[HN Gopher] Tether ownership and company weaknesses revealed in ...
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Tether ownership and company weaknesses revealed in documents
Author : enskied
Score : 106 points
Date : 2023-02-02 20:56 UTC (2 hours ago)
(HTM) web link (www.wsj.com)
(TXT) w3m dump (www.wsj.com)
| CyberDildonics wrote:
| If I have this straight, Brock Pierce is one of the people
| running tether.
|
| This means that potentially one of histories biggest ponzi
| schemes is being run by someone who has an entire documentary (An
| Open Secret) about them running a child prostitution ring and
| whose roommate was convicted of child prostitution and was also
| named in the related civil suit.
|
| https://www.imdb.com/title/tt3677412/
| https://www.youtube.com/watch?v=4TAnAYa8gas
| onlyrealcuzzo wrote:
| I suppose that's better than Devasini - the main person running
| Tether - who was previously convicted of fraud.
|
| Or Excapsa - the other main person running Tether - who was
| convicted of enabling cheating on the online Poker platform he
| worked at.
| [deleted]
| s5300 wrote:
| Pierce also has (had?) big ties with Steve Bannon, the dude
| who played World of Warcraft, came to the conclusion that
| there's an absolutely excessive amount of angry lonely men in
| the world with absolutely nothing in their life but
| videogames & hate, & proceeded to get a little bag of
| $60,000,000 from Goldman Sachs(?) in an attempt to exploit
| these men via large scale real world trading of in-game
| currency. I believe he moved to Hong Kong to try to start a
| slave farm of ultra-poor Chinese to acquire said in-game
| currency to then sell it to aforementioned angry lonely men
| that had some trickle of $USD to be reaped.
|
| It's all kind of insane if you go down the entire rabbithole
| surrounding these people, though sadly, also a bit undeniably
| hilarious. A lot of money is to be made with sufficient
| hatred & absolute lack of morality.
| woodruffw wrote:
| Do you have an article for this? Not that I don't believe
| you; that's just insane even by the standards of that
| crowd.
|
| Edit: https://www.washingtonpost.com/investigations/steve-
| bannon-o...
| onlyrealcuzzo wrote:
| Steve Bannon was convicted of fraud with border wall
| fundraising.
|
| I think that's the more relevant part, and we can leave it
| at that.
| s5300 wrote:
| You don't find _anything_ interesting about one of the
| main people behind tether, one of the shadiest enigmas in
| crypto, having formerly been one of the main people
| within a company founded around real world trading &
| exploitation of virtual in game currencies? Where they
| literally tried to create slave farms to obtain these in
| game currencies?
|
| Reeks of a lifelong grifter. If you can't put the 2+2
| together of a lifelong grifter & immoral individual being
| at the top of tether...
|
| Anyways, I patiently await the collapse of it all as
| somebody who's been around since the near beginning of
| blockchain cryptocurrency.
| onlyrealcuzzo wrote:
| > Where they literally tried to create slave farms to
| obtain these in game currencies?
|
| None of this was convicted.
|
| Lots of people are accused of all types of things. Some
| people get convicted of stuff they didn't do, but this
| happens much less often than wild accusations.
| s5300 wrote:
| I don't understand what you're trying to say at all.
|
| By convicted I'm presuming you think I'm implying he
| broke some laws?
|
| I did not say that he broke any laws, nor do I believe
| that what he did was illegal in the slightest?
|
| https://imgur.com/a/Weiki3i
|
| When things related to things are so easy to find with a
| pretty serious paper trail behind it, I can only imagine
| your saying this to try to defend the perpetrator in some
| way.
|
| I don't think that's the case, so I digress.
|
| Company IGE tried to make virtual in-game currency
| sweatshops. IGE was headed by Pierce & Bannon. This is
| something that happened and there is not much more to it.
