The bitcoin game is becoming way too big
Topic: United States CFTC Charges BitMEX Owners! (Read 713 times)
Now, that's some stimulating news. Exchanges and third-parties have always been the biggest single-point-of-failure of the vast crypto environment. I don't want to name which exchanges I believe could soon be in trouble, but by doing some research it can easily be understood which are the next in line.
The bitcoin game is becoming way too big
The bitcoin game is becoming way too big
News update.
New lawsuits. Where is Arthur Hayes?
It appears that some speculations made on cryptospace exchanges as part of a global money laundering ring might be true.
I speculate another series of investigations and takedowns on Chinese and Eastern European exchanges. This time coordinated between different government task forces.
Beleaguered crypto derivatives exchange BitMEX and its founders are facing yet another lawsuit that alleges racketeering, money laundering, and market manipulation.
Păun Gabriel-Razvan, a resident of Bucuresti, Romania, filed the lawsuit in the Northern District Court of California on Friday. He alleges that HDR Global Trading Limited, the operator of BitMEX, the exchange's founders Arthur Hayes, Ben Delo, and Samuel Reed and others, engaged in and facilitated racketeering activities, "earning Defendants billions of dollars in illicit profits."
The complaint comes one month after a similar lawsuit was filed against BitMEX and founders by plaintiff Dmitry Dolgov, a resident of Moscow, Russia. Both Dolgov and Gabriel-Razvan are represented by the same attorney — Pavel Pogodin of Consensus Law.
Source https://www.theblockcrypto.com/post/84842/bitmex-yet-another-lawsuit-alleging-market-manipulation
New lawsuits. Where is Arthur Hayes?
It appears that some speculations made on cryptospace exchanges as part of a global money laundering ring might be true.
I speculate another series of investigations and takedowns on Chinese and Eastern European exchanges. This time coordinated between different government task forces.
Beleaguered crypto derivatives exchange BitMEX and its founders are facing yet another lawsuit that alleges racketeering, money laundering, and market manipulation.
Păun Gabriel-Razvan, a resident of Bucuresti, Romania, filed the lawsuit in the Northern District Court of California on Friday. He alleges that HDR Global Trading Limited, the operator of BitMEX, the exchange's founders Arthur Hayes, Ben Delo, and Samuel Reed and others, engaged in and facilitated racketeering activities, "earning Defendants billions of dollars in illicit profits."
The complaint comes one month after a similar lawsuit was filed against BitMEX and founders by plaintiff Dmitry Dolgov, a resident of Moscow, Russia. Both Dolgov and Gabriel-Razvan are represented by the same attorney — Pavel Pogodin of Consensus Law.
Source https://www.theblockcrypto.com/post/84842/bitmex-yet-another-lawsuit-alleging-market-manipulation
@figmentofmyass. What would occur if the NYAG won their case against iFinex, Bitfinex, Tether and had legal right to freeze all their bank accounts then ordered them to stop the issuance and the use of Tether?
Would exchanges continue to take the risk?
Would exchanges continue to take the risk?
I disagree. I speculate that exchanges might be ordered immediately to stop accepting Tether deposits, withdrawals and trades by regulators.
wanna bet? i'm game.
when have you ever seen regulators across the globe make a unified order for crypto exchanges to de-list a cryptocurrency? even if that kind of insanity ever happened, it wouldn't happen fast enough to stop USDT holders from unwinding their exposure after a seizure. the panic buying would happen very fast IMO.
In any case, what are the news updates on Bitmex? The website is still working. I speculate a settlement.
me too. they're probably gonna pass all user data on to the feds as part of a settlement. that's always been their bargaining chip of last resort.
What if this is being hold as a controlled bomb against the inevitable bitcoin price rise?
It's difficult to say what will happen when USDT does finally implode. Obviously there is an awful lot of fake USDT being printed out of thin air, which has been used to pump the market at various times for the benefit of iFinex/Bitfinex/Tether. The Leibowitz v iFinex Inc. case spells it out pretty well: https://www.classaction.org/media/leibowitz-et-al-v-ifinex-inc-et-al.pdf. So when USDT collapses, all that artificial pumping will disappear and a lot of people will lose a lot of money, which could obviously lead to bitcoin's price falling. However, prior to the complete collapse of USDT, there will be millions of users trying to offload 16 billion USDT in to other assets, the majority of which will be bitcoin. It will be a volatile time, that's for sure, but just like every other hack or scam it won't kill or irreversibly damage bitcoin. I think it would be better for it to happen sooner rather than later.I disagree. I speculate that exchanges might be ordered immediately to stop accepting Tether deposits, withdrawals and trades by regulators.
