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Bitcoin Government The Almighty Buck United States

Bitcoin Drops 7 Percent On Allegations of $850 Million Fraud By Bitfinex By New York Attorney General (theregister.co.uk) 63

An anonymous reader quotes a report from The Register: The price of Bitcoin has dropped seven per cent after New York's Attorney General accused leading exchange Bitfinex of trying to hide $850 million in missing funds. The accusation came in a legal filing [PDF] on Thursday that claims Bitfinex raided the reserves of Tether -- a digital currency that is kept at parity with the U.S. dollar in order to allow traders to switch easily between real and virtual currencies -- in order to make up the massive shortfall. Both Tether and Bitfinex are headquartered in the tax haven of the British Virgin Islands and, according to the NY Attorney General, are owned and run by the same group of executives and staff.

Tether is a so-called "stablecoin" and the company claims that every Tether virtual coin is backed by a dollar held in reserves, the idea being that people can be assured of its stability. But last month, on March 4, the NY Attorney General notes that Tether changed that assurance to note that "every Tether is always 100 per cent backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties." [...] As part of that investigation, the OAG uncovered documents that purportedly show that in mid-2018 Bitfinex didn't have sufficient real-world currency deposits to meet customer demand.

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Bitcoin Drops 7 Percent On Allegations of $850 Million Fraud By Bitfinex By New York Attorney General

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  • by Anonymous Coward

    Someone actually believed that Tether was anything other than bullshit?

    • You can easily make money by just parking dollar reserves for a dollar tied coin in short term US bonds and money market funds. Just as Bitfinex can easily make money on the margins of trading. There is no reason for these companies to speculate on crypto coins with their customers money, they already make money hand over fist.

      The reason to distrust Tether is not on principle, the reason to distrust it is because security at crypto exchanges is a joke. If they lost 850 Million dollar it's almost certainly f

      • The reason to distrust Tether is not on principle

        In principal, tether's value is pegged to the dollar. Except the dollar is regulated and protected against fraud. Tether is not.

        There's every reason to distrust Tether on principle.

        • The dollar and FDIC are protected by a state with a printing press and an army. That's obviously better protection than mere regulation.

          But fraud is still a crime, so equally obviously regulations apply to Tether. It just takes a while for the long arm of the law to catch up to fraud.

          I think Bitfinex has had massive losses from a hack, then they wrote a worthless non marked to market loan from Tether to Bitfinex to cover it up and changed the terms of service for Tether to try to cover their asses. Which wi

      • A lot of cryptocurrency exchanges have claimed to be "hacked", when what was really going on was an exit scam, mismanagement, or spending the customer's money to live the good life.

  • Hur dur tulip comments. I made a nice profit on Binance coin.

  • Who would have thought that these unregulated totally-not-banking institutions are vulnerable to bank runs.
  • https://cointelegraph.com/news/unconfirmed-polish-prosecutors-seize-400-mln-amid-allegations-bitfinex-is-implicated-in-fraud

    Basically Crypto Capital, the "bank" behind several exchanges, went insolvent because of government seizures over alleged cartel connections. One of the largest problems with crypto right now is finding banks to deal with it. This is slowly going away though as more and more companies enter or startup their own banks to fill the need. One theory is Crypto Capital runs Bitfinex/Tether.

  • They had to fake the money used to prop up other fake money.
  • ...get yer TULIPS....

  • How is this different from brick and mortar banks?

    https://en.wikipedia.org/wiki/... [wikipedia.org]

  • Should have bought Dogecoin! Because even today, after all the craziness of Bitcoin and crypto, after all the ups and downs of the financial markets, 1 DG is still worth 1 Dogecoin!
  • Nothing?

    Nothin' from nothin' leave nothin'. You gotta have somethin' if you wanna be with me.

  • Only the small drops seem to ever get reported.

    The fact that it's been going up like crazy for the last couple of months, goes unannounced. But, a frankly small drop, that is recovering quickly, gets reported like it's the end of the world.

    So much bias against Bitcoin.

    • This website is for older techies, who have aged to the "get off my lawn" point. All new technology or changes in their environment are taken with scorn, and they love to naysay and schadenfreude when they can.

      20 years after the internet existed, and still hadnt changed the world yet, early adopter clifford stoll lashed out https://thenextweb.com/shareab... [thenextweb.com]

      Bitcoin is here to stay, and its going to change their world whether they like it or not.

      • That's totally unfair to Slasdot I think.

        Public and media perception is just very anti-bitcoin.

        I'd say that the perception is mainly fueled by big players who have a lot to lose, like banks, companies, stock markets and brokers, etc. The thing is, people tend to listen to those people even when they are wrong.

  • The fanbois here are still scraping the barrel for lame excuses to defend it in vain hope they can squeeze a few more bucks out of the gullible.

  • Bitcoin Drops 7 Percent On Allegations By New York Attorney General of $850 Million Fraud By Bitfinex.

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