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Author Topic: Judge Orders Bitfinex to Turn Over Tether Loan Documents (Again)  (Read 262 times)
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September 18, 2020, 12:57:47 PM
 #1

Bitfinex and Tether must turn over documents detailing their financial relationship and history to the New York Attorney General’s office (NYAG), a New York Supreme Court justice ruled again on Thursday.

Judge Joel M. Cohen, the judge who has been overseeing the NYAG’s inquiry into Bitfinex and Tether, made the ruling after a charged, hour-long hearing on Thursday. Counsel for the crypto companies argued the document production order is too broad while the NYAG’s office argued the order is reasonable, saying Bitfinex has not submitted anywhere near the sufficient documents despite the amount of time that has elapsed since the case began.

Cohen didn’t set a firm deadline for when Bitfinex and Tether would have to produce these documents, leaving that decision to a special referee, but said a deadline would need to be set. As part of his order, he extended an injunction that would have ended in the next few weeks barring Tether from loaning funds to Bitfinex by 90 days. 


https://www.coindesk.com/bitfinex-tether-nyag-hearing

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September 18, 2020, 01:49:30 PM
 #2

If Tether is accused of cheating again, this could be a shock, the market could be hit hard by bad news like this one. Tether they have printed too much USDT at a rate of 1 billion dollars a month in the last 5 months. Assuming they used USDT to buy altcoins and bitcoins at a good price and now they want to sell them to use the money to prove their liquidity, it is a disaster.

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September 18, 2020, 01:57:39 PM
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 #3

It's one of those cases where you want both sides to lose, heh.

I don't doubt the Attorney General's office are basically grasping in the dark, have no idea what they're actually looking for and probably wouldn't recognise it if they found it.  But at the same time, it's right that they should be suspicious of Bitfinex, who have been excessively furtive and rather shady in their dealings around the supposed "fully backed" nature of Tether.  It would be genuinely astounding to me if it turns out they really do have $14 billion USD in reserve, but something tells me they're never going to attempt to prove that's the case.  Last I heard of this ongoing farce, they'd amended their T&Cs to state that other assets may be used to back Tether, but didn't go into much further detail about what those assets might be.

I'll take this opportunity to give the usual reminder that people should only have funds on exchanges that they can afford to lose, particularly in the case of Bitfinex at the moment.  Also, if anyone currently has large sums stored in USDT, consider hedging with some other stablecoins (although, personally, they all sound as scammy and dangerous as each other to me, so I don't actually recommend holding any of them).

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September 18, 2020, 02:57:44 PM
 #4

It's one of those cases where you want both sides to lose, heh.

 It would be genuinely astounding to me if it turns out they really do have $14 billion USD in reserve, but something tells me they're never going to attempt to prove that's the case.  Last I heard of this ongoing farce, they'd amended their T&Cs to state that other assets may be used to back Tether, but didn't go into much further detail about what those assets might be.

Personally i find it really difficult to believe that so much fiat money ( roughly 10 billion usd between jan to September) could have flown into crypto markets at a time of so much financial turmoil/ consolidation all over the world. The most likely scenario to me is that there is a very high demand from people for tether/stable coins but most of this demand is being met by using crypto currencies as collateral rather than actual USD.
I.e People selling bitcoins on exchanges for tether and the exchanges then requesting more tether from Bitfinex/ tether corp and tether subsequently printing the same and sending it over (this would then explain the large 250 million batches). Again this new tether would have then be printed using Bitcoins/cryptos as collateral since one could safely assume that even most exchanges combined would not have 10 billion in fiat to send to Tether over 6-7 months.


I'll take this opportunity to give the usual reminder that people should only have funds on exchanges that they can afford to lose, particularly in the case of Bitfinex at the moment.  Also, if anyone currently has large sums stored in USDT, consider hedging with some other stablecoins (although, personally, they all sound as scammy and dangerous as each other to me, so I don't actually recommend holding any of them).

