[SamuelBRoberts]

The tethers thing looks close to blowing open.

I'm overworked (it's 7:00 AM where I'm at and I'm probably not gonna get done working until evening) so I don't have time to get into detailed discussions of this, and I particularly don't have time to deal with JJG-style word swamps, so I may not be able to discuss it too deeply, but it's something that I think members should be aware of. I'll just list things really quickly.

1. Bitcoin's huge price rise really started earlier this year, around the time a major exchange, Bitfinex, lost their banking.
2. Bitfinex is also responsible for the issuance of a type of currency called "tethers", which most traders on this forum have probably used.
3. Tethers are a crypto that is supposedly "backed" by dollars, that is, each individual tether can in theory be redeemed for one dollar from a bank account owned by Bitfinex's tether inc. subsidiary.
4. Tethers are not actually backed by dollars. They're not backed by anything. It is impossible to redeem tethers for real money. Nobody ever tries, everyone just assumes that you can. The bank account where the "backing" dollars are may not even exist. Tether claims daily audits, but there was one very poorly done audit of it over the course of months, that failed to verify much of anything.
5. The implications of this are obvious: Bitfinex has a supply of infinite money that they can use whenever they want at no risk to them. Want to buy some more bitcoin? Just create some more tethers!
5. Bitfinex corp also trades on its own exchange, and thus has access to information ordinary users don't. (They can see hidden orders, for instance.) They can also wash trade with impunity, for instance, because who's going to catch them? They own the exchange!
6. So you have a malicious actor with access to information that ordinary people don't have and a supply of free money. What would someone like that try to do? The same thing the Fed wanted to do with "quantitative easing", drive prices up as high as possible. What have we seen with bitcoin? Prices being driven up as high as possible.
7. Ever noticed how how bitcoin will sometimes have these massive pumps that make no real sense, right after a huge drop? Not ordinary bounces, massive green candles that are FAST? Ever ask yourself "What idiot is doing these huge market buys?" Well, it's not an idiot if they're paying with fake tethers.

There is good reason to believe that a large amount of Bitcoin's price rise over the last year is due to Bitfinex and their tethers. When the tether scam is stopped, expect the bitcoin price to crash. The scam is starting to get more attention, and I believe that in the next few months it will blow up

COMMON OBJECTIONS:
Objection: Bitcoin's price is going up because everybody is buying it! My aunt/uncle/guy at work etc. are all buying bitcoin!
Answer: Yes, they're buying because the price is on a massive uptrend, and the reason the price is on a massive uptrend is that any time it starts to go down, tethers come along and save the day. What happens when teh

Objection: Big institutional money is coming into Bitcoin. JP Morgan is buying, etc.!
Answer: Same as above.

Objection: There are only 648 million tethers in existence, and Bitcoin's marketcap is god-knows-how-many billion! Tethers can't possibly be affecting the price that much when they're less than 3% of Bitcoin's marketcap!

Answer: This question reflects a fundmental misunderstanding of how marketcap works. Marketcap is price * circulating supply, but the circulating supply doesn't reflect how much of a coin is actually available to purchase. Bitcoin's circulating supply is about 15 million, I think, but only a tiny amount of that is on exchanges at any one time, and it's that tiny amount that determines the price. For instance, a while ago 27 million in purchases was enough to send BTC's price up 300$, adding billions to its marketcap.



If any of this is unclear, I will happily take questions from anyone who is not JJG, because there's just not enough hours in the day to even figure out what the hell JJG is saying in his posts, let along answer them.

[void]

How is Tether different than any other BTC/SHITCOIN trade pair? Nobody guarantees me a payout of SHITCOIN/USD or SHITCOIN/EUR. There are only a few fiat trade pairs backed by some exchanges.

Thought experiment. I create a new crypto currency called TrailerParkCoin, I do not back up the coins with any money. After some time all my coins are worth 1 Billion dollar, on exchanges. It's not backed by anything.

