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This is funny or sad ,depending on how you look at it
US Justice Dept Mulling Criminal Charges Against Binance Founder CZ: Report https://decrypt.co/116961/us-justice-dept-mulling-criminal-charges-against-binance-founder-cz-report
Imagine you're CZ. You just exposed one of the biggest fraudsters ever. And now the DOJ wants to investage...you. Meanwhile, the actual fraudster is still free, giving interviews. Yeah, the DOJ has been looking into binance for years, but it shows the unfairness of it all I guess.
Binance Withdrawals Surge as Concerns About Its Reserve Report Spook Traders
CZ's victory may appear pyrrhic in the long-term.
But the really interesting thing is that the US government may be effectively doing to Binance what CZ did to FTX: fomenting doubt amongst customers leading to a pullout. In this case, by announcing vague considerations of charges against CZ and Binance. Always a bigger fish.
Between that + their inability to provide an actual audit and CZ tweeting like he's Hitler in his bunker...I'm betting on Binance not being long for the world.
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You were saying? https://twitter.com/tier10k/status/1602446984090107905
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Didn’t it take years after the bankruptcy for charges to be brought for Enron? My completely unfounded guess is that the DoJ is working to get a high level executive to work against SBF in order to prove intend on fraud (vs negligence if they can’t prove intent). That process could take time to establish. I would be shocked if SBF ends up not being criminally charged eventually.
I agree too. There are two competing camps here. Those who think the government is not doing enough or is going to let him off the hook due to his democratic party connections, and those who think he will be punished.
Ironically Enron is a good example on the political donations side as well. The top brass at Enron was extremely well connected with the Bush family. IMO SBF is a big fish (much bigger than Elizabeth Holmes who got serious time) and the DoJ is going to aggressively pursue him. Justice just works slowly.
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The FBI has operated as a political hit-squad for the Democratic Party since the days of J Edgar Hoover. Bankman-Fried/FTX was the Democratic Party's second largest individual donor. TINACBNIEAC.
They spent the 50s hunting Commies, the 60s blackmailing civil rights leaders, and the 70s getting grilled for COINTELPRO. Burn down one compound and I suppose that’s water under the bridge.
The Democratic party has always been anti-communist and it was especially anti-communist in the 1940s to 1960s.
The Democratic party was split on civil rights leaders in the 1960s.
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You mean they spent the 50's helping the Democratic party establishment keep it's radicals in check, the 60s blackmailing civil rights leaders on behalf of segregationist Democrats, and the 70s fighting a rear-guard action for the "deep-state", after the splitting of the Democratic party between segregationists and anti-segregationists handed the Republicans a pair of decisive victories in 68 and 72.
I'd like to ask this question to both you and @netstack , then: what about the 80's and 90's? Besides some shootouts and Waco, anyways.
Shootouts.
I was going to suggest Heat instead of Die Hard, but a quick check tells me that’s just the LAPD. Still, that’s the impression left after two decades of tough-on-crime policy intersected with a historically laissez-faire agency. I’d say they were viewed as wannabe cowboys until grabbing a piece of the general authoritarian pie in the wake of 9/11.
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Do you remember the FBI agents from Die Hard? Do you remember how they were portrayed as a pair of vaguely clueless trigger happy cowboys who didn't really care about saving the hostages? That was(is?) the mainstream/normie impression of the FBI through the 80s and early 90s.
I remember growing up on Tom Clancy novels in the 90s, where the FBI and its agents were portrayed as unfailingly competent, loyal, and incorruptible. I'd say Tom Clancy was pretty normie, no? I'd be lying if I didn't admit that my media diet shaped my political perceptions.
Then again, Tom Clancy himself was very much establishment GOP, but it seems to me that there was a time that our currently evident cleavages weren't quite so glaring.
Granted it's been over a decade since I've read any of the books other than Patriot Games and Hunt for Red October but my recollection is that Clancy's DoJ-alligned characters (Clark, Chavez, Oreza, et al) had a bit of the Dirty Harry vibe going on, wherein they tended to save the day in spite of the chain of command rather than thanks to it.