Completely agree with you, i mean if something does happen to tether then yea any money o bitfinex will most likely be gone, while other exchanges will also be hard hit( Many will just close while the bigger ones might impose haircuts on all user funds they possesses.

And while no one can tell you with any surety whether tether actually has the funds or not( They have already admitted that its not 100% backed by cash but with equivalent, who is to say what this is but i am guessing its most likely backed by Bitcoin or god forbid some other altcoin.)


And while the nature of crypto trading means that there will always be a need for users to move into stable coins from time to time given the ongoing investigations and given how elusive Bitfinex/tether have been in general towards providing any concrete data on it, it just makes sense to use some other stable coin given that there are other choices available (PAX, TUSD, USDC etc). I Mean even if you think that all of the tether stuff is FUD why put your own funds at risk.  

That being said if tether does get taken down i couldn't really say how many other stable coins would survive or be able to maintain their own pegs.

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September 18, 2020, 03:04:01 PM
 #5

If Tether is accused of cheating again, this could be a shock, the market could be hit hard

Although the market may indeed react heavily, for many the fact Tether is cheating is known thing, not "a shock".
I actually hope this Tether "soap opera" comes to an end and only the properly backed stable coins remain on the market.

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September 19, 2020, 02:59:46 AM
 #6

If Tether is accused of cheating again, this could be a shock, the market could be hit hard

Although the market may indeed react heavily, for many the fact Tether is cheating is known thing, not "a shock".
I actually hope this Tether "soap opera" comes to an end and only the properly backed stable coins remain on the market.
Other stable currencies will benefit, exchange rate difference will occur, but eventually, the tether will recover as before.
Bifinex will find a way to compensate for the money they lack to bail for Tether, everything will be stable.

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September 19, 2020, 10:02:20 AM
 #7

Other stable currencies will benefit, exchange rate difference will occur, but eventually, the tether will recover as before.
Bifinex will find a way to compensate for the money they lack to bail for Tether, everything will be stable.

If Bitfinex have been lying all along and Tether isn't fully backed and they're operating some sort of fractional reserve scheme, does it deserve to recover?  I can't help but think your judgement might be clouded by how much USDT I presume you're holding.  Try not to make that classic mistake where, rather than someone admits they've been conned and cuts their losses in time, they keep believing things are going to get better until they lose everything.  Because it's possible such an outcome might happen in this case.

This all looks very risky.  Anyone still trading this Tether IOU is either far braver or far more misguided than I.  Only time will tell which it is.

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September 19, 2020, 10:18:52 AM
 #8

This all looks very risky.  Anyone still trading this Tether IOU is either far braver or far more misguided than I.  Only time will tell which it is.

I’ve never liked the idea of stable coins for a simple reason, they’re very easy to print without real cover in anything that should be behind them. What has been presented to the public before is that only about 70% of USDT is backed by $, and as you say for the rest it is not known on what basis they were printed. I understand that crypto users like this type of coin because it is easy to send between crypto exchanges and trade it between other coins, but many seem to intentionally close their eyes and pretend that everything works perfectly.

I wouldn’t say there’s any courage here, many don’t really realize how easy it is to tear down the whole thing just if someone is really interested in doing it - but I believe there is one very powerful circle of people who know how to keep the whole thing afloat - which it’s not that hard if you have your own money factory.

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September 19, 2020, 10:48:09 AM
 #9

If Tether is accused of cheating again, this could be a shock, the market could be hit hard by bad news like this one. Tether they have printed too much USDT at a rate of 1 billion dollars a month in the last 5 months. Assuming they used USDT to buy altcoins and bitcoins at a good price and now they want to sell them to use the money to prove their liquidity, it is a disaster.

If this is the case and tether doesn't support the current on-going investigation then it could call for untrusted opposition in it's use. Just imagine for those who had their investments into USDT to use it as stable coin will have to face bad consequences thereafter. I believe it's best not to invest in the coins who are on the verge of jeopardy. This calls for uncalled investments.
 
