that's the case, do you?

knownjorbist 5y ago

I'd err on the side of you not fully understanding the crypto picture rather than it being an enormous scam.

xenadu02 5y ago

Game theory predicts that market participants who discover Tether is a scam would publicly praise it while simultaneously moving away from it slowly and quietly to avoid spooking the market - leave some other sucker holding the bag. We also know people can be irrational so those who depend on Tether to operate simply cannot acknowledge it is a scam.

boc 5y ago
Yeah it's actually quite clever. Once you realize you've been trapped in a scam, the only way out is by hyping bitcoin so much that enough liquidity enters Bitfinex and allows you to liquidate your holdings. If you blow the whistle you get nothing out. If you ask for your money immediately, the exchange tells you they can't honor that request currently, but could if the price rises enough from new entrants. It's basically like a pyramid scheme where you can buy your way out by shilling hard enough for Bitcoin.
deleted 5y ago
[deleted]