NY Attorney General sues Bitfinex

[squatter]

I don't think bitfinex has $850M+ in reserves because they have a practice of paying most of their operating earnings to shareholders.

For the sake of Tether holders, I hope that's true now that Tether appears to be a major shareholder in Bitfinex's parent company. Has anyone done any back-of-the-envelope math on how long it would take Bitfinex to repay the loan?

https://www.coindesk.com/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents

'Tether’s reserves of cash and cash equivalents alone (without the line of credit) would cover approximately 74 percent of the outstanding amount of tether.'

I wonder how this will be digested. My guess is no one's going to care just like 'real' fiat.

That's a lot worse than a I thought. It's amazing that Tether holders seem to remain so confident. CMC still has it trading at $1.01.

[gentlemand]

That's a lot worse than a I thought. It's amazing that Tether holders seem to remain so confident. CMC still has it trading at $1.01.

Hmm. I dunno. For the longest time an awful lot of people were fully convinced it was 100% fictional. The one thing that's come out of this ballsup is confirmation that it was properly backed once upon a time.

They're also taking steps to restore it. Whether people will swallow BFX's shit again is another matter but they probably will. This time around if their weird IEO sale succeeds then that's real backing from real people out in the open which is a first for Tether.

If that completes Tether is then in the strongest position it's ever been in in terms of nixing the scepticism that's always surrounded it.

Then again all of these legal proceedings might unearth some much more unsavoury practices along the way.

[squatter]

That's a lot worse than a I thought. It's amazing that Tether holders seem to remain so confident. CMC still has it trading at $1.01.

Hmm. I dunno. For the longest time an awful lot of people were fully convinced it was 100% fictional. The one thing that's come out of this ballsup is confirmation that it was properly backed once upon a time.

They're also taking steps to restore it. Whether people will swallow BFX's shit again is another matter but they probably will. This time around if their weird IEO sale succeeds then that's real backing from real people out in the open which is a first for Tether.

If that completes Tether is then in the strongest position it's ever been in in terms of nixing the scepticism that's always surrounded it.

Then again all of these legal proceedings might unearth some much more unsavoury practices along the way.

I can only imagine what the various US agencies investigating Tether and Bitfinex have unearthed by now. In the long run, it doesn't really matter whether they recover from this or not. This will eventually end in tears. Regulators are years-deep into these investigations now. After another couple bank account seizures, another credit line won't save Bitfinex.

I always had a feeling that Tether was fully backed, but they're in a perpetually risky position where that could change at any moment.

[CryptoReggae]

all this will only "speed up" the regulation, and I would FINALLY say.

It is time to make transparency especially towards those who manage millions of dollars

[Baofeng]

Update:

Arizona Man And Israeli Woman Charged In Connection With Providing Shadow Banking Services To Cryptocurrency Exchanges

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Jonathan D. Larsen, Acting Special Agent in Charge of the New York Office of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced the arrest today of REGINALD FOWLER on charges of bank fraud and operating an unlicensed money transmitting business.  Bank fraud charges were also unsealed against co-conspirator RAVID YOSEF, who remains at large.  FOWLER and YOSEF, who worked for several related companies that provided fiat-currency banking services to various cryptocurrency exchanges (the “Crypto Companies”), allegedly participated in a conspiracy in which FOWLER made numerous false and misleading statements to banks to open bank accounts that were used to receive deposits from individuals purchasing cryptocurrency, and in which FOWLER and YOSEF falsified electronic wire payment instructions to conceal the true nature of a voluminous cryptocurrency exchange business.  Hundreds of millions of dollars flowed through the Crypto Companies’ accounts from banks located across the globe. FOWLER will be presented today in federal court in Phoenix, Arizona.  The case is assigned to U.S. District Judge Andrew L. Carter Jr.

https://www.justice.gov/usao-sdny/pr/arizona-man-and-israeli-woman-charged-connection-providing-shadow-banking-services

That name sound familiar? RAVID YOSEF? Yes, because it's the same person who is part of the QuadrigaCX exit scam. So it looks like there is a connection way before everyone really knows what's going on behind, and it looks like there are some connections between Bitfinex and QuadrigaCX after all. So the plot thickens.

