3 ms·

The main thing people claim Tether does is: 1. pretend to have customers 2. pretend those customers have deposits 3. issue Tether to front those deposits 4.

The main thing people claim Tether does is: 1. pretend to have customers 2. pretend those customers have deposits 3. issue Tether to front those deposits 4. pump up their favorite coins with their newly minted Tethers My first suspicion would be that FTX was more fraudulent to its investors than people claim. It pretended to have a lot more customers & deposits than it actually did to pump up FTT, to get real money from investors looking for a real business rather than crypto BS. Mainstream institutional money is gigantic, and it's mainly refusing to invest in coins. However, it's not afraid to invest in companies selling shovels to the gold rush. You can get a lot more money by defrauding institutional money than you can by defrauding retail. Is there hard evidence this isn't what happened? All I see is that the records were so bad they have no idea who's owed what. That seems like a really convenient way to cover up you didn't actually have customers in the first place and everything was a fraud.

miguelazo 4y ago
It's actually much, much worse than that. Tether, by misrepresenting its reserves, essentially "prints" money by faking the peg. This was already done in the overnight lending markets by huge financial institutions abusing the fractional reserve system, but at least there's a tiny facade of regulation on that side.* *https://press.uchicago.edu/ucp/books/book/chicago/M/bo22438821.html https://press.uchicago.edu/ucp/books/book/chicago/M/bo224388...
hungryforcodes 4y ago
What? How does Tether come into this? How is it related to FTX?
- xwdv 4y ago
  Tether is related to FTX in the sense it is also a fraud and will eventually collapse.
  - zoklet-enjoyer 4y ago
    FTX was one of their biggest customers. I think they both used the same bank too
- gitfan86 4y ago
  They both claim to be well capitalized, but have provided no proof that that capitalization isn't coming from market manipulation of coins they own.
  - cbm-vic-20 4y ago
    For whatever it's worth (I have no skin in the crypto game, I just watch for the drama), Tether posts some third party audits around this, but who knows if that's trustworthy. https://tether.to/en/transparency/#reports https://tether.to/en/transparency/#reports
    - gitfan86 4y ago
      It isn't an audit but a report. The difference is that a report just says "this person had $100 in their checking account on this date" an audit tells you where those funds came from and how long they have been in the account.
    - deleted 4y ago
      [deleted]
- TacticalCoder 4y ago
  tether (aka USDT) and Bitfinex are part of the same iFinex group. The Panamera papers revealed what everyone in the business knew: they're all exactly the same owners. So tether/Bitfinex: one and the same. Now how does FTX relates to tether? Bifinex's top lawyer happens, what a coincidence, to be an ex-colleague of FTX's top lawyer. But wait, it gets better: what does these two used to work together on? A poker server software that had a "god mode" where owners would see customers' cards and defraud them. So these two lawyers were already working hand in hand on a previous fraud. And now at least one of them is caught, again, in a similar fraud (replace poker with crypto), where the money sent to these guys disappears in a black hole. But it's just a coincidence right? OK... What about this one: it's well known that the Bahamas bank at the center of the entire tether thing is Deltec/Delbank (they also have tens if not hundreds of companies). Guess who SBF bought a bank in the US from? From the owner of Deltec. So tether and FTX may be related in that they both frauds (at least one is proved to be a fraud now). Or, if we listen to those who correctly explained SBF and FTX were scam from day one, before SBF was even in the news as the savior of the world, FTX and tether are one and the same fraud. Tether is ultra shady but they may have counterfeited their way into solvency (buy cheap bitcoins, print fake usdt to pump bitcoins... The guys were already in this game back when Bitcoin was worth $200 or so IIRC). Especially if, by sheer luck, the trading arm of Bitfinex (Bitfinex has a company that is to Bitfinex what Alameda was to FTX) happens to be those on the winning side of the trade where FTX/Alameda lost billions. For that's the thing: they "lost" billions and we're to believe it's retail who won big vs the billions FTX lost? But I'd say it's unlikely anything substantial will be publicly disclosed. I only except lies and more lies from the very same media that were presenting SBF as an altruistic genius.
dheera 4y ago
Sounds a lot like what banks do. They mostly lend out money they don't actually have, with the hope that the owners of the money they lend out don't notice.
- gitfan86 4y ago
  The main difference is that banks enforce a low loan to value ratio and collateral. So a bank will give a 10k personal loan to someone who has 100k of stock and 500k of equity in their home. If that person doesn't pay back the loan the bank can sell some of that person's stock or put a lean on the person's house. With FTX no one was putting up collateral other than crypto.
  - tom-thistime 4y ago
    In addition, banks don't precisely lend out "money they don't have." They lend out cash they don't have against outstanding loans that are rationally expected to be repaid. If those loans are bad and the bank conceals it, or if they misrepresent the amount of those loans, then that's fraud. (IANAL)
    - dheera 4y ago
      > expected to be repaid In other words, they don't have the money. They just have an IOU, but that isn't money. What I deposited into the bank, that's money. And it's my money, not theirs.
      - tom-thistime 4y ago
        If you believe that IOUs by definition aren't valuable, then stay away from treasury bonds. If you're just drawing some kind of distinction between valuable things that aren't money and valuable things that are money then ok. I don't understand the point, but ok.
        dheera 4y ago
        > If you believe that IOUs by definition aren't valuable, then stay away from treasury bonds. IOUs are like a lottery. Treasury bonds, OOM call options, they all aren't valuable on their own, there's just a chance I might win. In the case of treasury bonds, that chance is more like 99.99%, in the case of the call options, it might be 20%, but it's a spectrum, and never 100%. At the end of the day, my landlord isn't going to take a treasury bond for my rent payment, and neither is my supermarket. IOUs are not the same as hard cash.
webinvest 4y ago
Tether has been around far far longer than FTX has. It has also been called a fraud for half or more of that time and it is still standing strong. FTX wasn’t publicly called a fraud, at least here on HN. The moment Coindesk published that FTX and Alameda were a house of cards, the house collapsed in 2 weeks more or less. Tether has probably made a ton of money by lending newly minted tether at 1-6% annual interest to people pessimistic enough to short it unsuccessfully this whole time, ironically.