Clark in particular had a fair amount of that. Without Remorse, his origin story, has him completely outside the law, but it also has Jack Ryan's dad as the detective attempting to catch him, and a lot of the point of the novel is about how what he's doing really isn't okay. Particularly on the military side of things, there's a great deal of grousing about what we might term REMFs; Clear and Present Danger and The Sum of All Fears both hinge on jackass politicians fucking things up for the honest servicemen under them, and there's more of that in the other books as well. Still, especially at the level of the Feds and the Military, there's a whole lot of emphasis on following procedure and getting authorization, not engaging in cowboy shenanigans. The big exception is Clear and Present Danger, which now that I think of it has a whole bunch of faintly horrifying breaches of protocol, multiple incidents of threating criminals with murder if they don't spill, and a bunch of cops arranging to scuttle the case against a pair of murderers, provided they kill two other murderers, who are going to walk because the Coasties who caught them held a faked execution to coerce confessions. Every part of that sequence is portrayed as morally acceptable, if perhaps not terribly advisable, which in itself should probably give the reader pause... but absolutely did not when I was reading it as a youngster. None of that ever involves the Bureau, though.
The FBI is represented mainly by Special Agent Dan Murray, Jack Ryan's best friend, who's basically a carbon copy of Jack Ryan, only not the main character. Clear And Present Danger initiates its main plot when the incorruptible, courageous, and universally-lauded Director of the FBI is assassinated by Columbian drug cartels, and things follow that general take for the preceding and following books. FBI agents are significant characters in pretty much every book, and they are never portrayed with anything but a halo. I think I recall J. Edgar Hoover being mentioned as being the distant past, and the Bureau Doesn't Work That Way Any More, but beyond that the books get to engaging with real-world discontents with the FBI is in one of the later books, when some white supremacists try to build a huge truck bomb to blow up the white house.
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I think it's fair enough. Binance is shaky itself, CZ just managed in time to pull the rug out from under FTX to do down his rival before anything happened to his own house of cards.
Bankman-Fried is running his mouth off enough that I imagine some kind of criminal charges are in the works, but I also have an idea that the Justice Department is holding off while the receivers are in charge to try and let them recover some assets for the creditors. Once that has been sorted out as much as it can be, then jail time (even if a short period) for Bankman-Fried etc. is not impossible. I do think they have to sort out who knew what and can be held responsible, because of the messy, tangled way FTX and Alameda Research were run; should Singh and Wang and Ellison, for example, all be held equally responsible as Bankman-Fried?
I have also seen some online speculation that Ellison is maybe in the US talking to the Justice Department to cut a deal about giving evidence against Bankman-Fried in return for some sort of plea bargain, but that's all only speculation.
So many variables here: did CZ expect to pick up FTX for cheap after crashing it to shore up his own position and then discovered SBF had been even more profligate than he thought?
Now no one has confidence and people keep asking him to audit (I assume, since he keeps tweeting deflections).
I think simpler is pyramid schemes need a large infeed / network effect. He killed off a competing pyramid, so more people to feed his base.
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I think there were politics at work. Bankman-Fried seems to have represented FTX as the better alternative to what was out there - let me quote that invaluable Sequoia article once more:
He was also cosying up to politicians and regulators, even writing his own set of suggested regulations (which seem to have been widely panned) and part of that was badmouthing rivals like Binance. So there was bad blood there and no love lost and it seems to have hit a peak when FTX bought out Binance's investment in it in 2021.
I think, but this is only my own personal view, that Binance 'riding to the rescue' when Bankman-Fried was begging for investors to keep FTX afloat was nothing more than a way of making sure the entire thing collapsed. Revenge and profit in one!
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What makes you think that CZ isn't himself a fraudster?
CZ sent texts to SBF complaining about him selling 250K of Tether and how it might cause a depeg. If Tether has a $60billion market cap and people redeem all the time and it wasn't fraudulent (as it almost certainly is) then why does CZ think $250K would seriously impact it?
Beyond that: why is he even texting a competitor about his specific trades?
Beyond even that: after what happened with FTX CZ and everyone else in the crypto space has an incentive to appear transparent, yet he refused to do an actual grown-up audit.
Instead, like FTX and Tether (again: two almost certainly fraudulent things) he basically circles back round to "take our word (or this random attestation that isn't an audit) for it". I believe this is cause he can't, just like SBF (who also reassured everyone hoping to avoid a bank run). I think it's the same scenario playing out in slow motion.
tl;dr: I think they're all crooks and CZ stabbed SBF mainly due to SBF trying to amass political power and throwing shots at Binance/CZ with it. It was imperial court intrigue, not altruism. I think they're all playing the same game (except maybe Coinbase, which iirc is public and thus regulated) so I'm not surprised that CZ was able to "expose" SBF. SBF's problem was just hubris in breaking the code among thieves.
Where is the evidence for Tether being fraudulent? Everyone seems to imply that it's a fraud, but where is the proof?