|
| If you're simply unfamiliar with MMORPG & related
| videogames - I can perhaps understand. In short - I
| assure you, there is a near endless amount of people who
| shove very large amounts of $USD into virtual trinkets in
| these games. Always have been, hence their exploitation
| since the early 2000's
| aftbit wrote:
| Not to minimize the evils of child sex abuse at all, but I
| think many more rich and powerful people are involved with
| children than one might imagine. Just look at the number of
| people who were associated with Epstein, or the various
| scandals in the British government in the 1980s and 2010s.
| CyberDildonics wrote:
| What is your point here?
| Animats wrote:
| _... Tether made loans with tether. Instead of exchanging one
| tether for another currency worth $1, it lent tether to entities
| that promised to pay $1 for each tether. If borrowers can't pay
| back their loans, tether wouldn't be able to trade all tethers in
| circulation for dollars._
|
| _In May 2021, Tether had lent Celsius tether worth $1.8 billion,
| collateralized by $2.6 billion of Celsius's crypto assets, the
| report said. Tether had to manage the risk of the loan as crypto
| prices fell. Eventually the loan was liquidated and Celsius
| suffered a loss. In addition to lending to Celsius, Tether
| received loans from the company that were twice its credit limit
| while owning 7.73% of its equity, the report said._
|
| Uh oh. Where have we heard that story before?
| bluecalm wrote:
| Yup. "Commercial paper" claimed by Tether as backing of their
| token was long known to just be IOUs from various buddies of
| the scam company that runs it (online poker cheat, child
| molester and proven fraudster if I remember right).
| arcticbull wrote:
| Who could have known. Other than folks who read the CFTC
| settlement [1] and the NYAG settlement [2].
|
| And their org chart.
|
| 1. Tether and Bitfinex CEO J. L. van der Velve used to sell a
| product he claimed could transform the nicotine in cigarettes
| into vitamins - and suggested it allowed you to smoke 300 per
| day.
|
| 2. Their chief council, Stuart Hoegner, once held all of the
| Tether backing reserves in his personal Bank of Montreal
| account co-mingled with his lunch money, one assumes. He was
| also director of compliance at Excapsa, parent company of
| Ultimate Bet, where they had a backdoor interface allowing
| their friends to see their opponents cards. [3]
|
| 3. Giancarlo Devasini, their CFO, is a former plastic surgeon
| (for about a week) who had to pay a $65,000 fine for pirating
| Microsoft software in 1996 and was then sued by Toshiba for
| infringing some of their DVD patents. [4]
|
| [edit] Tether was co-founded by former Mighty Ducks cast member
| Brock Pierce, the guy who fled to Spain with Mark Collins-
| Rector while he was an indicted fugitive on child sex
| trafficking charges. They were then both arrested in a villa
| full of child pornography. [3]
|
| [edit2] Also note that none of the leadership team wanted to
| admit they were involved in Tether until it came out in the
| _paradise papers_ because they used Appleby. Because of course
| they used Appleby. [5]
|
| [edit3] Almost forgot, the guy who runs their banking partner,
| Deltec (and Moonstone!), was the creator of Inspector Gadget -
| Jean Chalopin. [6]
|
| [1] https://www.cftc.gov/PressRoom/PressReleases/8450-21
|
| [2] https://ag.ny.gov/press-release/2021/attorney-general-
| james-...
|
| [3] https://bennettftomlin.com/2021/03/27/before-bitfinex-and-
| te...
|
| [4]
| https://www.ft.com/content/4da3060c-8e1a-439f-a1d7-a6a4688ad...
|
| [5] https://news.bitcoin.com/paradise-papers-reveal-bitfinexs-
| de...
|
| [6] https://en.wikipedia.org/wiki/Jean_Chalopin
| boeingUH60 wrote:
| > Tether and Bitfinex CEO J. L. van der Velve used to sell a
| product he claimed could transform the nicotine in cigarettes
| into vitamins - and suggested it allowed you to smoke 300 per
| day.
|
| Did he plan to kill his customers or something?
