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Federal investigators probe Tether

116 points by dcgudeman 2y ago

seper8 2y ago
delete
Jacobford8 2y ago
[dead]
outside415 2y ago
[flagged]
- rekttrader 2y ago
  Ask Cantor Fitzgerald if they aren’t the largest US treasuries purchasing outfit... with larger balances than many countries much less banks.
- dang 2y ago
  Maybe so, but please don't post unsubstantive comments to Hacker News.
JumpCrisscross 2y ago
Tether was launched in 2014 [1]. It has over $120bn in outstanding liabilities against unknown assets [2]. When it fails, it will rival the fourth-largest 'bank' failure in U.S. history [3]. This has been a complete failure of U.S. regulatory bodies. [1] https://www.investopedia.com/terms/t/tether-usdt.asp https://www.investopedia.com/terms/t/tether-usdt.asp [2] https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/ [3] https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...
- SheinhardtWigCo 2y ago
  It really is just a bank without any of the regulatory safeguards. A disastrous outcome is inevitable.
  - JumpCrisscross 2y ago
    > really is just a bank without any of the regulatory safeguards A "bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans" [1]. Tether doesn't offer demand deposits--withdrawals are subject to a minimum and fee [2]. It's thus not a bank, but a bank-like shadow bank [3]. [1] https://en.wikipedia.org/wiki/Bank https://en.wikipedia.org/wiki/Bank [2] https://tether.to/en/redeem-tethers-to-fiat-currency/ https://tether.to/en/redeem-tethers-to-fiat-currency/ [3] https://en.wikipedia.org/wiki/Shadow_banking_system https://en.wikipedia.org/wiki/Shadow_banking_system
- TheAlchemist 2y ago
  Exactly - a massive failure of regulatory bodies. I wonder why. It was similar with Madoff - there were people literally sending documents showing it's a fraud, and they did nothing for years. I don't follow crypto lately, but it seems that Tether is printing money in high interest rate period. But back before that, it was a complete joke - it was so apparent that they published only made up numbers that didn't really add up, pretended to get legitimate transfers of billions of $ on Sundays etc. They were investigated once by a US A.G. and found out to have lied on the reserves in the past, but nothing really serious happened. They got a fine and were forced to published a pseudo balance sheet, which was a joke (still a bit better than FTX's Excel spreadsheet).
  - llamaimperative 2y ago
    > Exactly - a massive failure of regulatory bodies. I wonder why. It was similar with Madoff - there were people literally sending documents showing it's a fraud, and they did nothing for years. For this to mean much (unfortunately), we have to know how many legitimate companies are being constantly reported as fraudulent. Similar to the FBI's flawless "they were on our radar" after every mass shooting event... if everyone is on the radar then it's not that informative that this person was too. Madoff's returns were so egregious that they definitely should've been looked into despite any of this^ though. Arguably Tether should be looked into if only because of the systemic risk it (allegedly?) produces for the crypto universe more broadly. But then again... no one seems to eager to spend a bunch of investigative resources to bail out an economy of anti-government gamblers/degenerates.
  - fellowniusmonk 2y ago
    Free money and failure to regulate means scammers have never been more flush and able to talk with money. It's not a great space to be in, glad this administration placed Lina Kahn and others, without competition free markets can't operate efficiently. Both regulatory capture and natural monopolies all jam up the works. People don't remember it but one of the best things that ever happened to tech was the anti-trust suit brought against M$, anti-competitive behavior is such a drag on tech innovation, that combined with the incremental win for right to repair is all great progress.
- HWR_14 2y ago
  Aren't you comparing the wrong values. Those banks that failed had more assets than tether has liabilities. However, the actual difference between assets and liabilities was significantly less than 120bn for those banks. With Tether, I imagine the collapse will go from 1:1 redemptions day 1 to "oops all gone" day 2. So I expect Tether to be the largest "bank" failure in US history by terms of loss of value.
- paulpauper 2y ago
  Just another reason why crypto is inferior. So much risk , no upside. like investing in mortgage/ bank stocks in 2007.
  - BLKNSLVR 2y ago
    No upside? Historically, or purely in the context of this article, assuming it's true?
    - paulpauper 2y ago
      what has the price done over the past 8 months, past 3 years?
      - BLKNSLVR 2y ago
        At least you've done enough research to very specifically cherry pick your time spans. That kind of research could have earned you some good money. Also, I can cherry pick too: 1st Jan 2023 - 31st Dec 2023: 256% Cherry picking is meaningless. Research and knowledge are where the (digital?) gold is.
        paulpauper 2y ago
        yeah that is just to recover the 2022 losses lol
  - earnesti 2y ago
    Tell that to all the Bitcoin billionaires and millionaires, lol.
    - paulpauper 2y ago
      some people win the lottery too
satvikpendem 2y ago
Ah, finally, will Tether get its day in the litigious sun? It's well known in cryptocurrency circles that their coin is not backed 1:1 to USD, similar to FTX, only that FTX crashed and this was found out the easy way. Cracking Tether will be much harder as they resist audits.
- JumpCrisscross 2y ago
  > Cracking Tether will be much harder as they resist audits If Tether is sanctioned, they can't hold most dollar-denominated assets. Certainly none of the safe or liquid ones. Figuring out why it failed may take some digging. But causing it to fail is trivial.
- alchemist1e9 2y ago
  > It's well known in cryptocurrency circles that their coin is not backed 1:1 to USD, similar to FTX, only that FTX crashed and this was found out the easy way. Being speculated about is not the same as “known”. In fact every tether investigation seems to end up showing they are even over capitalize and hold more than 1:1! My understanding of the audit situation was that the big accounting firms have refused to do it, presumably due to pressure from someone to not get involved.
  - JumpCrisscross 2y ago
    > every tether investigation seems to end up showing they are even over capitalize and hold more than 1:1 The one adversarial investigation I know of found the opposite [1]. > presumably due to pressure from someone to not get involved Not how audit works. [1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlement_agreement_-_execution_version.b-t_signed-c2_oag_signed.pdf https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