Tether is ancient by crypto standards. It's the oldest and biggest stablecoin. It has defied at least five years of doommongering and considerable stresses in the 2017 crash, the COVID crash and the most recent crash. There are occasionally brief depegs, where it might go down to 0.99 cents or lower. So what? It's a live system, it's not living in the banking world of 'oh it will actually take us three business days to move your money (which purely exists in our spreadsheet)'. I highly doubt most banks could deal with an 80% share price crash, they'd need a bailout. Most banks don't have anywhere near the reserves tether does, proportionate to liabilities. That's the nature of fractional reserve banking.
Things like Luna and FTX are young and new by comparison.
If you go to their website they have some accountants describing their reserves, are you saying they're lying? Given that much of their holdings are US treasury bonds, they'll be making some decent returns there as interest rates rise.
https://tether.to/en/transparency/#reports
Tether's story went from "backed 1:1 to dollars" to "holding various tokens" to "we mostly have Chinese corporate paper" all along fighting or failing audits by state regulators and redefining what it's backed by, while printing billions a month without relative inflows.
Surely you're joking? Google "Tether scam" and there's a deluge of proof, including successful investigations against Tether, which led to Tether providing new reserve definitions.
Specifically: after it settled a court case in NY with the attorney general stating that Tether wasn't backed 1:1 to USD.
They just stated that they did no wrong doing and were vindicated, updated their story to holding commercial paper and other things other than USD and continued on their day. As the saying goes: the market can stay irrational for longer than you can stay solvent, so I'm not particularly moved by the fact that Tether is old.
Lying about 1:1 USD backing is enough imo. Why would anyone trust them after that when, upon pressure, suddenly we get a different (less problematic) story once they run into trouble? Especially since they continually refuse to do an audit and, iirc, refused to be clear about which paper they held last time they were questioned on CNBC.
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According to whom? A majority of their reserves are US treasuries according to BDO as of September 2022.
If you take a quick look at the market cap, about 20 billion Tether has been redeemed for USD since May 2022. You're giving the 2021 argument but we've moved on since then. Now that it's not printing billions a month but actually had billions withdrawn the last few months, does that invert your conclusion?
BDO:
They just confirmed that Tether claimed they had so and so assets on paper - not whence and why. It's literally meaningless. But sure, avoiding an audit for 5 years, and changing their claims of holdings many times is totally a string of bonafide grade-a deeds of trustworthiness!
If you collate redemption events with outside events, it's rather clear most is just drawing numbers down entirely. SBF's plots alone involved billions of Tether which were wiped off the books without fiat appearing. Tether created the tokens out of nothing and then wiped them later. Now, I don't just mean a few billions. Alameda and Cumberland received 70% of all Tether. There are concrete examples like 3 Arrows "redeeming" more than 2x the Tether it supposedly had accumulated around May. Now, in March it continued receiving more Tether - but directly on exchanges instead of its historical wallets.
There are many fun treatments like: https://protos.com/tether-papers-crypto-stablecoin-usdt-investigation-analysis/
Are you saying it wasn't a scam on the 30th of September but it was before and after? Or are you saying they just took Tether's word for it?
From the end of page 1, halfway down through page 2 it lists all the things they did. They checked over the blockchain records, they got confirmation letters from banks, looked for the collateral in the loans... Not what I'd call 'confirming that Tether claimed things'.
Yes.
Learn some accounting. They go through significantly more scrutiny when you buy a house. Tether has been shown to double or quadruple count assets in the past. Tether has been shown to literally make things up. Plenty of other friendly actors move 10x the assets into an account then remove it the day after.
That was a hit piece against Tether you know. They investigated it and found large amounts of bs and contradictory flows, not BDO.
In 2017 https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal
It disappeared the same day.
In march, Tether claimed 4.96 billion in "other investments (including digital currencies)" when the crypto market was over 2 trillion. After it dropped under 900 million a few months later, Tether claimed 5 billion. The numbers they claim are verifiable bullshit.
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I remember reading this and bookmarking it a while ago, no idea how accurate it is (original author got banned from medium): http://web.archive.org/web/20210904210829/https://medium.com/nerd-for-tech/greatest-scam-in-history-by-tether-76ac059b9550
tldr: He indeed thinks that there's far less backing tether than they claim, based on not performing an independent audit, and its primary use is gassing up the price of bitcoin.
For some reason that link isn't working for me, it just keeps refreshing the page every 3 seconds so I can't read it. I guess it rather backs up webarchive begging for funds.