Also, if everyone was given time to offload Tether to hold bitcoin before taken down, I reckon that everyone in the cryptospace might also be at risk because we hold cryptocoins without the liquidity that supports its markets.
In any case, what are the news updates on Bitmex? The website is still working. I speculate a settlement.
Interesting discussion and since we derailed it a bit but for a good reason below I share an article about a possible scenario regarding a possible Tether collapse
https://cryptonews.com/exclusives/imagine-regulators-shutting-tether-down-what-happens-to-bitc-8025.htm
https://cryptonews.com/exclusives/imagine-regulators-shutting-tether-down-what-happens-to-bitc-8025.htm
can you elaborate? why is it more compelling?
Because they actually examine real events. The specifically show that on days Tether is printed Bitcoin returns go up, even while controlling for all other variables (pages 28-9). They show that at hours when there are significant Tether/Bitcoin flows, bitcoin returns consistently flip from negative to positive (page 30).isn't that exactly what you would expect to happen?
when tether is created, it means dollars are being injected into the exchange system---to buy bitcoin or other cryptocurrencies. on days where coinbase or bitstamp credit large dollar inflows to depositing clients, would you not expect the price to go up too?
i don't see how that is proof of manipulation at all. all it suggests is that tether/bitfinex, due to their position as one of the biggest liquidity providers in the world, leads the market sometimes.
that would imply they issued unbacked assets, which is not what happened.
what the facts show is that one time, a bank seizure rendered bitfinex insolvent and tether then removed its 1:1 backing to fulfill bitfinex's liquidity needs. that's quite a far leap from this suggestion that tether is constantly printing money out of thin air!
But if they were rendered insolvent, and ended up in $800 million of debt, then why have they continued to print billions more USDT?what the facts show is that one time, a bank seizure rendered bitfinex insolvent and tether then removed its 1:1 backing to fulfill bitfinex's liquidity needs. that's quite a far leap from this suggestion that tether is constantly printing money out of thin air!
presumably because they had dollar inflows that back the newly minted USDT.
we've already gone over all this. bitfinex's debt replaced the missing cash reserves on their balance sheet, which was later replaced by the LEO token offering. then tether continued business as usual.
you may not like how they went about surviving the liquidity emergency, but nothing you're saying suggests that tether prints money out of thin air. not even once, let alone on a regular basis.
And why was their claim of being backed up 1-to-1 with USD quietly removed from their website?
because it was no longer true.
that still doesn't suggest they ever issued unbacked USDT. it just reinforces what we already know about their balance sheet.
can you elaborate? why is it more compelling?
Because they actually examine real events. The specifically show that on days Tether is printed Bitcoin returns go up, even while controlling for all other variables (pages 28-9). They show that at hours when there are significant Tether/Bitcoin flows, bitcoin returns consistently flip from negative to positive (page 30). They show that if you remove the hours with the top 10% of Tether outflow, bitcoin returns would be 80% lower than the were (page 32). And so forth. I find this more compelling than simply drawing up a VAR model with some arbitrarily chosen variables and basing your entire hypothesis on the outcome of this single model. But as I say, I'm not a statistician, so please correct me if I'm wrong.that would imply they issued unbacked assets, which is not what happened.
what the facts show is that one time, a bank seizure rendered bitfinex insolvent and tether then removed its 1:1 backing to fulfill bitfinex's liquidity needs. that's quite a far leap from this suggestion that tether is constantly printing money out of thin air!
But if they were rendered insolvent, and ended up in $800 million of debt, then why have they continued to print billions more USDT? And why was their claim of being backed up 1-to-1 with USD quietly removed from their website? what the facts show is that one time, a bank seizure rendered bitfinex insolvent and tether then removed its 1:1 backing to fulfill bitfinex's liquidity needs. that's quite a far leap from this suggestion that tether is constantly printing money out of thin air!
The exchange at the moment is reorganizing the leadership of the exchange while Arthur Hayes faces the wraught of the law after resignation. I feel SEC will have the knowledge of who will replace him as they reorganize the positions. I just hope it wont be a selfish decision. The news is now out, so users should be more conscoius
what specifically are you pointing to?