    - alchemist1e9 2y ago
      The NYAG settlement you keep posting didn’t find that Tether was unbacked or below 1:1. It focused on transparency issues and the fact that funds were not always properly segregated. There were periods when reserves included assets like receivables or funds temporarily seized by authorities (e.g., Crypto Capital), but there was NO finding that USDT wasn’t fully backed. In fact, Tether has often shown it holds more than the necessary reserves, as evidenced in various attestations and reports post-settlement, and even in the report you keep posting NEVER they claim USDT isn’t fully solevent! It’s funny how the no-coiner crowd keeps pushing the idea that Tether is some crypto scam destined to collapse, yet every single investigation, including the NYAG’s, has failed to back up that narrative. The reality is Tether has proven time and again that their USDT is fully backed and their business is profitable. The desperation to prove otherwise is just not supported by the facts.
daft_pink 2y ago
deleted. I have to figure out the exact agency and repost sorry. I thought it was the sec, but I am wrong.
- JumpCrisscross 2y ago
  > Tether effectively evaded future SEC oversight by withdrawing from the U.S. market and operating outside U.S. jurisdiction U.S. "jurisdiction is triggered when a payment in U.S. dollars [takes] place and the U.S. financial system [is] used" [1]. EDIT: Tether withdrew from New York State's jurisdiction as part of its settlement with the New York AG [2], not to be confused with the U.S. attorney based in Manhattan. [1] https://www.ziv.unibe.ch/unibe/portal/fak_rechtwis/c_dep_private/ziv/content/e7688/e50302/e150986/e196606/e1215672/Emmenegger_Zuber_SZW2022_DollarBasedJurisdiction_ger.pdf https://www.ziv.unibe.ch/unibe/portal/fak_rechtwis/c_dep_pri... [2] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlement_agreement_-_execution_version.b-t_signed-c2_oag_signed.pdf https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
neonate 2y ago
https://www.msn.com/en-us/money/markets/federal-investigators-probe-cryptocurrency-firm-tether/ar-AA1sVTzV https://www.msn.com/en-us/money/markets/federal-investigator... has the article
alchemist1e9 2y ago
https://x.com/paoloardoino/status/1849876338573799912 https://x.com/paoloardoino/status/1849876338573799912 CEO of Tether - “As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.”
- JumpCrisscross 2y ago
  U.S. attorneys are under no obligation to tell people they are investigating that they are under investigation. That doesn't prove the Journal's assertion. But it's nonsense to the point of suspicion to conclude from not having been noticed that there is no investigation.
- dogmayor 2y ago
  Yeah that's not how investigations work. USAOs don't publicize ongoing investigations for obvious reasons. Once they wrap up an investigation but before convening a grand jury to indict, they may send a target letter, but they typically don't. Most often, people don't find out until they're indicted.
  - alchemist1e9 2y ago
    https://x.com/paoloardoino/status/1849930663278833822 https://x.com/paoloardoino/status/1849930663278833822 Tether CEO additional statement on X - “At Tether, we deal regularly and directly with law enforcement officials to help prevent rogue nations, terrorists and criminals from misusing USDt. We would know if we are being investigated as the article falsely claimed. Based on that, we can confirm that the allegations in the article are unequivocally false.”
    - dogmayor 2y ago
      Again, that's not how it works. They wouldn't know if they're being investigated unless the USAO told them. And if the USAO had told them they're a target of an investigation then they'd say that instead of this garbage quote. Hell they may even be working with the sdny on some investigations, but in no way does that mean they would know if they themselves are the subject of another investigation. In other words, unless Tether is somehow working with the investigators on an investigation into Tether, Tether wouldn't know they're being investigated.
qqqult 2y ago
Yearly Tether obituary thread
- JumpCrisscross 2y ago
  > Tether obituary thread Timing its collapse is foolhardy. Concluding it must collapse isn't. It's a shadow bank run without deposit insurance nor AML.
  - qqqult 2y ago
    Why must it collapse?
    - JumpCrisscross 2y ago
      > Why must it collapse? One, because the consequences of an AML failure are immediately catastrophic: a dollar stablecoin can't reasonably survive without access to the dollar financial system. Tether's unregulated status means enforcement options are zero or ban. (Banks can be fined and put under compliance regimes.) Running a perfect AML programme indefinitely is impossible. There is no indication Tether runs much of an AML programme at all. Two, because bank-like structures are inherently unstable. Asset values fluctuate. The banks they hold cash or assets at will fail, sometimes beyond deposit insurance limits. Unlike banks, Tether has the benefit of being able to block redemptions. But they can only do that so many times before a regulator takes notice. In summary, Tether exists at the pleasure of American regulators and the consequences of losing favour are collapse. They're compliance-wise and financially unstable. The consequences of a single failure won't be catastrophic. But eventually they will fail for the same reason every bank without deposit insurance will, eventually, fail.
    - alchemist1e9 2y ago
      Governments don’t like stable coins so even if it is perfectly 1:1 they will still try to find a way to go after them. Other commenters have hinted the path is “sanctions” for not enforcing some controls.. Personally I can’t wait for governments to go after stable coins, then Bitcoin will really “moon”!
deleted 2y ago
[deleted]
charliebwrites 2y ago
My unsubstantiated conspiracy theory on this is that not only is Tether not backed 1:1 USD > USDT but that they are so disproportionately not backed that they basically printed money during the peak of the pandemic, causing real measurable inflation in the crypto markets
ldjkfkdsjnv 2y ago
How bitcoin got huge was basically tether money printing. since it wasnt backed by anything, they just printed tether and bought bitcoin. a group did it behind the scenes, got massively wealthy.
- FireBeyond 2y ago
  And at stupid numbers that cryptofans just ate up like it was perfectly logical. "Oh, you're banking $700M PER DAY in deposits for Tether? Sounds legit to me!"
  - seper8 2y ago
    delete
wmf 2y ago
