Tether Executives Said To Face Criminal Probe Into Bank Fraud (bloomberg.com) 22
An anonymous reader quotes a report from Bloomberg: A U.S. probe into Tether is homing in on whether executives behind the digital token committed bank fraud, a potential criminal case that would have broad implications for the cryptocurrency market. Tether's pivotal role in the crypto ecosystem is now well known because the token is widely used to trade Bitcoin. But the Justice Department investigation is focused on conduct that occurred years ago, when Tether was in its more nascent stages. Specifically, federal prosecutors are scrutinizing whether Tether concealed from banks that transactions were linked to crypto [...]. Criminal charges would mark one of the most significant developments in the U.S. government's crackdown on virtual currencies. That's because Tether is by far the most popular stablecoin -- tokens designed to be immune to wild price swings, making them ideal for buying and selling more volatile coins. The token's importance to the market is clear: Tethers in circulation are worth about $62 billion and they underpin more than half of all Bitcoin trades.
Federal prosecutors have been circling Tether since at least 2018. In recent months, they sent letters to individuals alerting them that they're targets of the investigation, one of the people said. The notices signal that a decision on whether to bring a case could be made soon, with senior Justice Department officials ultimately determining whether charges are warranted. A hallmark of Tether is that its creators have said each token is backed by one U.S. dollar, either through actual money or holdings that include commercial paper, corporate bonds and precious metals. That has triggered concerns that if lots of traders sold stable coins all at once, there could be a run on assets backstopping the tokens. Fitch Ratings has warned that such a scenario could destabilize short-term credit markets.
In the course of its years-long investigation, the Justice Department has examined whether traders used Tether tokens to illegally drive up Bitcoin during an epic rally for cryptocurrencies in 2017. While it's unclear whether Tether the company was a target of that earlier review, the current focus on bank fraud suggests prosecutors may have moved on from pursuing a case tied to market manipulation. [...] Tether has already drawn the ire of regulators. In February, Bitfinex and several Tether affiliates agreed to pay $18.5 million to settle claims from New York Attorney General Letitia James that the firms hid losses and lied that each token was supported by one U.S. dollar. The companies had no access to banking in 2017, making it impossible that they had reserves backing the tokens, James said. The firms settled without admitting or denying the allegations.
Federal prosecutors have been circling Tether since at least 2018. In recent months, they sent letters to individuals alerting them that they're targets of the investigation, one of the people said. The notices signal that a decision on whether to bring a case could be made soon, with senior Justice Department officials ultimately determining whether charges are warranted. A hallmark of Tether is that its creators have said each token is backed by one U.S. dollar, either through actual money or holdings that include commercial paper, corporate bonds and precious metals. That has triggered concerns that if lots of traders sold stable coins all at once, there could be a run on assets backstopping the tokens. Fitch Ratings has warned that such a scenario could destabilize short-term credit markets.
In the course of its years-long investigation, the Justice Department has examined whether traders used Tether tokens to illegally drive up Bitcoin during an epic rally for cryptocurrencies in 2017. While it's unclear whether Tether the company was a target of that earlier review, the current focus on bank fraud suggests prosecutors may have moved on from pursuing a case tied to market manipulation. [...] Tether has already drawn the ire of regulators. In February, Bitfinex and several Tether affiliates agreed to pay $18.5 million to settle claims from New York Attorney General Letitia James that the firms hid losses and lied that each token was supported by one U.S. dollar. The companies had no access to banking in 2017, making it impossible that they had reserves backing the tokens, James said. The firms settled without admitting or denying the allegations.
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The increase in market cap of Tether followed strange patterns. And it seemed correlated to price increases in other cryptos. If the peg breaks there will definitely be pain in some markets. At least temporarily.
Well now (Score:4, Insightful)
In the course of its years-long investigation, the Justice Department has examined whether traders used Tether tokens to illegally drive up Bitcoin during an epic rally for cryptocurrencies in 2017.
Traders used every available lever in their arsenal to drive up the value of Cryptocurrencies in 2017, and it defies credulity to imagine Tether wasn't such a lever.
Tethers in circulation are worth about $62 billion and they underpin more than half of all Bitcoin trades.
Correlation is not necessarily causation, but if your heifers get pregnant every time the bull is in their pasture, it's time to suspect that fucking bull is up to something.
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Tether was THE lever. A reckoning is coming.
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To be fair, Tether is probably in the crosshairs of the investigation because of their success in dominating market share, but let's be honest (I know, I know), folks who didn't understand crypto [google.com] wasn't just a misspelling of Kal-el's canine, were in for an otherworldly ride, in any event.
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Just stop. Tether printed $50-something BILLION (or more) counterfeit US dollars which have been used to massively inflate all crypto. Tether is about 80% of BTC trading liquidity. Remove Tether and it all comes crashing down. USDC won't be able to replace it without filling the $62 BILLION hole. Anyone with crypto or funds held at an exchange when the hammer drops will likely lose it all, they're insolvent right now.
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CNBC mostly agrees with him, with cause. https://www.cnbc.com/2021/07/0... [cnbc.com] Banks, other businesses, and economies collapse when they over-extend that far.
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And even if it is, today's all-of-crypto volume for the top-10 is ~$100B. Are you thinking that demand will drop by 62%? I think that it will hold up, people use tether to get into the final crypto asset. If tether goes away another vehicle will emerge.
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So, meh, they created imaginary monies to buy imaginary monies. The interesting thing, they effectively borrowed the money from the ether, issuing currency from nothing and claiming they would buy it back, when they did not have the money to buy it. They were not issuing currency, they were issuing IOU. The deep lying scam, shh, they would never have paid it back but fully intended to steal everything they borrowed.
Really cunning con, they did not give you funny money for your funny money but an IOU for mon
The tether ponzi (Score:2)
For deets:
https://www.singlelunch.com/2021/05/19/the-tether-ponzi-scheme/
If Tether dies, the whole crypto space might go to zero quickly. Such scam.
It's cryptocurrency (Score:2)
It's best to just assume fraud and attempt to prove it wasn't than to give them benefit of the doubt.
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