If Tether would stop operation, the whole coin market would loose 0,3% of it's cap. This is a drop in the bucket. The only problem is real price determination, but as market cap is determined by BTC/fiat pairs and not BTC/USDT, we should be safe. BTC/USDT is a altcoin trade pair first, and a USDT/fiat pair second.

The real issue is, do we trust the exchanges to work properly and not steal money and keep low fiat cash reserves. (crypto coin bankrun/exchange run style) Fiat banks only hold a certain percent of their bogus money in cash/assets, the rest is numbers in computers.

To be safe, one could trade on exchanges with real BTC/USD pair only.

[SamuelBRoberts]

>How is Tether different than any other BTC/SHITCOIN trade pair? Nobody guarantees me a payout of SHITCOIN/USD or SHITCOIN/EUR. There are only a few fiat trade pairs backed by some exchanges.

The way Tethers are being used is similar to quantitive easing, it's essentially a central bank for crypto to prop up the price of the asset. Tethers are widely used because they fulfill a need everyone has: to quickly get money in and out of bitcoin on exchanges where there's no fiat pairing. They're so convenient that demand for them is enormous, and nobody ever really questions where they come from or how they work. Thus, while you could make your TrailerParkCoin, you wouldn't be able to issue new ones. If you started increasing the supply whenever you felt like it, like Bitfinex does with Tethers, your coins value would rapidly drop to zero and would never make it to a billion dollar marketcap.

The issue is not what happens to the total market cap of all cryptos when tether is removed. There are two issues here:

1.) Tether has probably played a large part in bitcoin's price rise. When it's shut down and tethers are removed from the ecosystem, it will no longer be able to sustain this function, which will mean that bitcoin's going to have a much harder time going up.
2.) Bitfinex is very likely violating all kinds of laws with this, as are any exchanges which accept tether. Bitfinex will very likely close as a result of this, and tether-accepting exchanges may go down too.

[Dvorak]

Something def. smells fishy about them, and a lot of people are warning to stay away from them.

Why do you think they're artificially supporting BTC specifically? Is it because they own a lot themselves and want to keep the hype-train going?
It seems like Bitfinex has a lot more to lose than to gain from this? They're a large exchange, and probably making good money. Why take such a risk?

[dasher]

(11-18-2017 06:25 AM)Dvorak Wrote:  

Something def. smells fishy about them, and a lot of people are warning to stay away from them.

Why do you think they're artificially supporting BTC specifically? Is it because they own a lot themselves and want to keep the hype-train going?
It seems like Bitfinex has a lot more to lose than to gain from this? They're a large exchange, and probably making good money. Why take such a risk?

That line of thinking hasn't stopped any other large corp or business from doing illegal things in the past and I doubt it will in the future.

[Dvorak]

(11-18-2017 07:13 AM)dasher Wrote:  

(11-18-2017 06:25 AM)Dvorak Wrote:  

Something def. smells fishy about them, and a lot of people are warning to stay away from them.

Why do you think they're artificially supporting BTC specifically? Is it because they own a lot themselves and want to keep the hype-train going?
It seems like Bitfinex has a lot more to lose than to gain from this? They're a large exchange, and probably making good money. Why take such a risk?

That line of thinking hasn't stopped any other large corp or business from doing illegal things in the past and I doubt it will in the future.

I know, just wondering... Maybe they think they can get away with it, and it doesn't pose a big risk...

[Bill Brasky]

This is pretty serious and I have a tendency to agree with what you say Sam. Everything you stated here is cogent. However, this is a serious allegation and there are some big players involved in BTC. They are either involved somehow, they know what's going on, or they are completely oblivious.

How do you think that large institutional buyers or whales allowed something like this to get past them? I'm sure they did a lot of due diligence before investing.

Also, it's my current understanding that the Tethers (USDT, EURT, JPYT) are ALL redeemable and convertable back into their respective fiat. From their site:

Quote:

Tether Platform currencies are 100% backed by actual fiat currency assets in our reserve account. Tethers are redeemable and exchangeable pursuant to Tether Limited’s terms of service. The conversion rate is 1 tether USD₮ equals 1 USD.