I don't know why, but the one thing cryptobros fear is OFAC. They shrug off fraud, securities violations, and money laundering but when sanctions are mentioned people start running away. We saw this with Tornado Cash and hopefully Tether will get OFACed next. BTW, Tether probably is backed 1:1 or better because they bought $XXB of US treasury bonds at >4% which return billions in profit per year. BTC is also (currently) near all time highs. Whatever hole they had was probably filled in.
- seper8 2y ago
  [flagged]
pessimizer 2y ago
Both presidential candidates have signaled that they are pro-crypto scams (and one thinks that has something to do with the welfare of black men.) It's too late. Bitcoin has entered the house price zone, where people are elected to office on promises to make housing as expensive as possible. We'll have to wait until crypto brings down the entire economy. And after it does, the people who hold it will be bailed out: "Do you know how many disadvantaged minorities are invested in crypto? Especially after we allowed them to invest their social security into it, with matching contributions from the state if they agree to hodl? Are you a racist monster?" Meanwhile 90% of black people will have 90% of their savings in crypto, accounting for less than 2% of all crypto holdings. FTX so far was barely a speedbump. All it taught politicians is that there's a lot of money in doing what crypto whales say, and absolutely no consequences even if it goes belly up in the worst way.
- paulpauper 2y ago
  It's just pandering. Neither candidate will do anything. Existing regulation will stay in place or tighten.
  - mikeyouse 2y ago
    Trump launched an actual Shitcoin.. will be interesting to see what happens to that.
BLKNSLVR 2y ago
Good timing, along with the election. Going by history there's the likelihood of a ~20% dip in the BTC price before it takes a couple of big steps up in the last few months of the bull run part of the 4-year cycle. If it happens, accumulate.
- gosub100 2y ago
  Don't buy a pizza with it, or help Aunt Mildred with an expense, or loan your brother $4k though, because it's useless for any practical purposes.
  - BLKNSLVR 2y ago
    I'm aware of these things, but good points to know for the uninitiated.
- paulpauper 2y ago
  Why would I accumulate something which has so much risk and so much downside when I can just buy tech stocks like TSLA or NVDA which actually go up, with less risk and less volatility? Meta, Nvidia, QQQ have beaten bitcoin for years now. The time to have bought bitcoin was pre-2017 or so. those days over for good. Bitcoin is weak and bloated, never goes up anymore, too many old wallets and whales dumping. Too much regulation.
  - BLKNSLVR 2y ago
    Depends on your timescale and when to buy and sell. Depending on the reason, I'd also say it would be worth buying Meta, NVDA, TSLA, etc. on a 20% dip, especially if they were going into a season where, historically, they makes their largest gains.
100k 2y ago
Zeke Faux's Number Go Up (https://www.amazon.com/Number-Go-Up-Cryptos-Staggering/dp/0593443837 https://www.amazon.com/Number-Go-Up-Cryptos-Staggering/dp/05...) started as an investigation into Tether. He found some extremely suspect clues, but he wasn't able to crack it. Hopefully the feds are able to shed some light on it.
stogot 2y ago
From what I’ve seen, they waited a couple years longer than they should have. I expect tether deleted evidence by now
gws 2y ago
For those doubting that Tether is fully backed, note that Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment banks and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds
- JumpCrisscross 2y ago
  > Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment bank and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds Source? I'm seeing Fitzgerald say "Cantor Fitzgerald manages 'many many' of" Tether's assets (not all) and that he can vouch for their balance sheet [1]. But not that Cantor manages all of its assets nor that it's all in Treasuries. [1] https://www.bloomberg.com/news/articles/2024-01-16/tether-s-custodian-says-the-crypto-giant-has-the-money-it-claims https://www.bloomberg.com/news/articles/2024-01-16/tether-s-...
  - gws 2y ago
    The most comprehensive and forceful statements are in this video: https://youtu.be/IjR3Hj0aRW4?si=s2D0wjQOIS5uiFKh https://youtu.be/IjR3Hj0aRW4?si=s2D0wjQOIS5uiFKh
    - gws 2y ago
      8:45
- pfisherman 2y ago
  What are the incentives at work here? What is their risk exposure to a collapse of tether? What would be the reputation al risk to their firm if tether was a scam? I personally would take this with a grain of salt as they have a direct financial interest in Tether looking solid and prestigious and continuing its present operations. I am old enough to remember when investment banks touting their mortgage backed securities business before the collapse in 2008.
jerry1979 2y ago
I'm very curious to see how this investigation plays out, especially considering the debt situation here in the US. It appears (according to tether's audit reports) that tether went from about 64 billion in treasuries mid-2023 to about 92 billion mid-2024. That's 27 billion in demand for treasuries over that one year period which (if my math and research is correct) is about 3% of all treasury demand for roughly that time period. It does appear that tether holds short-term maturity treasuries, and I don't know how that fits into the larger demand picture. https://assets.ctfassets.net/vyse88cgwfbl/63oJePOHqIvrcnXWMPZ1M0/4cfaf2e7cdf80c30b17fdc70faaf741f/ESO.03.01_Std_ISAE_3000R_Opinion_30-06-2023_BDO_Tether_CRR.pdf https://assets.ctfassets.net/vyse88cgwfbl/63oJePOHqIvrcnXWMP... https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtYgICGy/d7462f312aa15b872f8474322ba90363/ISAE_3000R_-_Opinion_on_Consolidated_Financials_Figures_30.06.2024_RC134792024BD0209.pdf https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtYg... https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html https://ticdata.treasury.gov/resource-center/data-chart-cent...
paulpauper 2y ago
This is just another example of how shorting Bitcoin during market hours is such an effective strategy, which is as profitable now at $60k as it was at $20k. This takes advantage of the tendency of bad news to drop when the stock market is open. Federal government offices are closed on weekends, so if bad news is dropped or a rumor of bad news, it will be on a weekday and when the market is open, as has been the case. Good news can also drop, but there is a major asymmetry favoring bad news and liquidations, and consequently sudden drops of the Bitcoin price. You don't have to work at a hedge fund to find great methods like this. It also shows why Bitcoin is an inferior investment compared to tech stocks, in which investors do not have to worry about these regulatory risks (except for antitrust, which is a slow, drawn-out process and this can be mitigated with diversification). QQQ has far outperformed Bitcoin even as far back as 2020.
