Some interesting opinions here about bitcoin:
https://www.macrobusiness.com.au/2017/11/bitcoin-going-1million-replace-central-banks/
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At the heart of every Ponzi is a fraud, and the fraud at the heart of BTC is Tether. I have been aware of Tether for a while, but only recently have I become aware of the surge in the amount of Tether on issuance, and the explosion in Tether margin lending that has occurred primarily on one exchange – Bitfinex.
At the start of the year the amount of Tether on issue was $6m. By April 2017, an important date, that I will come back to, it had grown by 10 times the amount to $60m. Since April to the start of November the amount of Tether on issue has grown by a further 10 times to $600m…. in the last week it has added more than $60m.
What is Tether? Tether is a crypto currency that is supposedly backed on a One for One basis by USD…. supposedly. The only issue is that there has NEVER been an audit performed over the assets supposedly backing Tether. It is primarily used on a type of crytpo online exchange – one that is attempting to avoid specific US Banking regulations that arise around Anti-Money Laundering and Know Your Customer rules that prevent these online exchanges for taking USD deposits – Tethers have become a crucial element in providing liquidity to these online exchanges.
The way the crypto markets work is this – a person opens an account on a legitimate exchange, deposits USD and then uses that $ to buy BTC. They then send this BTC to “online” exchanges which generally have a whole suite of exotic Crypto where they speculate by buying Shitcoin. When their Shitcoin appreciates far enough, the sell their Shitcoin against Tether – listed on all these exchanges very confusingly as USDT…. most people are unaware that they are buying Tether and not USD.
Now as I said, I would come back to April 2017 – why is April 2017 important? Because that is the month that both Bitfinex AND Tether lost access to the conventional banking system, when their accounts were closed by Wells Fargo. They have been operating since then, for 7mths WITHOUT A BANK ACCOUNT!!
Both Tether and Bitfinex are related parties – they are controlled by the same dodgy guys, guys so shady that if you were drinking a beer with them, you’d be sure to take your wallet with you when you went for a piss. Tether has been mentioned in the recent Paradise Papers, as has the directors of Bitfinex and Tether (same guys).
This here is a summary of how the scam works, it turned me from being uneasily ambivalent towards crypto to an outright bear:
http://www.ofnumbers.com/2017/11/09/a-note-from-bob-on-the-transparency-of-tether/
Basically the implication of this article is that Bitfinex/Tether is running a private QE operation – every time a major BTC sell off threatens, they issue more unaudited Tether through Bitfinex to support the price. Essentially they are counterfeiting USD in order to buy BTC, send them to legitimate exchanges and eventually extract them from the system..
Not only this, but the fake liquidity that they have created has flooded out of Bitfinex onto most of the other “online” exchanges that don’t have access to traditional bank accounts – Poloniex, Bittrex, and most of the Korean exchanges. The implication here is that with all the fake liquidity there has been no true price discovery.
Many people are familiar with MtGox’s failure, but what is not so well know are some of the details, including the fact that people trading coins on MtGox were not actually trading BTC, but rather Gox Coin, while their BTC were supposedly safely in the vault. Through shear stupidity Gox also carried out their own form of inadvertent quantitative easing – they simply minted Gox coin on the assumption that BTC had been transferred to their cold wallet – MtGox systems were so bad no reconciliations were ever done.
As a part of the MtGox scam to buy back BTC to cover their asses for their own hack, they had a Bot “Willy” that automatically bought BTC…. through a combination of their use of the Bot, their poor record keeping and their use of Gox coin, MtGox inadvertently counterfeited $100m USD – in the liquidity constrained BTC ecosystem this was enough to blow a $10bn bubble that exploded in 2013/14.
The Bot at MtGox, Willy was discovered when MtGox periodically lost access to the internet through DoS attacks. When no one else was able to buy, Willy bot was busy chugging away on MtGox. Over the weekend Bitfinex went down for an hour for crucial maintance… there is evidence of a Bot running trades in both BTC and the more liquidity constrained BCH over that period.
Bitfinex and Tether have issued nearly 700m!!! Unlike MtGox Bitfinex has an advanced margin lending system, so they’ve taken that 700m of fake USD and leveraged it further and in my opinion have blown the biggest bubble of all time.
I have sent this story through to Macro, but for whatever reasons they haven’t sought any reason to publish it. However, I have previously argued and defended Crypto – I strongly believe that many of the crypto coins have a strong Primary Use Case, that does create value – but I also recognise that there are flaws to their model that allow them to be exploited. It is for the reason that my defense of crypto may having persuaded people buy BTC that I am posting this comment… I have attached some further links here and will be happy to return throughout the day to answer any questions anyone has.
When USDT blows up, and it will, it will be a disaster. Anyone in any of those financial exchanges without access to hard currency will be massacred. It is possible BTC may shoot to 100k a coin on these sites as people desperately sell their Shitcoins for anything with the slightest hint of liquidity. Meanwhile on exchanges with access to hard currency, the price of BTC will plummet.
In my honest opinion it is only a matter of days, if not hours until this becomes commonly understood. There will be no CME futures listing – they HAVE to crash the market before then. You can f**k with crypto currency, but CME futures are a US market security derivative – you f**k with the US markets and you will go to jail – forever.
Over view of the scam
http://www.ofnumbers.com/2017/11/09/a-note-from-bob-on-the-transparency-of-tether/
Background
No Audit
Blogger denies it is a personal grudge
https://ftalphaville.ft.com/2017/09/15/2193370/crypto-tethers-as-the-new-eurodollars/"
Won't claim I fully understand it however!