I have not read their TOS so it's possible that this line is bullshit. But this line seems to indicate that they are redeemable back into fiat and then into the connected bank account.

I was in the process of the KYC process to connect my bank account to the actual Tether wallet but never did it.

Again, I take what you state seriously. However, I'm wondering how this has not already made it to much bigger news outlets and that this is breaking news via the RVF.

[Bill Brasky]

I'm also having a hell of a time getting my Coinbase account unlocked. I was in Cuba for 2 days to renew a visa and they blocked my account after detecting a Cuba IP address (prohibited region). It's been over two months now and I'm completely helpless in terms of exchanging my BTC back into actual USD (not tether).

I'm thinking maybe coinbase is doing this to people to prevent conversion to fiat to keep the price high.

That's the conspiracy theorist part of me.

[Dvorak]

Found the following link which explains the backstory a bit more: https://medium.com/@bitfinexed/the-bitfi...b9d989359f

[Vaun]

(11-18-2017 11:03 AM)Bill Brasky Wrote:  

I'm also having a hell of a time getting my Coinbase account unlocked. I was in Cuba for 2 days to renew a visa and they blocked my account after detecting a Cuba IP address (prohibited region). It's been over two months now and I'm completely helpless in terms of exchanging my BTC back into actual USD (not tether).

I'm thinking maybe coinbase is doing this to people to prevent conversion to fiat to keep the price high.

That's the conspiracy theorist part of me.

Please help me understand this a little better, because I am completely naive to all of this bitcoin stuff.

Let me get this straight; you have an account with Coinbase, and I am assuming it is some sort of bank, or storage vehicle for your Bitcoins? And for the last two months, you haven't been able to log in and retrieve your funds?

And, did you invest your hard earned cash to buy that Bitcoin, that you can now not access in your "bank"?

If you could explain for me, a total dope when it comes to this stuff, I would appreciate it.

[Bill Brasky]

@vaun. Yes I have an account with coinbase. My bank account is connected to the account and I used it to buy BTC with money transferred from my bank account.

I logged into the account when I was in Cuba and I got an error message saying it's a prohibited region. I left Cuba and still got the error message and have been locked out of my account. I have submitted numerous support tickets and always get the same response that it's been "escalated to a specialist." I finally spoke to someone yesterday who again said that it's been escalated to highest priority and that I need to wait. It has been actually over two months now.

There are no "funds" to be retrieved in my coinbase account. But it is currently my only fiat gateway meaning I cannot sell by BTC for actual USD. I don't "store" BTC on coinbase either as I have a hardware wallet.

Yes I invested my hard earned cash but it's money that could go to zero and I'd be fine.

[Neo]

Thanks for the info Sam, good explanations. Although I'm not totally clear on the exact details of the tethers, since we're at or near an all time high might be a good time to start locking in some gains.

[SamuelBRoberts]

Quote:

How do you think that large institutional buyers or whales allowed something like this to get past them? I'm sure they did a lot of due diligence before investing.

I'm not a believer in the infallibility of whales/instititional buyers, but I will say that many institutional buyers have noticed things like this and it's causing them to stay out of the markets for now. When you see people saying it's unregulated, or talking about how they're going to "tame" bitcoin in order to prevent bad actors (Like the CEO of the CME was saying two weeks ago), this is the kind of thing they're talking about.

Quote:

I have not read their TOS so it's possible that this line is bullshit. But this line seems to indicate that they are redeemable back into fiat and then into the connected bank account.

It's bullshit. The TOS specifically states that they're not money, can't be redeemed for money, and don't form a contract for money.
You can't deposit or withdraw from the actual Tether site.

[/url]

Quote:

Again, I take what you state seriously. However, I'm wondering how this has not already made it to much bigger news outlets and that this is breaking news via the RVF.

Well, I certainly didn't come up with it. There's this one guy, named [url=https://twitter.com/bitfinexed]Bitfinexed, on twitter, who's been digging into this stuff and posting about it for months. I've been following him, first with a lot of skepticism, and then with the growing realization that everything that he's said is right.

