Bitcoin-Rigging Criminal Probe Focused on Tie to Tether
bloomberg.com
bloomberg.com
There are lots and lots of stories about individuals losing money in bitcoin and tether, this is one way they do it.
Possibly they’re using their fiat dollars to redeem tethers at a discount? (Or to try and enforce the peg)?
Doesn’t Coinmarketcap use exchanges’ self-reported data? What prevents Bitfinex from wash trading at $1?
Only way to obtain USDT is second hand on exchanges.
I dunno if Tether’s ledger is public or not. I would assume it would have to be for anyone to know how many are in existence.
The ledger doesn’t report the dollar price at which Tethers were bought and sold. The ledger could remain intact while Bitfinex falsifiés the prices of trades.
If you want the price, you need to aggregate the USDT trades across all pairs to get the price.
https://blockmodo.com/quotes/USDT
It moves up and down but it largely comes back to a dollar.
Obvious counterpoint: a viable secondary market is a necessary step to adoption of a cryptocurrency.
For example, if I ever see DAI trading at, say, $1.02 then I would quickly mint some new DAI and sell for USD. Likewise, if DAI is at $0.98 then I would buy it back, then burn what I've minted, collecting a profit.
Also note that with traditional USD pegs, they are not always on parity and hover a few cents from time to time. For example the HKD. https://en.m.wikipedia.org/wiki/Hong_Kong_dollar
In essence, if you declare a plausible intent of keeping a rate near 1$ by accepting limitless orders to buy it at 0.98$ and sell it at 1.02$, and can keep that promise, then that's a decent peg.
The market cap for tether went down 750 million recently so there appears to be some way to take it out of circulation.
Demand drops and the value of 1.00 USDT drops below $1.00, redeem the USDT yourself and profit on the spread.
I'd argue that it's inherent in the sense that none of them factored that into their model. As such, I'd argue that the models are inherently flawed because a trustless core is fundamentally compromised if you only have a trustful interface to the rest of the world.
To that end, I agree with your basic point: you need an interface to the outside word that has similar properties to the core model. At least, trustless, transparent, auditable. Probably anonymous as well.
Not really but they're clearly making an attempt in that direction.
Which is impossible because at some point the entire thing needs to interface with humans and human processes -- neither of which is infallible. The entire premise of Bitcoin, Ethereum and "Code Is Law" is broken at the core. They all try to get rid of "trust" by replacing it with computer code but at some point you need to interact with meatspace and meatspace is not logical, and not at all trustful.
In other words, trying to make everything trustless is futile because at the end of the day, you eventually have to trust other people.
The act of holding a US dollar bill in your hand doesn't bring you under the jurisdiction of the US government.
https://www.crowell.com/NewsEvents/AlertsNewsletters/all/For...
(NYS has jurisdiction over a foreign entity by virtue of a tie with a bank in the state.)
https://cblr.columbia.edu/the-u-s-jurisdiction-over-transfer...
(An article about jurisdiction of USD transfers.)
https://news.ycombinator.com/item?id=16267428
(Another recent HN discussion on this topic.)
Anybody can setup a little hut where they take in physical US dollars and give out virtual dollars which can be transferred over the internet, ala Tether.
If you operated such a hut outside the jurisdiction of the US, it doesn't matter what laws the US has, they don't apply to you.
This is the point I was trying to make that you dismissed as "infantile": just because you hold US dollars doesn't mean US laws apply to you.
I don't know what a 'hut' is in this context, but if it's connected to the USD payment system, not only can the long arm of the U.S. try to apply itself, but the said hut can be cut off via pressure on the international banking system. For the former, see the links I sent, which includes a case about New York State applying laws to an overseas entity; for the former, consider Iran and sanctions.
If your hut consists of a person shuffling US currency around with thumbs and rubber bands, well, that's a different story.
Bitcoin to USD exchanges are incredibly regulated. AML/KYC/SAR are all required by many governments.
Unregulated financial markets don’t work. You’re selling something intangible whose benefits are inherently only realisable after an indeterminable amount of time. That encourages fraud. This is a core and fundamental failure of cryptocurrencies.
The problem was everyone deciding to brand Bitcoin as an investment vehicle instead of as a currency.
Cryptocurrencies are money. The benefits are immediately realizable. If I gave you $5 in exchange for a service worth more than $10, promising that due to market forces that $5 would soon have the buying power of $10, you would laugh in my face and demand the $10 immediately, not later. Yet somehow we decided this was OK to do with crypto.
It has to do with a lack of knowledge, partially due to world governments initially being hostile towards crypto and then indifferent.
Were this technology correctly introduced to society by trusted parties with regulated information, we wouldn't be having this conversation about whether or not cryptocurrency is flawed due to an inherent volatility that comes with low market adoption.
...it would be fundamentally outperformed by said trusted party producing a database.
BTC solved an actual financial problem, though. There was a desire to make distributed financial transactions. The most obvious application was to make purchases where moving the money through central, regulated banks was undesirable (e.g. buying drugs or money laundering).
However, there were other applications as well. For my part, although I've never actually spent any BTC (I have a small amount that I actually mined with my CPU, if you can believe it!), the attraction was the possibility to make payments online because as non-permanent resident foreigner, every credit card company refused my business. It's slightly easier to get a credit card now, but I still don't have one.
In other places in the world, the banks are corrupt. My friend's wife had her employer pay her with BTC because she would be sure to actually receive payment. In some places, depending on who you are it is literally impossible to get a bank account. This is a form of marginalisation and discrimination. BTC (or something like it) can solve this problem, presuming you can find a way to convert it to fiat currency.