Yeah, the Griffin and Shams study - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066. Now, I am not a statistician, but I would say that their analysis is far more than simply conjecture, and I certainly find it more compelling than the simple VAR analysis by Wei to which you linked.can you elaborate? why is it more compelling?
i read through a lot of the claims in that filing. it's filled with conjecture and assumptions about how manipulation would have, or could have, worked.
interestingly, the CFTC began probing bitfinex and tether for market manipulation in 2017 and nothing has ever come of it. in contrast, the CFTC began probing bitmex in early 2019 and criminal charges have already been filed. completely different cases i'm sure, but i find the disparity interesting to say the least.
after the crypto capital bank seizure and subsequent transfer from tether to bitfinex, USDT was no longer backed 1:1. i don't see any indication that USDT was printed out of thin air
I don't see how you can come to any other conclusion. USDT is not backed up 1-to-1 with either USD or indeed any assets, and yet Tether have continued to mint billions more USDT. If these new tokens aren't backed up by any assets, then pretty much by definition they are being created out of nothing.that would imply they issued unbacked assets, which is not what happened.
what the facts show is that one time, a bank seizure rendered bitfinex insolvent and tether then removed its 1:1 backing to fulfill bitfinex's liquidity needs. that's quite a far leap from this suggestion that tether is constantly printing money out of thin air!
what specifically are you pointing to?
Yeah, the Griffin and Shams study - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066. Now, I am not a statistician, but I would say that their analysis is far more than simply conjecture, and I certainly find it more compelling than the simple VAR analysis by Wei to which you linked.after the crypto capital bank seizure and subsequent transfer from tether to bitfinex, USDT was no longer backed 1:1. i don't see any indication that USDT was printed out of thin air
I don't see how you can come to any other conclusion. USDT is not backed up 1-to-1 with either USD or indeed any assets, and yet Tether have continued to mint billions more USDT. If these new tokens aren't backed up by any assets, then pretty much by definition they are being created out of nothing. It's difficult to say what will happen when USDT does finally implode. Obviously there is an awful lot of fake USDT being printed out of thin air, which has been used to pump the market at various times for the benefit of iFinex/Bitfinex/Tether. The Leibowitz v iFinex Inc. case spells it out pretty well: https://www.classaction.org/media/leibowitz-et-al-v-ifinex-inc-et-al.pdf.
what specifically are you pointing to?
that filing spells out what we already know---after the crypto capital bank seizure and subsequent transfer from tether to bitfinex, USDT was no longer backed 1:1. i don't see any indication that USDT was printed out of thin air, or that there was an ongoing conspiracy for years to manipulate prices as the lawsuit alleges. the theories referenced (eg the griffin and sham study) and facts presented appear to be mostly conjecture supporting their theory AFAICT, and all are contradicted by other academic studies like this: https://www.coindesk.com/tethers-impact-on-bitcoin-price-not-statistically-significant-study-finds
the plaintiffs occur to me as ambulance chaser types. they were heavily invested in shitcoins during a bubble and are now looking for someone to blame for all their losses after the bubble popped. the idea that tether caused the 2017 bubble as they claim is absurd to me.
What if this is being hold as a controlled bomb against the inevitable bitcoin price rise?
It's difficult to say what will happen when USDT does finally implode. Obviously there is an awful lot of fake USDT being printed out of thin air, which has been used to pump the market at various times for the benefit of iFinex/Bitfinex/Tether. The Leibowitz v iFinex Inc. case spells it out pretty well: https://www.classaction.org/media/leibowitz-et-al-v-ifinex-inc-et-al.pdf. So when USDT collapses, all that artificial pumping will disappear and a lot of people will lose a lot of money, which could obviously lead to bitcoin's price falling. However, prior to the complete collapse of USDT, there will be millions of users trying to offload 16 billion USDT in to other assets, the majority of which will be bitcoin. It will be a volatile time, that's for sure, but just like every other hack or scam it won't kill or irreversibly damage bitcoin. I think it would be better for it to happen sooner rather than later.Looking at the mempool today, there was the usual dump of transactions just after 13:00 UTC, so looks like BitMex withdrawals are still functioning normally for the time being.
what if Tether's bank accounts are based on a huge fractional reserve.
They are. We already know that. They were audited and found to not have enough USD cash to back up USDT 1-to-1 as claimed, to not have enough reserves of any kind to back up USDT 1-to-1, and the reserves they did have included loan repayments they were making to themselves to repay the loan they gave to themselves when they printed 800 billion USDT out of thin air to stop themselves from going bankrupt. These audits were all done over a year ago when the market cap of Tether was only around $3 billion. It is now $16 billion. Tether is an outright scam. The sooner it and Bitfinex collapse, the healthier for the whole of crypto. Any idea where Reed was arrested?
From this story, he was released on bail recently: https://coinfomania.com/bitmex-cto-samuel-reed-released-5m-bond/The court documents are from Massachusetts, so it may have been there? It also says his passport has been seized, so it is reasonable to assume if it wasn't in Massachusetts then it was within the US. The articles also says (but with no source) that the three founders have transferred their positions to other staff members, so I assume that also means the ability to process withdrawals, which is a little reassuring at least.
what if Tether's bank accounts are based on a huge fractional reserve.