| dom96 wrote:
| Serious question: why are these types of articles not causing
| Tether (and by extension Bitcoin) to collapse?
|
| How long will this charade last?
| unicornmama wrote:
| Because it's in no one's interest to see Tether collapse. The
| damage to the crypto "ecosystem" would be profound. So the
| major players work together to make sure the music doesn't
| stop.
| neysofu wrote:
| Why would Bitcoin collapse as a consequence of Tether
| collapsing? I would expect to see a temporary drop due to
| market instability and low investors' confidence amid fear, but
| surely not a collapse.
| woodruffw wrote:
| All available public evidence points to a significant portion
| (majority?) of Bitcoin's current valuation being supported by
| Tether.
| seunosewa wrote:
| Could you share some of this evidence and explain it?
| NotYourLawyer wrote:
| Because tether is being used to create artificial demand for
| btc.
| iamsanteri wrote:
| Is there a way to bet against Tether?
| ryuukai wrote:
| Of course. You can short tether on every crypto exchange, both
| centralized and decentralized (DEXes, DeFi apps)
|
| The only counterparty risk is the collateral that you use.
| Ether, BTC, usdc, etc. Some exchanges also support fiat
| currencies (eur, usd)
|
| Some hedge funds have been running tether shorts for a long
| time, maybe they cashed out when the rates spiked, if not
| they're just losing money.
|
| There's nothing new in this report. Tether/Finex's founders are
| well known for many years
|
| Also FYI, tether has been able to redeem > 20 billion$ in a few
| days, something that I am not aware of ANY other company, not
| even banks, being able to do - and def without CB/govt support
| hervature wrote:
| > The only counterparty risk is the collateral that you use.
|
| That's not really painting an accurate picture. If Tether
| goes to 0 (you win the short) there's a strong possibility
| your counterparty cannot pay you. So, you're either wrong and
| lose it, or, you're correct and lose it. That's not the
| making of a good trade.
| m00dy wrote:
| AFAIK, they sold some Chinese-commercial papers mostly from
| real-estate sector during that little time window.
| matthewdgreen wrote:
| Tether _says_ they redeemed $20bn. We have no way to know if
| they redeemed it for actual dollars to parties that aren't
| affiliated with Tether.
| bluecalm wrote:
| Bet against Grayscale, MicroStrategy or any other publicly
| traded crypto company. Hell, even Coinbase is good enough. All
| will face very difficult times once Tether collapses and takes
| most of the crypto "economy" with it.
|
| That's the only way I can think of to avoid crazy counter party
| risk.
| iamsanteri wrote:
| Now this right here is not that bad of an idea. I thought
| coinbase is the only major publicly traded cryptocurrency
| company.
|
| What kind of an impact are we expecting on, say, Coinbase?
| Chabsff wrote:
| A tether collapse would instantly reduce the USD market cap
| of crypto by 80 billion, and that's without any investor
| behavior added on top.
|
| On top of that, Coinbase needs a stable coin to operate at
| any non-trivial scale.
|
| I'd say the impact would be severe. That is unless crypto
| investors just pretend nothing happened, and some other
| bullshit stable coin immediately takes care of the
| liquidity issue, which I'd call likely.
| superzamp wrote:
| You can open a short position on e.g. Kraken, for as long as
| you can keep paying the yield to the stakers.
| graeme wrote:
| Problem is if you win the bet you can also expect the
| exchange to go bust. They're all part of the Tether system
|
| The lack of a good way to short Tether with a reliable
| counterparty is a major reason why Tether has lasted as long
| as it has
| alasdair_ wrote:
| Of course, if Tether collapses, there is the sizable risk
| that so will most of the exchanges. Counterparty risk is a
| big deal.
| iamsanteri wrote:
| So we can expect that soon, if people are smart, a nice and
| stable unloading of this "asset" will start.
| albntomat0 wrote:
| Someone looked into this, and found most ways of doing so had
| large counterparty risk, among other issues.
|
| https://fakemoneynews.substack.com/p/shorting-tether-for-fun...
