Let's talk about #Tether - THREAD
Start with ew fun facts from their rules for using the #Tether services 🤡
Thread 🧵⬇️
Start with ew fun facts from their rules for using the #Tether services 🤡
Thread 🧵⬇️
[1/x]
In Tether's terms of service we can find information that #Tether doesn't have to buy back $USDT tokens, should anyone wish to exchange them back into $USD, if it does not want to.
In Tether's terms of service we can find information that #Tether doesn't have to buy back $USDT tokens, should anyone wish to exchange them back into $USD, if it does not want to.
[2/x]
The terms state that Tether reserves the right to delay the redemption of tokens at a time if such a delay is necessary due to lack of #liquidity, unavailability, or loss of any reserves held by Tether to support USDT Tokens.
The terms state that Tether reserves the right to delay the redemption of tokens at a time if such a delay is necessary due to lack of #liquidity, unavailability, or loss of any reserves held by Tether to support USDT Tokens.
[3/x]
Tether reserves the right to redeem USDT Tokens through non-native redemptions of securities and other assets held in #reserves. Tether makes no representations or warranties whether USDT Tokens tradable on the network may be traded on the network at any time.
Tether reserves the right to redeem USDT Tokens through non-native redemptions of securities and other assets held in #reserves. Tether makes no representations or warranties whether USDT Tokens tradable on the network may be traded on the network at any time.
[4/x]
So...
Tether reserves the right to return funds "in kind (or in goods)." Incredibly, it comes out that when buying USDT with US #dollars, Tether can return the funds in bonds, #stocks or other assets held in reserves. How do we know how much such assets might be worth?
So...
Tether reserves the right to return funds "in kind (or in goods)." Incredibly, it comes out that when buying USDT with US #dollars, Tether can return the funds in bonds, #stocks or other assets held in reserves. How do we know how much such assets might be worth?
[5/x]
Audits - it turns out that there hasn't been a single #audit conducted in more than half a decade. Phil Potter, co-founder of Tether, in an interview, reports that the reason for the lack of audits is that there is a lot of negativity around the project...
Audits - it turns out that there hasn't been a single #audit conducted in more than half a decade. Phil Potter, co-founder of Tether, in an interview, reports that the reason for the lack of audits is that there is a lot of negativity around the project...
[6/x]
On the Tether audit, they initially hired #Ledger Labs to conduct a #security audit (and requested a financial audit). The audit was never released. It turned out that they had another willing party to conduct the audit - it was Friedman LLP.
On the Tether audit, they initially hired #Ledger Labs to conduct a #security audit (and requested a financial audit). The audit was never released. It turned out that they had another willing party to conduct the audit - it was Friedman LLP.
[7/x]
In 2018, Tether resigned in the middle of the audit, explaining that #Friedman was showing nagging detail. Also, Tether had not had a review for a long time, for the reason that the examiner who agreed to conduct the visit asked uncomfortable questions and was too detailed
In 2018, Tether resigned in the middle of the audit, explaining that #Friedman was showing nagging detail. Also, Tether had not had a review for a long time, for the reason that the examiner who agreed to conduct the visit asked uncomfortable questions and was too detailed
[8/x]
Tether Holdings Limited owners are the same people who own #Bitfinex - a popular cryptocurrency exchange. Bitfinex was the first, and main exchange where #Tether tokens could be bought and sold.
Phil Potter and Giancarlo Devasini are the owners of Tether and Bitfinex.
Tether Holdings Limited owners are the same people who own #Bitfinex - a popular cryptocurrency exchange. Bitfinex was the first, and main exchange where #Tether tokens could be bought and sold.
Phil Potter and Giancarlo Devasini are the owners of Tether and Bitfinex.
[9/x]
In May 2015. Bitfinex was hacked. Their vault with 1,500 #Bitcoin was depleted, but they were able to cover it with corporate funds.
In May 2015. Bitfinex was hacked. Their vault with 1,500 #Bitcoin was depleted, but they were able to cover it with corporate funds.
