US Regulators To Subpoena Crypto Exchange Bitfinex, Tether

U.S. regulators are scrutinizing one of the world's largest cryptocurrency exchanges as questions mount over a digital token linked to its backers, Bloomberg reported on Tuesday. From the report: The U.S. Commodity Futures Trading Commission sent subpoenas last week to virtual-currency venue Bitfinex and Tether, a company that issues a widely traded coin and claims it's pegged to the dollar, according to a person familiar with the matter. The firms share the same chief executive officer. Tether's coins have become a popular substitute for dollars on cryptocurrency exchanges worldwide, with about $2.3 billion of the tokens outstanding as of Tuesday. While Tether has said all of its coins are backed by U.S. dollars held in reserve, the company has yet to provide conclusive evidence of its holdings to the public or have its accounts audited. Skeptics have questioned whether the money is really there.
Update: "Bitfinex'ed", a pseudonymous blogger whose been calling foul on Tether and Bitfinex for months, outlines steps he thinks exchanges that use Tether should take ASAP.

“Crypto” is not a synonym for “C

[93 Escort Wagon]

We’ve been talking about crypto here for longer than cryptocurrencies have been a thing.

People submitting stories to Slashdot should know better.

Re:

[Anonymous Coward]

It isn't the fault of a submitter when a shitty summary ends up on the Slashdot front page. There's only one set of people (or cron jobs?) responsible, and they're called the "editors".

What did cron jobs ever do to you to deserve that comparison?

Re:

[Baron_Yam]

Language evolves, and faster in niche groups. In the 'popular geek stuff' group, 'crypto' now refers to blockchain-based electronic economic token systems and not encryption and such.

Which is regrettable, because only one of those things should be of any importance to us, and it isn't the one that is currently called 'crypto'.

Re:“Crypto” is not a synonym for &

[Anonymous Coward]

Cryptocurrency is a very poor name for the "technology" of blockchains and coins. It is neither crypto nor currency. It is a digital trading system based on hashing proof of work. The actual ledger is completely open and verifiable, and has no cryptography in it. It has some degree of steganography in the form of hash checking to verify the prior block.

Using words for what they mean is important, and is being lost in this age of lies and misinformation.

Re:âoeCryptoâ is not a synonym for

[Baron_Yam]

>Using words for what they mean is important

I agree... but at a certain point you have to accept that you've lost the battle and the word now has a new meaning, and that further resistance means YOU are no longer using the word properly.

Ultimately, the goal is effective communication, and if your definition doesn't match that of the majority, you're going to have a problem communicating.

Re:

[93 Escort Wagon]

But we (geeks) still commonly use "crypto" as shorthand for cryptography, such as in the phrases "public key crypto" or "symmetric crypto" or "elliptic curve crypto".

The title on this Slashdot submission is, to the best of my knowledge, actually the first time I've seen someone write "crypto" when they are referring to "cryptocurrency"... because people generally spell out "cryptocurrency".

This isn't "hackers" versus "crackers"... this is just bad/lazy writing.

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[angel'o'sphere]

I as well will apreciate the time when we all say: uug! hug! ogg! ogg huug, uug! And everyone knows what we are talking about.

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[DontBeAMoran]

It is a digital trading system based on hashing proof of work.

Not all coins are based on that.

Re:

[fisted]

Using words for what they mean is important, and is being lost in this age of lies and misinformation.

Oh the irony.

Re:

[Kremmy]

Update your firmware.

Re:

[Holi]

Since we are able to understand usage based on context I don't see the issue.

Re:

[Zaelath]

English words can mean more than one thing; I can post (mail) a post (stick) to a post (location).

Perhaps you should switch to Spanish.

At 2.3 Billion

[NicknameUnavailable]

They would be idiots not to keep it all - even low quality investments would beat inflation by several tens of millions of dollars a year.

Re:

[Anonymous Coward]

So the only reason Tether trades near $1 is because the exchange says so? There must be some mechanism for keeping it pegged to $1 or traders would start messing with it price.

Re:

[Anonymous Coward]

It trades on Bitfinex and other gentleman agreement exchanges for the price. The other exchanges are the ones that help prop it up and actually let it eventually cash out (either by getting something else, or shear stupidity).