domoregood 2y ago
https://archive.is/bCRd3 https://archive.is/bCRd3
ironyman 2y ago
Tether's press release: https://tether.io/news/tether-slams-wsjs-irresponsible-reporting-stands-by-strong-law-enforcement-track-record https://tether.io/news/tether-slams-wsjs-irresponsible-repor...
- lolinder 2y ago
  Is it actually just those two paragraphs, or is something not rendering correctly? If that's all there is, it's not a great defense. Maybe they felt like the WSJ article was just so unfair it didn't deserve a response, but then... just don't respond. This kind of righteous indignation with no actual rebuttal isn't persuasive.
cryptica 2y ago
If Tether is a fraud then the entire financial system is clearly a fraud as well. What kind of financial system allows a fraud of this size to continue for over a decade? Let me guess, nobody knew anything. Yet the government knows about every transaction over $600 on all our accounts. It's clown world.
yobid20 2y ago
Jesus only 6 or 7 years late! It was OPENLY KNOWN and ADMITTED IN COURT they never had the cash backing and were just printing tokens to inflate prices. Why start an investigation now?
- TacticalCoder 2y ago
  AIUI it's not an investigation about whether tether has the USDT or not but an investigation as to whether or not allowed customers to launder dirty money. Tether is in a country that has a long history of doing monkey business, including monkey business with drug trafficking money and arms trafficking money. Even the CIA was tied to that monkey business. To me there's zero doubt there's actual money laundering ongoing and I really wouldn't be surprised if, once again, some three letter agencies were implicated in monkey bahamian business.
  - FireBeyond 2y ago
    > Tether is in a country that has a long history of doing monkey business, including monkey business with drug trafficking money and arms trafficking money. I never forget the farcical interview with Deltec Bank's "Deputy CEO": At the start of 2021, according to their website, it was a 55 year old bank. By the end of 2021, it was a 70 year old bank! The bank's website is a WordPress site. And their customers must be unhappy - online banking hasn't worked for nearly two years at this point - take a look at the HTML source, there's no way it could actually work. Anyway, their Deputy CEO gave this hilarious interview from his gaming rig. A 33 year old Deputy CEO, who by his LinkedIn claimed to have graduated HEC Lausanne in Switzerland with a Master of Science at the age of 15... celebrating his graduation by immediately being named Professor of Finance at a university in Lebanon. While dividing his spare time between running hedge funds in Switzerland and uhh... Jacksonville, FL. The name of his fund? Indepedance [sic] Weath [sic] Management. Yeah, okay. In this hilariously inept interview, he claimed that people's claims about Deltec's money movements being several times larger than all the banking in their country was due to them misunderstanding the country's two banking licenses, the names of which he "couldn't remember right now" (the Deputy CEO of a bank who can't remember the name of the banking licenses where they operate), and he "wasn't sure which one they had, but we might have both". Once the ridicule and all this started piling on, within 24 hours, he was removed from the bank's website leadership page. When people pointed out how suspicious that looked, he was -re-added-. The bank then deleted the company's entire website and replaced it with a minimally edited WordPress site, where most of the links and buttons were non-functional and remained so for months thereafter. I mean fuck it, if the cryptobros want to look at all that and say "seems legit to me", alright, let em.
heroprotagonist 2y ago
Federal investigators should probably also probe who controls that sizeable chunk of dormant bitcoin that's projected to be valued higher than a significant chunk of the US economy in a few years. This used to be a non-serious question. But now we've got presidential candidates calling for national debt ceilings that will result in a default on US debt, and therefore crash the US dollar. Bitcoin's getting integrated into every payment app as if these companies are readying for an eventual modern equivalent of a run on the banks. Except with everyone moving their money to crypto instead of getting 'real dollars' to stuff into their mattresses. There's a 99.99%+ likelihood that Satoshi just.. lost his wallet one day, or died, or whatever. BUT -- assume a 0.01% possibility that there is something else at play with that early-mined bitcoin. Assume the _impact_ of a negative outcome with it will eventually be on the order of entire economies. If you use common practice to calculate security risk by multiplying the likelihood of risk by it's potential impact, there is certainly enough at play here to justify the US government putting a couple agents on a search for a week to figure out who this guy is/was, and who now controls all of those apparently-lost coins.
m101 2y ago
"backed" is a somewhat unclear term. Given tether don't only hold cash their securities will have mark-to-market valuations. At purchase prices, in a legitimate operation, they should be "backed", but if they were forced to finance redemptions at losses from purchase price then I suppose might not be "backed". However, they must have been sitting on so much interest up to now given where rates went recently that, provided they ran a fairly conservative operation, they should have plenty of reserves.
Terretta 2y ago
The U.S. federal government is investigating Bureau of Engraving and Printing's "US Dollar" notes for possible violations of sanctions and anti-money-laundering rules, according to people familiar with the matter. The criminal investigation, run by prosecutors at the Manhattan U.S. attorney’s office, is looking at whether notes "tethered" to the Federal Reserve's "dollar" have been used by third parties to fund illegal activities such as the drug trade, terrorism and hacking—or launder the proceeds generated by them. The Treasury Department, meanwhile, has been considering sanctioning the Federal Reserve because of the Bureau of Engraving and Printing's currency notes' widespread use by individuals and groups sanctioned by the U.S., including the terrorist group Hamas and Russian arms dealers. Sanctions against the Federal Reserve would generally prohibit Americans from doing business using the notes.
Elizabeth0147 2y ago
[dead]