miguelazo 4y ago

It's actually much, much worse than that. Tether, by misrepresenting its reserves, essentially "prints" money by faking the peg. This was already done in the overnight lending markets by huge financial institutions abusing the fractional reserve system, but at least there's a tiny facade of regulation on that side.* *https://press.uchicago.edu/ucp/books/book/chicago/M/bo22438821.html https://press.uchicago.edu/ucp/books/book/chicago/M/bo224388...

hungryforcodes 4y ago

What? How does Tether come into this? How is it related to FTX?

xwdv 4y ago
Tether is related to FTX in the sense it is also a fraud and will eventually collapse.
- zoklet-enjoyer 4y ago
  FTX was one of their biggest customers. I think they both used the same bank too
gitfan86 4y ago
They both claim to be well capitalized, but have provided no proof that that capitalization isn't coming from market manipulation of coins they own.
- cbm-vic-20 4y ago
  For whatever it's worth (I have no skin in the crypto game, I just watch for the drama), Tether posts some third party audits around this, but who knows if that's trustworthy. https://tether.to/en/transparency/#reports https://tether.to/en/transparency/#reports
  - gitfan86 4y ago
    It isn't an audit but a report. The difference is that a report just says "this person had $100 in their checking account on this date" an audit tells you where those funds came from and how long they have been in the account.
  - deleted 4y ago
    [deleted]
TacticalCoder 4y ago
tether (aka USDT) and Bitfinex are part of the same iFinex group. The Panamera papers revealed what everyone in the business knew: they're all exactly the same owners. So tether/Bitfinex: one and the same. Now how does FTX relates to tether? Bifinex's top lawyer happens, what a coincidence, to be an ex-colleague of FTX's top lawyer. But wait, it gets better: what does these two used to work together on? A poker server software that had a "god mode" where owners would see customers' cards and defraud them. So these two lawyers were already working hand in hand on a previous fraud. And now at least one of them is caught, again, in a similar fraud (replace poker with crypto), where the money sent to these guys disappears in a black hole. But it's just a coincidence right? OK... What about this one: it's well known that the Bahamas bank at the center of the entire tether thing is Deltec/Delbank (they also have tens if not hundreds of companies). Guess who SBF bought a bank in the US from? From the owner of Deltec. So tether and FTX may be related in that they both frauds (at least one is proved to be a fraud now). Or, if we listen to those who correctly explained SBF and FTX were scam from day one, before SBF was even in the news as the savior of the world, FTX and tether are one and the same fraud. Tether is ultra shady but they may have counterfeited their way into solvency (buy cheap bitcoins, print fake usdt to pump bitcoins... The guys were already in this game back when Bitcoin was worth $200 or so IIRC). Especially if, by sheer luck, the trading arm of Bitfinex (Bitfinex has a company that is to Bitfinex what Alameda was to FTX) happens to be those on the winning side of the trade where FTX/Alameda lost billions. For that's the thing: they "lost" billions and we're to believe it's retail who won big vs the billions FTX lost? But I'd say it's unlikely anything substantial will be publicly disclosed. I only except lies and more lies from the very same media that were presenting SBF as an altruistic genius.

dheera 4y ago

Sounds a lot like what banks do. They mostly lend out money they don't actually have, with the hope that the owners of the money they lend out don't notice.

gitfan86 4y ago
The main difference is that banks enforce a low loan to value ratio and collateral. So a bank will give a 10k personal loan to someone who has 100k of stock and 500k of equity in their home. If that person doesn't pay back the loan the bank can sell some of that person's stock or put a lean on the person's house. With FTX no one was putting up collateral other than crypto.
- tom-thistime 4y ago
  In addition, banks don't precisely lend out "money they don't have." They lend out cash they don't have against outstanding loans that are rationally expected to be repaid. If those loans are bad and the bank conceals it, or if they misrepresent the amount of those loans, then that's fraud. (IANAL)
  - dheera 4y ago
    > expected to be repaid In other words, they don't have the money. They just have an IOU, but that isn't money. What I deposited into the bank, that's money. And it's my money, not theirs.
    - tom-thistime 4y ago
      If you believe that IOUs by definition aren't valuable, then stay away from treasury bonds. If you're just drawing some kind of distinction between valuable things that aren't money and valuable things that are money then ok. I don't understand the point, but ok.
      - dheera 4y ago
        > If you believe that IOUs by definition aren't valuable, then stay away from treasury bonds. IOUs are like a lottery. Treasury bonds, OOM call options, they all aren't valuable on their own, there's just a chance I might win. In the case of treasury bonds, that chance is more like 99.99%, in the case of the call options, it might be 20%, but it's a spectrum, and never 100%. At the end of the day, my landlord isn't going to take a treasury bond for my rent payment, and neither is my supermarket. IOUs are not the same as hard cash.

webinvest 4y ago

Tether has been around far far longer than FTX has. It has also been called a fraud for half or more of that time and it is still standing strong. FTX wasn’t publicly called a fraud, at least here on HN. The moment Coindesk published that FTX and Alameda were a house of cards, the house collapsed in 2 weeks more or less. Tether has probably made a ton of money by lending newly minted tether at 1-6% annual interest to people pessimistic enough to short it unsuccessfully this whole time, ironically.