But the problem here is that despite the potential (or even because of it) the field is littered with fraud. The banks do not want a distributed payment processing system. They want to be in control. Especially in countries where they are abusing the customers, or actively marginalising parts of the population -- it's not an accident. They don't want to fix the "problem".
So the existing regulated industry wants no part of cryptocurrency (at least from the perspective of an actual decentralised payment processing system that removes control from them). This creates the vacuum that attracts the fraud. It also makes the adoption for beneficial transactions (e.g. not drugs and money laundering) very difficult because legitimate vendors have to adhere to the regulated system and cryptocurrency does nothing to make that easier. At best it doesn't make it harder. As many cryptocurrency nouveau-riche can identify with, figuring out how to pay your taxes with the capital gains/losses from FOREX is not trivial.
While I'm hopeful that a distributed payment solution will eventually arise, I think the OP's point that the pains we are experiencing are pretty much inevitable is correct. Though we could make our lives a lot easier if we used an inflationary cryptocurrency (because then you'd be forced to spend it quickly).
IOTA's coordinator in contrast defines when a transaction can be considered confirmed.
They are nothing alike.
I dont really see how XRP is really any different than Paypal. If they can ban me, stop me from sending my tokens to whoever I want, or reverse my transaction I don't feel as though im getting any of crypto's benefits.
Not sure if thats general thinking, but it is at least mine.
Ripple Inc only controlled all validating nodes until stable third party nodes were established. Each node decides which other nodes to trust. There is a default Unique Node List (trusted nodes) provided by Ripple. But, the UNL is not a list of all validating nodes.
At this time Ripple only controls 39% of nodes on the default UNL. If Ripple Inc turned to dust the XRP network would continue on.
No entity, not even Ripple Inc., can freeze XRP or prevent you from sending it. Assets can be frozen by the issuing entity but XRP cannot ever be frozen.
99% of coins are bewilderingly shitty.
IOTA has said you should consider a transaction confirmed if their centrally controlled coordinator has accepted it. So no it's not a cryptocurrency as they should be decentralized.
(This is of course assuming Tether is not an actual fraud, when all the evidence points that way)
We are no longer in SEC turf and DOJ has a conviction rate of 93% as of 2012, a trend which has been increasing. It's one thing to argue against Howey Test or hide money from the Taxman. It's a whole new level of shit storm to be accused of laundering money for terrorists and drug cartels.
https://medium.com/@justsomeperson/uncovering-the-real-carte...
Oh no, the cartels and terrorist cells would have to go back to conducting all their illegal activities in physical US dollars.
> We are no longer in SEC turf and DOJ has a conviction rate of 93% as of 2012
DOJ has such a high conviction rate because they only prosecute cases they expect to win.
Things like kingpin laws (continuing criminal enterprise) and RICO probably help the conviction rate.
Why would all cryptocurrency transactions be tainted by this? Or are you saying that the value (relative to real money) would plummet?
https://www.reuters.com/article/us-hsbc-probe/hsbc-became-ba...
https://www.bloomberg.com/news/articles/2018-11-16/gett-is-s...
The government has already made its stance clear. Crime is OK if it's done in a complex way.
They just need to formalize it into a law that way citizens are aware of the complexity threshold that is required for a crime to be legal.
Transporting millions in cash is risky (either you trust the courier with that and risk their life, or you do it yourself and risk yours), and doing so internationally is extremely challenging and/or expensive. By contrast, doing it digitally is quite easy and fast.
It feels a bit disingenuous to insist the two are the same.
https://en.m.wikipedia.org/wiki/HSBC_Mexico#Money_laundering
Not if you have to hire a lawyer to show the Bitcoins which left a violent criminal’s wallet were transferred to you legitimately.
Along with Civil Asset forfeiture mentioned by others, there are also:
* Know Your Customer laws,
* mandatory Suspicious Action Reports of all transactions over a certain value,
* anti-Smurfing or anti-Structuring laws that against structuring deposits to be under the threshold of SAR reports,
* a whole host of foreign transaction laws
* and plenty more...
So yes, prosecution of use of cash is very alive and healthy with people getting prosecuted for all of these crimes related to use of cash. And this is before any prosecutions that establish direct use for terrorism or drug cartels.
>f. People/exchanges/entities rarely use shell companies for legitimate purposes. And by rarely, I mean almost never.
The only reason their conviction rate is so high is because they don't bother to prosecute the majority of crimes anymore. These days if you can pay an arbitrary fine, you can get away with pretty much any financial crime.. (laundering money for drug cartels, etc.)
They didnt need bitcoin to do it.
The US has already given guidance on this. They have already stated that BTC and other cryptos are a commodity, and legal.
The SEC itself disagrees with your absurd notion that anyone who even accept crypto as payment could be in trouble.
Losses in cryptocurrencies like Bitcoin and ICOs are the result of individuals hyping each other up and smoking hopium. Opportunities have to at least pass a smell test before you can claim you've been "duped".
These stories fit peoples' expectations for fraud in Bitcoin, they lust for scams and intrigue.
The null hypotheses is boring but also quite plausible: bitcoin sees bubbles because price has been steadily rising and this eventually triggers positive-feedback cycles that cause the boom and bust. The insensitivity of Bitcoin price to news/events supports this hypothesis: price is the news.
The fraud narratives are more tea-leaf reading than actual analysis. Just dive into the Willy bot oeuvre if you'd like a sense of that.