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[Pinky's Brain]

They are the sole miners, so any coin they sell they get 1 buck and they can spend that buck again to buy it back (minus litecoin transaction fees).

So in theory they can simply adjust the stock to match supply and demand ,,, right down to just buying all the coins back.

Re:

[jandrese]

Buying all of the coins back with what? Do you seriously believe they have a bank account somewhere with 2.3 billion dollars worth of fiat currency in it that they can use to buy back Tethers? They're obviously just printing money and people are buying it up like crazy. The line on their homepage about Tethers being backed by USD is obvious bullshit. Their promise of "regular audits" has gone about as well as you would expect, with them being forced to fire the auditors before they finished their first

Re:

[Holi]

Considering that is exactly what they claim, then either they are, or the regulators have a very good reason for the investigation. It's an easy case. They are either lying and committing fraud or they have 2.3 billion in USD somewhere.

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[DaveV1.0]

2.3 billion U,S, Dollars in assets is all that is required. Invested in CDs, bonds, stable commodities, quality real estate, US Treasuries, etc. they could earn a tidy sum in interest and if they are safe value stores, which means the value goes up as the value of the dollar goes down with inflation, when they convert the investment back into dollars, they would be able to buy back all the "coins" and end up with a lot of money left over.

Re:

[michelcolman]

Just put them into a savings account? Even a 1% rate will give you a tidy 23 million a year.

Also, on the exchanges, buy every coin that's offered for less than 0.99 and sell (creating new coins as necessary) when people want to buy for more than 1.01. Quite easy to peg the coins to the dollar that way, and profit is guaranteed.

I really don't understand how they could screw this up. Unless through greed, of course. Nah, that wouldn't happen, would it?

Re:

[jandrese]

Hell, if they do have $2.3 billion USD stashed away somewhere that just leads to more questions. But there's virtually no chance that's the case. They would have taken the money and run at this point if it got that big.

Here's the real giveaway. Look on their website and see how you sell your Tethers to get the USD. If they actually existed there should be a way to get them out, otherwise they would be useless. But there isn't. All you have is a lie on a webpage claiming that they're backed by real

Re:

[Pinky's Brain]

They are printing tether ... but people are buying it at 1$, or the price would be collapsing. It's a zero sum game, all those dollars to buy new tethers go into their pockets.

Even if the CEO has been on a non stop cocaine fueled bender buying prostitutes and supercars he's unlikely to have blown through 2.3 Billion dollars. There's only two ways they have substantially less. Either it got stolen/embezzled or they traded with it and made losses.

Re:

[robbak]

They have no banking arrangements - at least, none that anyone knows about - so no one can be paying them all these dollars. They have been using them to buy various cryptocurencies, and, as these have all dropped in price recently, they can't have enough assets to cover all the Tether they have issue.

Re:

[Pinky's Brain]

They don't need a banking arrangement, it eats into their profit but they can exchange the bitcoin/ethereum/whatever they get paid for new tethers to dollars on another exchange.

Re:

[Pinky's Brain]

If they made a loss with that they made a trading loss, which was one of my options.

Regardless of what they exchange for new tether, they can convert it to dollars and put them in US government bonds and money market funds..

Re:

[bobbied]

Do you believe it?

Not on your life... They could prove their assertion, but choose not to. I choose not to trust them until they do.

I'm certainly not going to bet they are telling the truth, until they prove they are.

Re:

[networkBoy]

I actively disbelieve them. Lack of transparency is an indicator of fraud or incompetence in finance. Active opacity is only an indicator of fraud.

Re:

[DontBeAMoran]

"USA government holds 1 US dollar bill for each US dollar."

Would you believe that?

Re:

[angel'o'sphere]

I'm pretty sure the shop around my corner where I buy my flour to bake my pancakes from, has an extra pound of flour for every pound I buy to bacck my baking. And if I really need some flour I can trade in my flour for some flour from the bbaccking to bake more pancakes!

"Subpoena" a foreign company?

[Anonymous Coward]

Can someone explain how the US can effectively subpoena a company based in Hong Kong? Bloomberg seems to be spreading the FUD today.

Bitfinex isn't a US company

[Anonymous Coward]

Good luck with that subpoena.

ob xkcd

[Hognoxious]

https://deadhomersociety.files... [wordpress.com]