[10/x]
In June 2016. Bitfinex settled with the Commodity and #Futures Trading Commission and paid a fine of $75,000 for 'offering illegal, funded over-the-counter commodity transactions in bitcoin and other #cryptocurrencies'.
In June 2016. Bitfinex settled with the Commodity and #Futures Trading Commission and paid a fine of $75,000 for 'offering illegal, funded over-the-counter commodity transactions in bitcoin and other #cryptocurrencies'.
[11/x]
In August 2016, one of the largest hacks in history occurred, when 119,756 bitcoins were stolen. Bitfinex said that after calculations, it came out that the overall loss percentage was 36.067%. As part of the first #recovery, for every dollar, users received one $BFX.
In August 2016, one of the largest hacks in history occurred, when 119,756 bitcoins were stolen. Bitfinex said that after calculations, it came out that the overall loss percentage was 36.067%. As part of the first #recovery, for every dollar, users received one $BFX.
[12/x]
People had two options - either convert them into Bitfinex funds or wait for Bitfinex to #repay them. Haircut is the difference between the initial market value of an asset and the purchase price paid for that asset at the start of the repo.
People had two options - either convert them into Bitfinex funds or wait for Bitfinex to #repay them. Haircut is the difference between the initial market value of an asset and the purchase price paid for that asset at the start of the repo.
[13/x]
Bitfinex probably manipulated the calculation of the losses incurred, in their #statement they promised to disclose the calculation they took - unfortunately, this never happened.
Bitfinex probably manipulated the calculation of the losses incurred, in their #statement they promised to disclose the calculation they took - unfortunately, this never happened.
[14/x]
In 2017, people began to seriously criticize Tether. There were increasingly bold individuals publicly criticizing $USDT. There appeared a Twitter account @Bitfinexed which became the loudest and most popular critic of Tether then.
In 2017, people began to seriously criticize Tether. There were increasingly bold individuals publicly criticizing $USDT. There appeared a Twitter account @Bitfinexed which became the loudest and most popular critic of Tether then.
[15/x]
He said, in an interview, that he noticed unusual trading on Bitfinex, which was similar to trading on #MtGox when it lost #banking.
He said, in an interview, that he noticed unusual trading on Bitfinex, which was similar to trading on #MtGox when it lost #banking.
[16/x]
In November 2017. Tether was hacked. About $30 million was stolen from Tether's vault, and in response, Tether used its dominant economic position to make changes to the #Omni layer. They added a feature that allowed them to freeze Tether that was in circulation.
In November 2017. Tether was hacked. About $30 million was stolen from Tether's vault, and in response, Tether used its dominant economic position to make changes to the #Omni layer. They added a feature that allowed them to freeze Tether that was in circulation.
[17/x]
The #attack was particularly strange because it may have been perpetrated by the same person (they didn't give public information regarding their #investigation into the hack) who hacked #Bitstamp in 2015 and #Bitfinex in 2015.
The #attack was particularly strange because it may have been perpetrated by the same person (they didn't give public information regarding their #investigation into the hack) who hacked #Bitstamp in 2015 and #Bitfinex in 2015.
[18/x]
From March 2017 to mid-September 2017, Tether was without a bank account. This would be the first period in which Tether was definitively unsupported. The only cash they had was allegedly held in Stuart Hoegner's account. This account held $61.5 million.
From March 2017 to mid-September 2017, Tether was without a bank account. This would be the first period in which Tether was definitively unsupported. The only cash they had was allegedly held in Stuart Hoegner's account. This account held $61.5 million.
[19/x]
During this period, the rest of Tether's support was allegedly dependent on Bitfinex. The Bitfinex bank account received deposits from 2 people during this period. Neither of these accounts acquired Tether. The number of USDT increased from about $35m to $443m.
During this period, the rest of Tether's support was allegedly dependent on Bitfinex. The Bitfinex bank account received deposits from 2 people during this period. Neither of these accounts acquired Tether. The number of USDT increased from about $35m to $443m.