116 points by dcgudeman 2y ago

seper8 2y ago

delete

Jacobford8 2y ago

[dead]

outside415 2y ago

[flagged]

rekttrader 2y ago
Ask Cantor Fitzgerald if they aren’t the largest US treasuries purchasing outfit... with larger balances than many countries much less banks.
dang 2y ago
Maybe so, but please don't post unsubstantive comments to Hacker News.

JumpCrisscross 2y ago

Tether was launched in 2014 [1]. It has over $120bn in outstanding liabilities against unknown assets [2]. When it fails, it will rival the fourth-largest 'bank' failure in U.S. history [3]. This has been a complete failure of U.S. regulatory bodies. [1] https://www.investopedia.com/terms/t/tether-usdt.asp https://www.investopedia.com/terms/t/tether-usdt.asp [2] https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/ [3] https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...

SheinhardtWigCo 2y ago
It really is just a bank without any of the regulatory safeguards. A disastrous outcome is inevitable.
- JumpCrisscross 2y ago
  > really is just a bank without any of the regulatory safeguards A "bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans" [1]. Tether doesn't offer demand deposits--withdrawals are subject to a minimum and fee [2]. It's thus not a bank, but a bank-like shadow bank [3]. [1] https://en.wikipedia.org/wiki/Bank https://en.wikipedia.org/wiki/Bank [2] https://tether.to/en/redeem-tethers-to-fiat-currency/ https://tether.to/en/redeem-tethers-to-fiat-currency/ [3] https://en.wikipedia.org/wiki/Shadow_banking_system https://en.wikipedia.org/wiki/Shadow_banking_system
TheAlchemist 2y ago
Exactly - a massive failure of regulatory bodies. I wonder why. It was similar with Madoff - there were people literally sending documents showing it's a fraud, and they did nothing for years. I don't follow crypto lately, but it seems that Tether is printing money in high interest rate period. But back before that, it was a complete joke - it was so apparent that they published only made up numbers that didn't really add up, pretended to get legitimate transfers of billions of $ on Sundays etc. They were investigated once by a US A.G. and found out to have lied on the reserves in the past, but nothing really serious happened. They got a fine and were forced to published a pseudo balance sheet, which was a joke (still a bit better than FTX's Excel spreadsheet).
- llamaimperative 2y ago
  > Exactly - a massive failure of regulatory bodies. I wonder why. It was similar with Madoff - there were people literally sending documents showing it's a fraud, and they did nothing for years. For this to mean much (unfortunately), we have to know how many legitimate companies are being constantly reported as fraudulent. Similar to the FBI's flawless "they were on our radar" after every mass shooting event... if everyone is on the radar then it's not that informative that this person was too. Madoff's returns were so egregious that they definitely should've been looked into despite any of this^ though. Arguably Tether should be looked into if only because of the systemic risk it (allegedly?) produces for the crypto universe more broadly. But then again... no one seems to eager to spend a bunch of investigative resources to bail out an economy of anti-government gamblers/degenerates.
- fellowniusmonk 2y ago
  Free money and failure to regulate means scammers have never been more flush and able to talk with money. It's not a great space to be in, glad this administration placed Lina Kahn and others, without competition free markets can't operate efficiently. Both regulatory capture and natural monopolies all jam up the works. People don't remember it but one of the best things that ever happened to tech was the anti-trust suit brought against M$, anti-competitive behavior is such a drag on tech innovation, that combined with the incremental win for right to repair is all great progress.
HWR_14 2y ago
Aren't you comparing the wrong values. Those banks that failed had more assets than tether has liabilities. However, the actual difference between assets and liabilities was significantly less than 120bn for those banks. With Tether, I imagine the collapse will go from 1:1 redemptions day 1 to "oops all gone" day 2. So I expect Tether to be the largest "bank" failure in US history by terms of loss of value.
paulpauper 2y ago
Just another reason why crypto is inferior. So much risk , no upside. like investing in mortgage/ bank stocks in 2007.
- BLKNSLVR 2y ago
  No upside? Historically, or purely in the context of this article, assuming it's true?
  - paulpauper 2y ago
    what has the price done over the past 8 months, past 3 years?
    - BLKNSLVR 2y ago
      At least you've done enough research to very specifically cherry pick your time spans. That kind of research could have earned you some good money. Also, I can cherry pick too: 1st Jan 2023 - 31st Dec 2023: 256% Cherry picking is meaningless. Research and knowledge are where the (digital?) gold is.
      - paulpauper 2y ago
        yeah that is just to recover the 2022 losses lol
- earnesti 2y ago
  Tell that to all the Bitcoin billionaires and millionaires, lol.
  - paulpauper 2y ago
    some people win the lottery too

satvikpendem 2y ago

Ah, finally, will Tether get its day in the litigious sun? It's well known in cryptocurrency circles that their coin is not backed 1:1 to USD, similar to FTX, only that FTX crashed and this was found out the easy way. Cracking Tether will be much harder as they resist audits.

JumpCrisscross 2y ago
> Cracking Tether will be much harder as they resist audits If Tether is sanctioned, they can't hold most dollar-denominated assets. Certainly none of the safe or liquid ones. Figuring out why it failed may take some digging. But causing it to fail is trivial.
alchemist1e9 2y ago
> It's well known in cryptocurrency circles that their coin is not backed 1:1 to USD, similar to FTX, only that FTX crashed and this was found out the easy way. Being speculated about is not the same as “known”. In fact every tether investigation seems to end up showing they are even over capitalize and hold more than 1:1! My understanding of the audit situation was that the big accounting firms have refused to do it, presumably due to pressure from someone to not get involved.
- JumpCrisscross 2y ago
  > every tether investigation seems to end up showing they are even over capitalize and hold more than 1:1 The one adversarial investigation I know of found the opposite [1]. > presumably due to pressure from someone to not get involved Not how audit works. [1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlement_agreement_-_execution_version.b-t_signed-c2_oag_signed.pdf https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
  - alchemist1e9 2y ago
    The NYAG settlement you keep posting didn’t find that Tether was unbacked or below 1:1. It focused on transparency issues and the fact that funds were not always properly segregated. There were periods when reserves included assets like receivables or funds temporarily seized by authorities (e.g., Crypto Capital), but there was NO finding that USDT wasn’t fully backed. In fact, Tether has often shown it holds more than the necessary reserves, as evidenced in various attestations and reports post-settlement, and even in the report you keep posting NEVER they claim USDT isn’t fully solevent! It’s funny how the no-coiner crowd keeps pushing the idea that Tether is some crypto scam destined to collapse, yet every single investigation, including the NYAG’s, has failed to back up that narrative. The reality is Tether has proven time and again that their USDT is fully backed and their business is profitable. The desperation to prove otherwise is just not supported by the facts.