The reason you're seeing it here first is that major Reddit subreddits are censoring it (/r/btc talks about it a lot, though), and the news sites don't want to talk about it.

It's been posted on 4chan several times, of course, I've seen it there, and I've seen plenty of my trader friends talk about it. Most were skeptical, but lately more and more are coming around to the idea that it's right, just because the evidence is so overwhelming. (I haven't gotten into it very clearly here, because my head is a mess from overwork these days, and writing complex ideas clearly is a bit beyond me.)


EDIT: I was wrong about sites not wanting to talk about it. CoinTelegraph is starting to bring it up.
https://cointelegraph.com/news/rapid-inc...accounting

[Steve McQueen]

SamuelBRoberts it's getting out there, lve seen it posted by bitcoin super bulls like max keiser just this week on twitter, question is why hasn't the price gone down in reaction, still too early?

What's your strategy here, just hold paper until it blows up?

[SamuelBRoberts]

I think it's a combination of a couple things. First, people "believe it", but they don't really believe it, that is, they agree that it's true but they don't actually take any action on it. Most people who are into Bitcoin enough to have heard this story are in pretty deep: they're folks with substantial BTC holdings, or people who've quit their jobs to trade. It would take a LOT to get people like that to cash out their bitcoin, particularly the guys who quit their jobs. If you've quit your shitty office job for the life of a day trader, it's gonna take more than a story on CoinTelegraph to get you to give that up.

Secondly, there's plenty of people who agree that it's true but don't really care: Bitfinex is making the price go up! So what does it matter what they're doing? These people think they can just dump at the top of the bubble. This includes folks who are planning to ride it out until Bitfinex gets shut down, and then go open a 100x short at Bitmex and laugh all the way to the bank. (Which isn't a terrible idea at all btw.)

Third, the reason the price isn't going down on the news that Bitfinex is manipulating it that, well, Bitfinex is manipulating the price. A few people cashing out because they're worried is nothing in the face of a mountain of free money from tethers and Bitfinex's ability to liquidate whoever they want.

I think it's a combination of these factors.

As for what I've done, I've mostly cashed out after a really lucky run at the start of October, and now I'm just letting my shit ride. I'm too busy with other projects to really trade anyway, and I'm getting a little tired of the whole bitcoin scene. I'll be pulling out my remaining holdings over the next month, I think.

I'm going to make some predictions here, since I'm a big fan of making testable predictions instead of just spouting off like an asshole.

In a few weeks or so, Tether will do the same things that Ponzi schemes do when they're under pressure, and start letting a few people do withdrawls. Expect a whole lot of "Tethers are fine, you were just fudding!" when this happens.

I do not expect this information by itself to have a major influence on the BTC price at any point in time. BTC may easily break 10k.

At some point in the next several months, POSSIBLY before the opening of the CME futures trading by the end of the year, Bitfinex/Tethers will be arrested in a major operation involving the police of several countries working together. The SEC may or may not be involved. This is when we'll start to see BTC's price go boom.

[Vaun]

(11-18-2017 04:35 PM)Bill Brasky Wrote:  

Yes I invested my hard earned cash but it's money that could go to zero and I'd be fine.

I am not trying to make light of your situation other than to learn more about it. But losing funds, for a simple technical glitch, is reason enough for me to not take bitcoin seriously. I wonder how many investors have lost money.

I was once in the ass crack of Mexico 20 years ago and get sucked into a riot in Mazatlan. It was a riot at a bank, that closed, and effectively took all of the money of the common people in the town. It was pretty violent and scary, and people were literally tearing the bank apart. A least they had something to destroy and people to hold accountable, other than their laptop.

[Ray Carlton]

(11-18-2017 04:05 PM)Dvorak Wrote:  

Found the following link which explains the backstory a bit more: https://medium.com/@bitfinexed/the-bitfi...b9d989359f

Quite a good and concerning read. But looking at the Tether chart, it's probably true. What other reason would there be that the Tether market cap exploded out of nowhere?

[robreke]

(11-18-2017 04:35 PM)Bill Brasky Wrote:  

@vaun. Yes I have an account with coinbase. My bank account is connected to the account and I used it to buy BTC with money transferred from my bank account.