|
| HN discussion: https://news.ycombinator.com/item?id=34299618
| JumpCrisscross wrote:
| > _a group of four men has controlled 86% of Tether Holdings_
|
| So of Tether's $68bn "market cap", no more than $10bn was
| actually bought? Which means some subset of that are bag holders,
| with the rest being affiliated exchange obligations? (EDIT: Nvm.)
|
| Maybe it's not a deal if it's banned and collapses.
| AmericanChopper wrote:
| Tether Holdings Ltd is the company that operates Tether. The
| article says that group of 4 men owns 86% of the shares in
| Tether Holdings Ltd, not 86% of the Tether tokens.
| JumpCrisscross wrote:
| Thank you.
| aliqot wrote:
| This is my face of shock and dismay. It's wild how one could, at
| one time, watch the influx of tether into the system and relate
| it directly to the price of BTC. It really makes you wonder how
| much tether is a necessary parasite, subsuming the scaffold of
| the organism's body beyond what the brain intended.
| scotty79 wrote:
| > watch the influx of tether into the system and relate it
| directly to the price of BTC
|
| Do you have some charts that show that correlation over the
| whole (or partial) history of tether?
|
| I have trouble even noticing tether on long term bitcoin
| charts.
| ves wrote:
| ...what
|
| Look at a tether volume chart vs a btcusd chart
| enskied wrote:
| https://archive.ph/0xx2x
| aaroninsf wrote:
| Investment in crypto (including bitcoin) is comparable to mailing
| money orders to Nigerian scammers.
|
| The main difference? When you send money to scammers in Nigeria,
| it does something to equalize resource inequity internationally.
|
| PSA Tether will collapse, soon. Bitcoin, also, will collapse, but
| slower.
| ummonk wrote:
| Why would anyone keep holding Tether? Why hasn't everyone just
| liquidated their positions?
| unyttigfjelltol wrote:
| Ok, I'll play: Because they can't liquidate. Why would that be?
| m00dy wrote:
| There is nothing new in the news.
| jay-barronville wrote:
| Coffeezilla (on YouTube) has been exposing the Tether scam for
| probably almost two years now. Even as a crypto believer (long-
| term), it's been fascinating to see this scam survive this long
| despite being repeatedly exposed.
| mikewarot wrote:
| It amazes me every time I look at $USDT and see it hasn't
| collapsed to zero yet. The flow of Tether inbound is the only
| thing keeping Bitcoin from its natural price of about $5. (3 BTC
| for a Pizza was the price back in the day at PS:1 in Chicago)
| scotty79 wrote:
| Tether prevails because betting against tether is not
| profitable. It could be, but the people you could bet against
| would go bankrupt if tether collapsed so you'd have no way to
| collect on your winning bet.
| Swenrekcah wrote:
| So I read this explanation from Matt Levine a few weeks ago
| and it sounded convincing.
|
| But now I'm wondering, that was because the collateral you
| post against your short was assumed to be posted with the
| entity you borrowed the Tether from.
|
| But can't people make deals where they post collateral with a
| proper bank, and then if the counterparty goes bankrupt you
| just pay the estate back worthless Tether and keep the
| dollars posted with the reputable bank?
|
| I'm not involved in these types of dealings so perhaps this
| is a silly question but I would have thought this was how
| things were done.
| outside1234 wrote:
| Thank you for this - I hadn't made this connection until your
| comment.
| mgraczyk wrote:
| Maybe this is a good learning experience, and you could use it
| to update your beliefs about financial markets? If you're
| directionally and quantitatively wrong about some prediction
| for many years, it's very likely you are missing something.
| arcticbull wrote:
| Being right at the wrong time is the same as being wrong from
| a financial perspective. Tether's time will come, though.
| Scoundreller wrote:
| It was 5000 btc per pizza, back in 2010 or so.
|
| https://www.marketwatch.com/amp/story/bitcoin-pizza-day-lasz...
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