They are. We already know that. They were audited and found to not have enough USD cash to back up USDT 1-to-1 as claimed, to not have enough reserves of any kind to back up USDT 1-to-1, and the reserves they did have included loan repayments they were making to themselves to repay the loan they gave to themselves when they printed 800 billion USDT out of thin air to stop themselves from going bankrupt. These audits were all done over a year ago when the market cap of Tether was only around $3 billion. It is now $16 billion. Tether is an outright scam. The sooner it and Bitfinex collapse, the healthier for the whole of crypto. I am more afraid for Bitfinex and Tether. Pulling the USDT rug might show how bitcoin is very dependent on USDT for liquidity and cause a big short.
Tether is an interesting situation. It may be more complex than that. For example, if the US government were to seize Tether's bank accounts, the value of USDT would drop as USDT holders flee to other currencies. However, similar to April 2017 when Bitfinex and Tether lost banking capabilities, this could catalyze a bullish move in the overall crypto market as USDT pairs drag the rest of the market upwards.After seeing bitmex having had that service from the US believing that finex is fine is pure gullibility.
What is the latest news on withdrawals and cashouts? Bitcoin news media have been quiet about it. Many Bitmex users might be clicking the refresh button every minute hehehe.
Withdrawals are being processed. Over 40K BTC have been pulled out so far.
I think, similar to the 1Broker situation, that Bitmex should be able to refund customer deposits even if they are forced to shut down. There are no guarantees of course. I'm just speaking in practical terms and making educated guesses.
@exstasie. The ending of the story would be similar. The end of Bitmex.If so, it wouldn't be that bad. When 1Broker shut down, all customers got their money back. It took several days or maybe a couple weeks, but they eventually reached an agreement with the US government that let them process withdrawals.
I am more afraid for Bitfinex and Tether. Pulling the USDT rug might show how bitcoin is very dependent on USDT for liquidity and cause a big short.
Tether is an interesting situation. It may be more complex than that. For example, if the US government were to seize Tether's bank accounts, the value of USDT would drop as USDT holders flee to other currencies. However, similar to April 2017 when Bitfinex and Tether lost banking capabilities, this could catalyze a bullish move in the overall crypto market as USDT pairs drag the rest of the market upwards.
This announcement by the United Kingdom's Financial Conduct Authority, the FCA, might be related after Bitmex's legal issue.
I have mentioned this before. I speculate that it might not stop with crypto derivatives. The bans might also begin to crawl towards real cryptocoins and legally allow only people from a higher income bracket to buy and sell bitcoin.
I have mentioned this before. I speculate that it might not stop with crypto derivatives. The bans might also begin to crawl towards real cryptocoins and legally allow only people from a higher income bracket to buy and sell bitcoin.
Utter balls and bit late now. Still feels odd to see the UK pay some actual legal attention to cryptoland. It's been almost entirely silent up until recent times.
Our Arthur has just stepped down from Bitmex along with a few others.
https://www.theblockcrypto.com/post/80163/bitmex-announces-leadership-changes-arthur-hayes-no-longer-ceo
What is the latest news on withdrawals and cashouts? Bitcoin news media have been quiet about it. Many Bitmex users might be clicking the refresh button every minute hehehe.
@exstasie. The ending of the story would be similar. The end of Bitmex.
I am more afraid for Bitfinex and Tether. Pulling the USDT rug might show how bitcoin is very dependent on USDT for liquidity and cause a big short.
@exstasie. They have done it before, I am quite certain they can takedown the service, seize the domain and begin imprisoning more of Arthur Hayes' group. They might have other Bitmex servers everywhere, however, would you deposit your bitcoin?
No, but I would be a lot more worried if they were a fiat exchange with huge exposure to bank accounts that can be seized. That's the argument against using an exchange like Bitfinex or holding Tether, who have also been probed by the CFTC and I believe the DOJ within the last couple years. The Crypto Capital seizure that led to Tether having only 74% cash reserves is a perfect example of what can go wrong.
I think, similar to the 1Broker situation, that Bitmex should be able to refund customer deposits even if they are forced to shut down. There are no guarantees of course. I'm just speaking in practical terms and making educated guesses.
Since many a country won't let you buy anything in good old cash over a certain sum anyone expecting a fully untraceable coin to be left to flourish in peace is a crazyhead. It's the way of the world. It's crap but it is what it is. If I was balls deep in privacy I would have planned accordingly from the moment I entered.
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