daft_pink 2y ago

deleted. I have to figure out the exact agency and repost sorry. I thought it was the sec, but I am wrong.

JumpCrisscross 2y ago
> Tether effectively evaded future SEC oversight by withdrawing from the U.S. market and operating outside U.S. jurisdiction U.S. "jurisdiction is triggered when a payment in U.S. dollars [takes] place and the U.S. financial system [is] used" [1]. EDIT: Tether withdrew from New York State's jurisdiction as part of its settlement with the New York AG [2], not to be confused with the U.S. attorney based in Manhattan. [1] https://www.ziv.unibe.ch/unibe/portal/fak_rechtwis/c_dep_private/ziv/content/e7688/e50302/e150986/e196606/e1215672/Emmenegger_Zuber_SZW2022_DollarBasedJurisdiction_ger.pdf https://www.ziv.unibe.ch/unibe/portal/fak_rechtwis/c_dep_pri... [2] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlement_agreement_-_execution_version.b-t_signed-c2_oag_signed.pdf https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...

neonate 2y ago

https://www.msn.com/en-us/money/markets/federal-investigators-probe-cryptocurrency-firm-tether/ar-AA1sVTzV https://www.msn.com/en-us/money/markets/federal-investigator... has the article

alchemist1e9 2y ago

https://x.com/paoloardoino/status/1849876338573799912 https://x.com/paoloardoino/status/1849876338573799912 CEO of Tether - “As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.”

JumpCrisscross 2y ago
U.S. attorneys are under no obligation to tell people they are investigating that they are under investigation. That doesn't prove the Journal's assertion. But it's nonsense to the point of suspicion to conclude from not having been noticed that there is no investigation.
dogmayor 2y ago
Yeah that's not how investigations work. USAOs don't publicize ongoing investigations for obvious reasons. Once they wrap up an investigation but before convening a grand jury to indict, they may send a target letter, but they typically don't. Most often, people don't find out until they're indicted.
- alchemist1e9 2y ago
  https://x.com/paoloardoino/status/1849930663278833822 https://x.com/paoloardoino/status/1849930663278833822 Tether CEO additional statement on X - “At Tether, we deal regularly and directly with law enforcement officials to help prevent rogue nations, terrorists and criminals from misusing USDt. We would know if we are being investigated as the article falsely claimed. Based on that, we can confirm that the allegations in the article are unequivocally false.”
  - dogmayor 2y ago
    Again, that's not how it works. They wouldn't know if they're being investigated unless the USAO told them. And if the USAO had told them they're a target of an investigation then they'd say that instead of this garbage quote. Hell they may even be working with the sdny on some investigations, but in no way does that mean they would know if they themselves are the subject of another investigation. In other words, unless Tether is somehow working with the investigators on an investigation into Tether, Tether wouldn't know they're being investigated.

qqqult 2y ago

Yearly Tether obituary thread

JumpCrisscross 2y ago
> Tether obituary thread Timing its collapse is foolhardy. Concluding it must collapse isn't. It's a shadow bank run without deposit insurance nor AML.
- qqqult 2y ago
  Why must it collapse?
  - JumpCrisscross 2y ago
    > Why must it collapse? One, because the consequences of an AML failure are immediately catastrophic: a dollar stablecoin can't reasonably survive without access to the dollar financial system. Tether's unregulated status means enforcement options are zero or ban. (Banks can be fined and put under compliance regimes.) Running a perfect AML programme indefinitely is impossible. There is no indication Tether runs much of an AML programme at all. Two, because bank-like structures are inherently unstable. Asset values fluctuate. The banks they hold cash or assets at will fail, sometimes beyond deposit insurance limits. Unlike banks, Tether has the benefit of being able to block redemptions. But they can only do that so many times before a regulator takes notice. In summary, Tether exists at the pleasure of American regulators and the consequences of losing favour are collapse. They're compliance-wise and financially unstable. The consequences of a single failure won't be catastrophic. But eventually they will fail for the same reason every bank without deposit insurance will, eventually, fail.
  - alchemist1e9 2y ago
    Governments don’t like stable coins so even if it is perfectly 1:1 they will still try to find a way to go after them. Other commenters have hinted the path is “sanctions” for not enforcing some controls.. Personally I can’t wait for governments to go after stable coins, then Bitcoin will really “moon”!

deleted 2y ago

[deleted]

charliebwrites 2y ago

My unsubstantiated conspiracy theory on this is that not only is Tether not backed 1:1 USD > USDT but that they are so disproportionately not backed that they basically printed money during the peak of the pandemic, causing real measurable inflation in the crypto markets

ldjkfkdsjnv 2y ago

How bitcoin got huge was basically tether money printing. since it wasnt backed by anything, they just printed tether and bought bitcoin. a group did it behind the scenes, got massively wealthy.