[PrimeNumber7]

I don't think bitfinex has $850M+ in reserves because they have a practice of paying most of their operating earnings to shareholders.

For the sake of Tether holders, I hope that's true now that Tether appears to be a major shareholder in Bitfinex's parent company. Has anyone done any back-of-the-envelope math on how long it would take Bitfinex to repay the loan?

It has long been publicly known that tether and Bitfinex have common overlapping ownership and management.

Bitfinex has made about $7M this month based on my estimates, based on their published trading volumes. This has been a very slow month, after several slow months. In 2017, they were likely making $100+M per month based on the same information.

https://www.coindesk.com/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents

'Tether’s reserves of cash and cash equivalents alone (without the line of credit) would cover approximately 74 percent of the outstanding amount of tether.'

I wonder how this will be digested. My guess is no one's going to care just like 'real' fiat.

That's a lot worse than a I thought. It's amazing that Tether holders seem to remain so confident. CMC still has it trading at $1.01.

That is only based on cash equivalents not total assets. Including total assets tethers are fully backed.

[squatter]

https://www.coindesk.com/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents

'Tether’s reserves of cash and cash equivalents alone (without the line of credit) would cover approximately 74 percent of the outstanding amount of tether.'

I wonder how this will be digested. My guess is no one's going to care just like 'real' fiat.

That's a lot worse than a I thought. It's amazing that Tether holders seem to remain so confident. CMC still has it trading at $1.01.

That is only based on cash equivalents not total assets. Including total assets tethers are fully backed.

That's the point. A few months ago, they were fully backed by cash. Now, a quarter of Tether's assets are nothing more than an unsecured loan to a company who is battling insolvency and legal problems left and right. Tethers are backed by a piece of paper whose value is dependent on Bitfinex's continued success.

Given that, it seems crazy to value Tethers at 1:1. The risk seems much worse than that.

[mayax]

Bitfinex is planning on holding an IEO next week to plug the hole from their seized $850M.

Apparently people just love to throw hundreds of millions of dollars to a company being sued by a government agency, just after losing $850 million dollars.   

[PrimeNumber7]

https://www.coindesk.com/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents

'Tether’s reserves of cash and cash equivalents alone (without the line of credit) would cover approximately 74 percent of the outstanding amount of tether.'

I wonder how this will be digested. My guess is no one's going to care just like 'real' fiat.

That's a lot worse than a I thought. It's amazing that Tether holders seem to remain so confident. CMC still has it trading at $1.01.

That is only based on cash equivalents not total assets. Including total assets tethers are fully backed.

That's the point. A few months ago, they were fully backed by cash. Now, a quarter of Tether's assets are nothing more than an unsecured loan to a company who is battling insolvency and legal problems left and right. Tethers are backed by a piece of paper whose value is dependent on Bitfinex's continued success.

Given that, it seems crazy to value Tethers at 1:1. The risk seems much worse than that.

The loan is not unsecured, it is secured by shares in Bitfinex and presumably the accounts receivable from CC.

It is normal for banks to not have cash to backup all deposits of their customers. It is normal for banks to hold about 10% of customers deposits in cash/cash-like securities.
I believe Kraken allows for shorting of tethers if you believe they are overvalued.

Bitfinex is planning on holding an IEO next week to plug the hole from their seized $850M.

Apparently people just love to throw hundreds of millions of dollars to a company being sued by a government agency, just after losing $850 million dollars.   

I don’t believe any government agency is suing Bitfinex. If you are referring to the court order obtained by the NYAG, this is not a lawsuit.

I have seen what I believe to be a marketing document for the IEO and it appears Bitfinex is asking customers to prepay a billion dollars worth of trading fees in advance in exchange for a trading fee discount and other features regarding the tokens.