If Tether is accused of cheating again, this could be a shock, the market could be hit hard

Although the market may indeed react heavily, for many the fact Tether is cheating is known thing, not "a shock".
I actually hope this Tether "soap opera" comes to an end and only the properly backed stable coins remain on the market.

That's the issue, under the name of stable coin they ripped off the process of loaning. Since this is under centralised category they are abided with the regular laws too.
Im not sure if this applies to the country where this hearing is happening, but it will have overall effect.

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September 19, 2020, 12:16:31 PM
 #10

If Tether is accused of cheating again, this could be a shock, the market could be hit hard

Although the market may indeed react heavily, for many the fact Tether is cheating is known thing, not "a shock".
I actually hope this Tether "soap opera" comes to an end and only the properly backed stable coins remain on the market.

I second this. USDT is so shady that it's only a matter of time before some shit they're doing comes to the surface again and makes everything nearby stink. If USDT is actually proven to be making money out of thin air the ripple effect will damage Bitfinex and all cryptos, especially altcoins that trade exclusively for stablecoins.
It's going to be a cleansing event we haven't seen before.

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September 21, 2020, 01:59:22 AM
 #11

It's one of those cases where you want both sides to lose, heh.

I don't doubt the Attorney General's office are basically grasping in the dark, have no idea what they're actually looking for and probably wouldn't recognise it if they found it.  But at the same time, it's right that they should be suspicious of Bitfinex, who have been excessively furtive and rather shady in their dealings around the supposed "fully backed" nature of Tether.  It would be genuinely astounding to me if it turns out they really do have $14 billion USD in reserve, but something tells me they're never going to attempt to prove that's the case.  Last I heard of this ongoing farce, they'd amended their T&Cs to state that other assets may be used to back Tether, but didn't go into much further detail about what those assets might be.

I'll take this opportunity to give the usual reminder that people should only have funds on exchanges that they can afford to lose, particularly in the case of Bitfinex at the moment.  Also, if anyone currently has large sums stored in USDT, consider hedging with some other stablecoins (although, personally, they all sound as scammy and dangerous as each other to me, so I don't actually recommend holding any of them).

However, if you knew the conclusion of Bitfinex losing this case, you would want them to win hehe. Their loss might cause the big short of bitcoin.

Many of the exchanges in the cryptospace are using USDT on high volume, I reckon if the rug is pulled, all the liquidity is pulled.

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September 21, 2020, 03:04:26 AM
 #12

If Tether is accused of cheating again, this could be a shock, the market could be hit hard by bad news like this one. Tether they have printed too much USDT at a rate of 1 billion dollars a month in the last 5 months. Assuming they used USDT to buy altcoins and bitcoins at a good price and now they want to sell them to use the money to prove their liquidity, it is a disaster.

Correct. A few months back, the market cap of Tether used to be in the 4.0-4.5 billion USD range. When I checked yesterday, this had increased to $15.2 billion. Tether is creating money out of thin air, just like Ben Bernanke did during the Obama presidency, when he was the Chair of the Federal Reserve. Tether is just like fiat currencies such as USD or UKP.... I would even say that Tether is even worse when compared to them. At least in the case of USD, the Federal Reserve has some limitations on the amount of banknotes that they can print. Tether doesn't have any such restrictions.  



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September 21, 2020, 09:46:39 AM
 #13

However, if you knew the conclusion of Bitfinex losing this case, you would want them to win hehe. Their loss might cause the big short of bitcoin.

Many of the exchanges in the cryptospace are using USDT on high volume, I reckon if the rug is pulled, all the liquidity is pulled.

I'm not much of a speculator, so even if it meant some turmoil in the short term, I think it's better the poison is bled out sooner rather than later.

Think of it this way, what would cause a bigger loss of faith in the markets?  Recognising it for what it is and allowing it to collapse now at $14 billion of mirage fakery, or pretending it's not a problem and waiting until it balloons to $140 billion and then blows up in our faces?  The longer we allow the charade go on, the bigger the fallout will be.