I logged into the account when I was in Cuba and I got an error message saying it's a prohibited region. I left Cuba and still got the error message and have been locked out of my account. I have submitted numerous support tickets and always get the same response that it's been "escalated to a specialist." I finally spoke to someone yesterday who again said that it's been escalated to highest priority and that I need to wait. It has been actually over two months now.

There are no "funds" to be retrieved in my coinbase account. But it is currently my only fiat gateway meaning I cannot sell by BTC for actual USD. I don't "store" BTC on coinbase either as I have a hardware wallet.

Yes I invested my hard earned cash but it's money that could go to zero and I'd be fine.

The exchanges I've dealt with have atrocious customer service. Appallingly absolutely atrocious. Take weeks or longer to resolve something in most cases. I think it's getting better but the rate at which that's happening is about the way a glacier moves.

If these exchanges are bringing in so many new customers and presumably, so much new money, then damn man, hire some freaking customer service reps to get shit done in a timely manner. When you're dealing with peoples' money , fast and accurate customer service is absolutely paramount. It's the most important field of any fields to have speedy customer service. This is coming from me, someone who has worked in the financial services industry for years. Unfortunately, most of these exchanges are run by very intelligent hyper geeks that know a ton about crypto, blockchain and programming but have no real world experience in what quality customer service means and what the expectations are there (at least not when they first began the exchanges)

It's still the 'wild west' new phase of this investment type (crypto) and it shows in several aspects. Aside from that, the exchanges seem to have decent interfaces and trade entry, it's just the absolute slowness ( I consider it bordering on unacceptable) of the customer service response time.

[Bill Brasky]

From Bitfinex twitter:

Bitfinex twitter

Quote:

Bitfinex is solvent and both fiat and crypto withdrawals are functioning as normal. We are seeing increasing FUD which we believe is a co-ordinated attack to create a market disrupting event 1/2

[Bill Brasky]

(11-19-2017 10:25 AM)Vaun Wrote:  

(11-18-2017 04:35 PM)Bill Brasky Wrote:  

Yes I invested my hard earned cash but it's money that could go to zero and I'd be fine.

I am not trying to make light of your situation other than to learn more about it. But losing funds, for a simple technical glitch, is reason enough for me to not take bitcoin seriously. I wonder how many investors have lost money.

I was once in the ass crack of Mexico 20 years ago and get sucked into a riot in Mazatlan. It was a riot at a bank, that closed, and effectively took all of the money of the common people in the town. It was pretty violent and scary, and people were literally tearing the bank apart. A least they had something to destroy and people to hold accountable, other than their laptop.

You obviously have no understanding as to the issue I'm having. No funds have been "lost." It is also not a technical glitch. The coinbase software works fine.

What is going on with my issue right now has absolutely no relevance to Bitcoin itself.

This is the last response I'm going to write. You have a lot of homework to do regarding bitcoin.

I agree in that you'd be best to stay away from bitcoin at this moment in time until things clear up.

[Bill Brasky]

(11-19-2017 12:28 PM)robreke Wrote:  

(11-18-2017 04:35 PM)Bill Brasky Wrote:  

@vaun. Yes I have an account with coinbase. My bank account is connected to the account and I used it to buy BTC with money transferred from my bank account.

I logged into the account when I was in Cuba and I got an error message saying it's a prohibited region. I left Cuba and still got the error message and have been locked out of my account. I have submitted numerous support tickets and always get the same response that it's been "escalated to a specialist." I finally spoke to someone yesterday who again said that it's been escalated to highest priority and that I need to wait. It has been actually over two months now.

There are no "funds" to be retrieved in my coinbase account. But it is currently my only fiat gateway meaning I cannot sell by BTC for actual USD. I don't "store" BTC on coinbase either as I have a hardware wallet.

Yes I invested my hard earned cash but it's money that could go to zero and I'd be fine.

The exchanges I've dealt with have atrocious customer service. Appallingly absolutely atrocious. Take weeks or longer to resolve something in most cases. I think it's getting better but the rate at which that's happening is about the way a glacier moves.