[20/x]
Looks like Bitfinex and Tether had any banking at all, and yet Tether continued to issue millions of dollars of Tethers when it could not receive transfers. They tried to get out from under fire by arranging for an audit - a certificate that they had adequate reserves.
Looks like Bitfinex and Tether had any banking at all, and yet Tether continued to issue millions of dollars of Tethers when it could not receive transfers. They tried to get out from under fire by arranging for an audit - a certificate that they had adequate reserves.
[21/x]
A certificate (certification) is not the same as an audit, and is much less detailed. The New York Attorney General's investigation found that Tether convinced a third party to perform the certification for them on a very specific date.
A certificate (certification) is not the same as an audit, and is much less detailed. The New York Attorney General's investigation found that Tether convinced a third party to perform the certification for them on a very specific date.
[22/x]
On September 15, 2017, there was a meeting in connection with the certificate by Tether and Noble Bank. On the other hand, on September 14, 2017, Tether did not have a bank account in Noble Bank or any other bank.
On September 15, 2017, there was a meeting in connection with the certificate by Tether and Noble Bank. On the other hand, on September 14, 2017, Tether did not have a bank account in Noble Bank or any other bank.
[23/x]
On the day of the visit by the certifation person, Tether opened an account at Noble Bank, where they allegedly had reserves all this time.
'Bitfinex Transfered ~$382m from Bitfinex's account at Noble Bank into Tether account in Noble Bank'
ag.ny.gov/sites/default/…
On the day of the visit by the certifation person, Tether opened an account at Noble Bank, where they allegedly had reserves all this time.
'Bitfinex Transfered ~$382m from Bitfinex's account at Noble Bank into Tether account in Noble Bank'
ag.ny.gov/sites/default/…
[24/x]
On April 5, 2017, Bitfinex attempted to prosecute Wells Fargo bank (In retaliation that they didn't want to serve them, I guess the bank knew what kind of black business they might be drawn into, so they refused to cooperate).
On April 5, 2017, Bitfinex attempted to prosecute Wells Fargo bank (In retaliation that they didn't want to serve them, I guess the bank knew what kind of black business they might be drawn into, so they refused to cooperate).
[25/x]
Filed in federal court in San Francisco, where the bank is headquartered, the lawsuit claimed that bank had banned four Taiwanese banks that do business with Bitfinex from making outbound transfers.
Filed in federal court in San Francisco, where the bank is headquartered, the lawsuit claimed that bank had banned four Taiwanese banks that do business with Bitfinex from making outbound transfers.
[26/x]
The banks in question, according to the complaint, are KGI Bank, First Commercial Bank, Hwatai Commercial Bank and Taishin Bank.
The banks in question, according to the complaint, are KGI Bank, First Commercial Bank, Hwatai Commercial Bank and Taishin Bank.
[27/x]
Banks in general did not want to get involved in handling Tether. Bitfinex decided to start working with Crypto Capital. Crypto Capital was famous for the fact that it serviced such "shady" clients who had nowhere to go at all - no one wanted to handle their money.
Banks in general did not want to get involved in handling Tether. Bitfinex decided to start working with Crypto Capital. Crypto Capital was famous for the fact that it serviced such "shady" clients who had nowhere to go at all - no one wanted to handle their money.
[28/x]
To illustrate what kind of clients Crypto Capital worked with it was, among others, the Colombian drug cartel.
cointelegraph.com/news/head-of-c…
To illustrate what kind of clients Crypto Capital worked with it was, among others, the Colombian drug cartel.
cointelegraph.com/news/head-of-c…
[29/x]
And that's all in this thread.
There are a lot of scams in #crypto, even in foundations, and it is necessary to talk about it.
More on bigsb.io web3 platform.
#bigshortbets
And that's all in this thread.
There are a lot of scams in #crypto, even in foundations, and it is necessary to talk about it.
More on bigsb.io web3 platform.
#bigshortbets
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