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September 21, 2020, 04:20:49 PM
 #14

     Man, this is quite a dilemma for bitfinex. Imagine what the effects would be or what would happen with the whole crypto currency industry if bitfinex would ever lose this case. Just thinking about it makes my imagination go wild and scares me a lot. But at the same time though, I really cannot say that the people opposing bitfinex are entirely wrong. I mean, bitfinex is really quite shady. But maybe, just maybe, they really do have the assets to back those tether. If things like these happening makes small investors like me worry, imagine those who have invested a lot or most of their assets? That's just scary.

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September 21, 2020, 04:29:28 PM
 #15

It's one of those cases where you want both sides to lose, heh.

I don't doubt the Attorney General's office are basically grasping in the dark, have no idea what they're actually looking for and probably wouldn't recognise it if they found it.  But at the same time, it's right that they should be suspicious of Bitfinex, who have been excessively furtive and rather shady in their dealings around the supposed "fully backed" nature of Tether.  It would be genuinely astounding to me if it turns out they really do have $14 billion USD in reserve, but something tells me they're never going to attempt to prove that's the case.  Last I heard of this ongoing farce, they'd amended their T&Cs to state that other assets may be used to back Tether, but didn't go into much further detail about what those assets might be.

I'll take this opportunity to give the usual reminder that people should only have funds on exchanges that they can afford to lose, particularly in the case of Bitfinex at the moment.  Also, if anyone currently has large sums stored in USDT, consider hedging with some other stablecoins (although, personally, they all sound as scammy and dangerous as each other to me, so I don't actually recommend holding any of them).

I am sorry to stress the fact that Bitcoin and Tether are quite linked together, unfortunately. Hence, if there will be a defeat of both Bitfinex and Tether, Bitcoin will inevitably face a few consequences.
We have seen this already but this could be like an atomic bomb. Look a USDT cap and tell me how that will not reflect on BTC.

tl;dr take your funds out of finex just in case, and avoid using tether to store your wealth until things will look better

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September 22, 2020, 12:45:35 AM
 #16

However, if you knew the conclusion of Bitfinex losing this case, you would want them to win hehe. Their loss might cause the big short of bitcoin.

Many of the exchanges in the cryptospace are using USDT on high volume, I reckon if the rug is pulled, all the liquidity is pulled.

I'm not much of a speculator, so even if it meant some turmoil in the short term, I think it's better the poison is bled out sooner rather than later.

Think of it this way, what would cause a bigger loss of faith in the markets?  Recognising it for what it is and allowing it to collapse now at $14 billion of mirage fakery, or pretending it's not a problem and waiting until it balloons to $140 billion and then blows up in our faces?  The longer we allow the charade go on, the bigger the fallout will be.

However, you do not think that the tether rug pull will not cause the cryptospace's biggest crisis that might take years for recovery? It might not only be a short term turmoil.

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September 22, 2020, 09:42:43 AM
 #17

I'm not much of a speculator, so even if it meant some turmoil in the short term, I think it's better the poison is bled out sooner rather than later.

Think of it this way, what would cause a bigger loss of faith in the markets?  Recognising it for what it is and allowing it to collapse now at $14 billion of mirage fakery, or pretending it's not a problem and waiting until it balloons to $140 billion and then blows up in our faces?  The longer we allow the charade go on, the bigger the fallout will be.

However, you do not think that the tether rug pull will not cause the cryptospace's biggest crisis that might take years for recovery? It might not only be a short term turmoil.

If anyone has any viable alternatives, I'm all ears.  They're going to keep printing more from nothing.  New traders are probably being suckered in daily.  It's only going to get bigger.  Is there a way to collapse it gradually without causing an avalanche that brings the entire mountain down on us?

The only thing I can think of is some sort of educational campaign to highlight the dangers.  But I suspect the greed of traders will win out, just as it's been doing all along.  They're not going to listen to reason.