If these exchanges are bringing in so many new customers and presumably, so much new money, then damn man, hire some freaking customer service reps to get shit done in a timely manner. When you're dealing with peoples' money , fast and accurate customer service is absolutely paramount. It's the most important field of any fields to have speedy customer service. This is coming from me, someone who has worked in the financial services industry for years. Unfortunately, most of these exchanges are run by very intelligent hyper geeks that know a ton about crypto, blockchain and programming but have no real world experience in what quality customer service means and what the expectations are there (at least not when they first began the exchanges)

It's still the 'wild west' new phase of this investment type (crypto) and it shows in several aspects. Aside from that, the exchanges seem to have decent interfaces and trade entry, it's just the absolute slowness ( I consider it bordering on unacceptable) of the customer service response time.

Some exchanges have great customer service. Ironically, Bitfinex does have great CS in that they always respond quickly and get issues resolved in a timely manner.

Also, Binance has great CS. Poloniex CS is shit as is coinbase.

Coinbase just recently established a phone customer service solution but they are completely useless in that they cannot actually solve issues. They just tell you that you need to wait for the email.

I'll state again, people are conflating shitty CS with some sort of fault in BTC itself. It's like saying etrade is shit, ergo Apple stock must be shit.

BTC is actually perfect in that BTC's true value is always 1 BTC = 1 BTC. It's price in fiat is irrelevant.

[h3ltrsk3ltr]

I think Vaun is just trying to figure it out. Based on what he's saying, I get his concern.

However, bitcoin and coinbase just don't work like that. It's not like Bill Braskey lost his money, it's still there. He is having trouble accessing it which is a concern but that's all part of living in the territory.

interesting tweet from Bitfinex. I was thinking along the lines that SBR mentioned about waiting for it to hit some trouble then sell out but it's a developing situation.

Sadly I know I'm not ready to try the short-sell thing but working on educating myself.

https://medium.com/@bitfinexed/the-myste...a6407a1241

[SamuelBRoberts]

Part of what worries me is how utterly unprofessional Bitfinex is:

[/url]

[url=https://twitter.com/bitfinex/status/932287734152081408]

Ad hominem (Our critics are just trying to ruin bitcoin!). Dodging the point (Nobody is accusing Bitfinex of being currently insolvent. They'd have to fuck up REAL hard to be insolvent running a damn exchange.) Complete unprofessionalism. (Responding via tweets instead of an actual statement.)

These are not ultra-sophisticated operators.

[Ray Carlton]

(11-19-2017 03:05 PM)SamuelBRoberts Wrote:  

Part of what worries me is how utterly unprofessional Bitfinex is:

[/url]

[url=https://twitter.com/bitfinex/status/932287734152081408]

Ad hominem (Our critics are just trying to ruin bitcoin!). Dodging the point (Nobody is accusing Bitfinex of being currently insolvent. They'd have to fuck up REAL hard to be insolvent running a damn exchange.) Complete unprofessionalism. (Responding via tweets instead of an actual statement.)

These are not ultra-sophisticated operators.

So how can I short them?

[Bill Brasky]

(11-19-2017 03:20 PM)Ray Carlton Wrote:  

(11-19-2017 03:05 PM)SamuelBRoberts Wrote:  

Part of what worries me is how utterly unprofessional Bitfinex is:

[/url]

[url=https://twitter.com/bitfinex/status/932287734152081408]

Ad hominem (Our critics are just trying to ruin bitcoin!). Dodging the point (Nobody is accusing Bitfinex of being currently insolvent. They'd have to fuck up REAL hard to be insolvent running a damn exchange.) Complete unprofessionalism. (Responding via tweets instead of an actual statement.)

These are not ultra-sophisticated operators.

So how can I short them?

Bitmex. You can short BTC or any other crypto on Bitfinex but given that they will be the source of any possible crash via Tether, it's possible that tether would go to zero as well.

The only way that I know of is to short with actual fiat USD on GDAX (owned by coinbase) but you need an institutional account to do this.