FireBeyond 2y ago
And at stupid numbers that cryptofans just ate up like it was perfectly logical. "Oh, you're banking $700M PER DAY in deposits for Tether? Sounds legit to me!"
- seper8 2y ago
  delete

wmf 2y ago

I don't know why, but the one thing cryptobros fear is OFAC. They shrug off fraud, securities violations, and money laundering but when sanctions are mentioned people start running away. We saw this with Tornado Cash and hopefully Tether will get OFACed next. BTW, Tether probably is backed 1:1 or better because they bought $XXB of US treasury bonds at >4% which return billions in profit per year. BTC is also (currently) near all time highs. Whatever hole they had was probably filled in.

seper8 2y ago
[flagged]

pessimizer 2y ago

Both presidential candidates have signaled that they are pro-crypto scams (and one thinks that has something to do with the welfare of black men.) It's too late. Bitcoin has entered the house price zone, where people are elected to office on promises to make housing as expensive as possible. We'll have to wait until crypto brings down the entire economy. And after it does, the people who hold it will be bailed out: "Do you know how many disadvantaged minorities are invested in crypto? Especially after we allowed them to invest their social security into it, with matching contributions from the state if they agree to hodl? Are you a racist monster?" Meanwhile 90% of black people will have 90% of their savings in crypto, accounting for less than 2% of all crypto holdings. FTX so far was barely a speedbump. All it taught politicians is that there's a lot of money in doing what crypto whales say, and absolutely no consequences even if it goes belly up in the worst way.

paulpauper 2y ago
It's just pandering. Neither candidate will do anything. Existing regulation will stay in place or tighten.
- mikeyouse 2y ago
  Trump launched an actual Shitcoin.. will be interesting to see what happens to that.

BLKNSLVR 2y ago

Good timing, along with the election. Going by history there's the likelihood of a ~20% dip in the BTC price before it takes a couple of big steps up in the last few months of the bull run part of the 4-year cycle. If it happens, accumulate.

gosub100 2y ago
Don't buy a pizza with it, or help Aunt Mildred with an expense, or loan your brother $4k though, because it's useless for any practical purposes.
- BLKNSLVR 2y ago
  I'm aware of these things, but good points to know for the uninitiated.
paulpauper 2y ago
Why would I accumulate something which has so much risk and so much downside when I can just buy tech stocks like TSLA or NVDA which actually go up, with less risk and less volatility? Meta, Nvidia, QQQ have beaten bitcoin for years now. The time to have bought bitcoin was pre-2017 or so. those days over for good. Bitcoin is weak and bloated, never goes up anymore, too many old wallets and whales dumping. Too much regulation.
- BLKNSLVR 2y ago
  Depends on your timescale and when to buy and sell. Depending on the reason, I'd also say it would be worth buying Meta, NVDA, TSLA, etc. on a 20% dip, especially if they were going into a season where, historically, they makes their largest gains.

100k 2y ago

Zeke Faux's Number Go Up (https://www.amazon.com/Number-Go-Up-Cryptos-Staggering/dp/0593443837 https://www.amazon.com/Number-Go-Up-Cryptos-Staggering/dp/05...) started as an investigation into Tether. He found some extremely suspect clues, but he wasn't able to crack it. Hopefully the feds are able to shed some light on it.

stogot 2y ago

From what I’ve seen, they waited a couple years longer than they should have. I expect tether deleted evidence by now

gws 2y ago

For those doubting that Tether is fully backed, note that Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment banks and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds

JumpCrisscross 2y ago
> Howard Lutnick, CEO of Cantor Fitzgeral, one of the largest investment bank and a public company, has stated that Cantor Fitzgeral manages Tether’s money and indeed the money is all there and invested in US treasury bonds Source? I'm seeing Fitzgerald say "Cantor Fitzgerald manages 'many many' of" Tether's assets (not all) and that he can vouch for their balance sheet [1]. But not that Cantor manages all of its assets nor that it's all in Treasuries. [1] https://www.bloomberg.com/news/articles/2024-01-16/tether-s-custodian-says-the-crypto-giant-has-the-money-it-claims https://www.bloomberg.com/news/articles/2024-01-16/tether-s-...
- gws 2y ago
  The most comprehensive and forceful statements are in this video: https://youtu.be/IjR3Hj0aRW4?si=s2D0wjQOIS5uiFKh https://youtu.be/IjR3Hj0aRW4?si=s2D0wjQOIS5uiFKh
  - gws 2y ago
    8:45
pfisherman 2y ago
What are the incentives at work here? What is their risk exposure to a collapse of tether? What would be the reputation al risk to their firm if tether was a scam? I personally would take this with a grain of salt as they have a direct financial interest in Tether looking solid and prestigious and continuing its present operations. I am old enough to remember when investment banks touting their mortgage backed securities business before the collapse in 2008.

jerry1979 2y ago

I'm very curious to see how this investigation plays out, especially considering the debt situation here in the US. It appears (according to tether's audit reports) that tether went from about 64 billion in treasuries mid-2023 to about 92 billion mid-2024. That's 27 billion in demand for treasuries over that one year period which (if my math and research is correct) is about 3% of all treasury demand for roughly that time period. It does appear that tether holds short-term maturity treasuries, and I don't know how that fits into the larger demand picture. https://assets.ctfassets.net/vyse88cgwfbl/63oJePOHqIvrcnXWMPZ1M0/4cfaf2e7cdf80c30b17fdc70faaf741f/ESO.03.01_Std_ISAE_3000R_Opinion_30-06-2023_BDO_Tether_CRR.pdf https://assets.ctfassets.net/vyse88cgwfbl/63oJePOHqIvrcnXWMP... https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtYgICGy/d7462f312aa15b872f8474322ba90363/ISAE_3000R_-_Opinion_on_Consolidated_Financials_Figures_30.06.2024_RC134792024BD0209.pdf https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtYg... https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html https://ticdata.treasury.gov/resource-center/data-chart-cent...