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September 22, 2020, 10:13:43 AM
 #18

I'm not much of a speculator, so even if it meant some turmoil in the short term, I think it's better the poison is bled out sooner rather than later.

Think of it this way, what would cause a bigger loss of faith in the markets?  Recognising it for what it is and allowing it to collapse now at $14 billion of mirage fakery, or pretending it's not a problem and waiting until it balloons to $140 billion and then blows up in our faces?  The longer we allow the charade go on, the bigger the fallout will be.

However, you do not think that the tether rug pull will not cause the cryptospace's biggest crisis that might take years for recovery? It might not only be a short term turmoil.

If anyone has any viable alternatives, I'm all ears.  They're going to keep printing more from nothing.  New traders are probably being suckered in daily.  It's only going to get bigger.  Is there a way to collapse it gradually without causing an avalanche that brings the entire mountain down on us?

The only thing I can think of is some sort of educational campaign to highlight the dangers.  But I suspect the greed of traders will win out, just as it's been doing all along.  They're not going to listen to reason.
Exactly, the greed of traders will win out even if/when the truth will out. We all know that if this bubble bursts there is no going back. We can only expect more control coming from the regulators (who are already pushing their agenda like hell) and a possible crypto winter come back.
People will cry for their money and this world will never be the same again. If you ask me, shame on them. Sorry.

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September 22, 2020, 10:24:53 AM
 #19

It's one of those cases where you want both sides to lose, heh.

I don't doubt the Attorney General's office are basically grasping in the dark, have no idea what they're actually looking for and probably wouldn't recognise it if they found it.  But at the same time, it's right that they should be suspicious of Bitfinex, who have been excessively furtive and rather shady in their dealings around the supposed "fully backed" nature of Tether.  It would be genuinely astounding to me if it turns out they really do have $14 billion USD in reserve, but something tells me they're never going to attempt to prove that's the case.  Last I heard of this ongoing farce, they'd amended their T&Cs to state that other assets may be used to back Tether, but didn't go into much further detail about what those assets might be.

I'll take this opportunity to give the usual reminder that people should only have funds on exchanges that they can afford to lose, particularly in the case of Bitfinex at the moment.  Also, if anyone currently has large sums stored in USDT, consider hedging with some other stablecoins (although, personally, they all sound as scammy and dangerous as each other to me, so I don't actually recommend holding any of them).
I'm sure Tether is not 100% backed by USD, and like you've mentioned, the company even doesn't claim that it is (I'm talking about the assets part). Since it's clear that the problem is with how good this stablecoin is backed up, I don't see why the Attorney General's office would not know what to look for: they can just require the company to show them all the money and other assets they have to back up Tether (reports as well as proofs that those reports are real). In case this goes south, Tether might finally crash. But if the most popular stable coin crashes, others might also experience panic withdraws of money, so I'd rather put money into BTC than in another stable coin until the investigation is over.

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September 22, 2020, 10:43:56 AM
 #20

Exactly, the greed of traders will win out even if/when the truth will out. We all know that if this bubble bursts there is no going back. We can only expect more control coming from the regulators (who are already pushing their agenda like hell) and a possible crypto winter come back.
People will cry for their money and this world will never be the same again. If you ask me, shame on them. Sorry.

It's not like there haven't been enough warnings.  There have been a few topics where people have highlighted the problems in clear detail:

https://bitcointalk.org/index.php?topic=1881199.msg18693313#msg18693313
https://bitcointalk.org/index.php?topic=3202211.msg33233707#msg33233707
https://bitcointalk.org/index.php?topic=5050929.msg46924908#msg46924908
https://bitcointalk.org/index.php?topic=5120673.msg50162473#msg50162473

BitMEX also have a fairly comprehensive write-up about it:

https://blog.bitmex.com/tether/


I can't tell if people simply haven't noticed and we're not shouting loudly enough, or they're just too busy trying to make a buck to even care.  If it's the former, then maybe we have a chance to educate people and limit the damage.  If it's the latter, then all we can do is await the inevitable and hope that it dies before it gets too big.

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