paulpauper 2y ago

This is just another example of how shorting Bitcoin during market hours is such an effective strategy, which is as profitable now at $60k as it was at $20k. This takes advantage of the tendency of bad news to drop when the stock market is open. Federal government offices are closed on weekends, so if bad news is dropped or a rumor of bad news, it will be on a weekday and when the market is open, as has been the case. Good news can also drop, but there is a major asymmetry favoring bad news and liquidations, and consequently sudden drops of the Bitcoin price. You don't have to work at a hedge fund to find great methods like this. It also shows why Bitcoin is an inferior investment compared to tech stocks, in which investors do not have to worry about these regulatory risks (except for antitrust, which is a slow, drawn-out process and this can be mitigated with diversification). QQQ has far outperformed Bitcoin even as far back as 2020.

domoregood 2y ago

https://archive.is/bCRd3 https://archive.is/bCRd3

ironyman 2y ago

Tether's press release: https://tether.io/news/tether-slams-wsjs-irresponsible-reporting-stands-by-strong-law-enforcement-track-record https://tether.io/news/tether-slams-wsjs-irresponsible-repor...

lolinder 2y ago
Is it actually just those two paragraphs, or is something not rendering correctly? If that's all there is, it's not a great defense. Maybe they felt like the WSJ article was just so unfair it didn't deserve a response, but then... just don't respond. This kind of righteous indignation with no actual rebuttal isn't persuasive.

cryptica 2y ago

If Tether is a fraud then the entire financial system is clearly a fraud as well. What kind of financial system allows a fraud of this size to continue for over a decade? Let me guess, nobody knew anything. Yet the government knows about every transaction over $600 on all our accounts. It's clown world.

yobid20 2y ago

Jesus only 6 or 7 years late! It was OPENLY KNOWN and ADMITTED IN COURT they never had the cash backing and were just printing tokens to inflate prices. Why start an investigation now?

TacticalCoder 2y ago
AIUI it's not an investigation about whether tether has the USDT or not but an investigation as to whether or not allowed customers to launder dirty money. Tether is in a country that has a long history of doing monkey business, including monkey business with drug trafficking money and arms trafficking money. Even the CIA was tied to that monkey business. To me there's zero doubt there's actual money laundering ongoing and I really wouldn't be surprised if, once again, some three letter agencies were implicated in monkey bahamian business.
- FireBeyond 2y ago
  > Tether is in a country that has a long history of doing monkey business, including monkey business with drug trafficking money and arms trafficking money. I never forget the farcical interview with Deltec Bank's "Deputy CEO": At the start of 2021, according to their website, it was a 55 year old bank. By the end of 2021, it was a 70 year old bank! The bank's website is a WordPress site. And their customers must be unhappy - online banking hasn't worked for nearly two years at this point - take a look at the HTML source, there's no way it could actually work. Anyway, their Deputy CEO gave this hilarious interview from his gaming rig. A 33 year old Deputy CEO, who by his LinkedIn claimed to have graduated HEC Lausanne in Switzerland with a Master of Science at the age of 15... celebrating his graduation by immediately being named Professor of Finance at a university in Lebanon. While dividing his spare time between running hedge funds in Switzerland and uhh... Jacksonville, FL. The name of his fund? Indepedance [sic] Weath [sic] Management. Yeah, okay. In this hilariously inept interview, he claimed that people's claims about Deltec's money movements being several times larger than all the banking in their country was due to them misunderstanding the country's two banking licenses, the names of which he "couldn't remember right now" (the Deputy CEO of a bank who can't remember the name of the banking licenses where they operate), and he "wasn't sure which one they had, but we might have both". Once the ridicule and all this started piling on, within 24 hours, he was removed from the bank's website leadership page. When people pointed out how suspicious that looked, he was -re-added-. The bank then deleted the company's entire website and replaced it with a minimally edited WordPress site, where most of the links and buttons were non-functional and remained so for months thereafter. I mean fuck it, if the cryptobros want to look at all that and say "seems legit to me", alright, let em.

heroprotagonist 2y ago

Federal investigators should probably also probe who controls that sizeable chunk of dormant bitcoin that's projected to be valued higher than a significant chunk of the US economy in a few years. This used to be a non-serious question. But now we've got presidential candidates calling for national debt ceilings that will result in a default on US debt, and therefore crash the US dollar. Bitcoin's getting integrated into every payment app as if these companies are readying for an eventual modern equivalent of a run on the banks. Except with everyone moving their money to crypto instead of getting 'real dollars' to stuff into their mattresses. There's a 99.99%+ likelihood that Satoshi just.. lost his wallet one day, or died, or whatever. BUT -- assume a 0.01% possibility that there is something else at play with that early-mined bitcoin. Assume the _impact_ of a negative outcome with it will eventually be on the order of entire economies. If you use common practice to calculate security risk by multiplying the likelihood of risk by it's potential impact, there is certainly enough at play here to justify the US government putting a couple agents on a search for a week to figure out who this guy is/was, and who now controls all of those apparently-lost coins.

m101 2y ago

"backed" is a somewhat unclear term. Given tether don't only hold cash their securities will have mark-to-market valuations. At purchase prices, in a legitimate operation, they should be "backed", but if they were forced to finance redemptions at losses from purchase price then I suppose might not be "backed". However, they must have been sitting on so much interest up to now given where rates went recently that, provided they ran a fairly conservative operation, they should have plenty of reserves.

Terretta 2y ago

The U.S. federal government is investigating Bureau of Engraving and Printing's "US Dollar" notes for possible violations of sanctions and anti-money-laundering rules, according to people familiar with the matter. The criminal investigation, run by prosecutors at the Manhattan U.S. attorney’s office, is looking at whether notes "tethered" to the Federal Reserve's "dollar" have been used by third parties to fund illegal activities such as the drug trade, terrorism and hacking—or launder the proceeds generated by them. The Treasury Department, meanwhile, has been considering sanctioning the Federal Reserve because of the Bureau of Engraving and Printing's currency notes' widespread use by individuals and groups sanctioned by the U.S., including the terrorist group Hamas and Russian arms dealers. Sanctions against the Federal Reserve would generally prohibit Americans from doing business using the notes.

Elizabeth0147 2y ago

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