I know Scott also posted a link to a convincing sounding anti-Tether essay too. But consider how much misinformation there is in the crypto-sphere, by nature of rumors moving markets very quickly. There are a lot of people who'd be happy to see Tether fail, since they can make a lot of money shorting it at the right time. It's difficult to profit from a stablecoin staying stable.
I haven't/can't actually read the medium article. But don't you think that if he got banned, then something might be suss about it? I'd imagine Medium has some kind of rule against impersonation or propagandizing. If Tether isn't backed, how come people have been able to take about 20 billion out of it? The marketcap has fallen a lot since May 2022, that means coins are being removed from circulation by redemption back to USD.
https://coinmarketcap.com/currencies/tether/
Maybe someday it will collapse. But I've gotten so tired of the seemingly never-ending story of Tether going under. There were supposed to be revelations coming out years ago about this. People have been panicking about it for so long now.
It's entirely possibly he was bullshitting. I also couldn't load the article, so I just ctrl+c ctrl+v'd it into notepad and scrolled down to the text.
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This makes SBF look bad
Tether is not run by binance. "Tether Limited is owned by the Hong Kong-based company iFinex Inc., which also owns the Bitfinex cryptocurrency exchange. As of July 2022, Tether Limited has minted the USDT stablecoin on ten protocols and blockchains."
No, but there seems to be incestuous, mutual relationships between these exchanges and Tether, just as these exchanges are trading each others coins (or apparently helping each other strategize on trades...)
CZ clearly thinks that Tether is necessary for the crypto space ( to prop up the price of bitcoin by pumping fradulent "backed" USDT), they are apparently in a mutually dependent relationship given his concerns.
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¿Por que no los dos?
I don’t really see a problem with an investigation of a second fraud. It’s not like CZ is behind bars. So long as both get justice served eventually.
Oh, and it looks like CZ and SBF are having a slapfight over Tether too. Maybe they’ll both incriminate themselves further?
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While it would surely be emotionally satisfying to arrest and indict Sam Bankman-Fried the reason the DoJ moves slowly is that after you bring an indictment there are avenues for the defendant to challenge further investigatory actions and there is a constitutional right to a speedy trial so you also face time limits in how long you can defer from the indictment to the trial (unless the Defendant consents). This creates a bias towards making sure you gather all the evidence you reasonably can before bringing an indictment.
Frankly, the investigation(s) into Binance seem good to me. Surely it's better to stop the fraud while it's occurring (and before funds have been lost) than let it continue and steal more from people.
I disagree even though I still think crypto is a bad investment . I don't even think a fraud was committed in the case of binance, unlike FTX. Unless they are stealing money from people like in the case of SBF/FTX, I don't care what they do. Money laundering seems like a BS reason so the US can enforce its monopoly/reach on global finance. It's like "We don't like your business. Because some shady money was occasionally passed through it, we will try to shut it down even though your businesses otherwise did nothing illegal and customers are happy."
What evidence makes you think fraud hasn't been committed in the case of Binance? Does this evidence differ from evidence we had about FTX one year ago about whether they were committing fraud? Frankly, given the number of large volume crypto exchanges that have turned out to be frauds I kind of think "this exchange is committing fraud" is a pretty good prior.
It's not as many as you probably assume . MtGox, FTX, maybe some others...out of hundreds of exchanges. The reason why fraud is not more prevalent, i suppose, is because running an exchange is quite profitable, without having to resort to fraud, such as fees. Odds are Binance is not fraudulent. An exchange being hacked and customer funds being lost is not the same as fraudulent (unless it was an inside job, I suppose).
Here's a list of ~450 (by line count) exchanges which failed: https://www.cryptowisser.com/exchange-graveyard/
75 exchanges closed down in 2020: https://cointelegraph.com/news/75-crypto-exchanges-have-closed-down-so-far-in-2020
51 in 2020: https://news.bitcoin.com/cryptowisser-51-crypto-exchanges-dead-in-2022-exchange-deaths-down-40-despite-crypto-winter/
https://coinjournal.net/news/42-percent-of-failed-crypto-exchanges-vanished-leaving-users-in-the-lurch/ lists 94 in 2020 and 81 in 2020... Higher than the others. From my work, there are more than a few which certainly weren't listed in the above. (Some 0 years when quite a few scams occurred.) Note, 42% disappeared without any justification at all.
Lot of which failed to really launch/aggregate large amounts of volume, though.
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shutting down is not the same as the exchange not making its users whole due to fraud.
And that's half the instances.
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Yeah, the US regulation on the crypto space has just been embarrassing imo. 10 years after crypto was created, we still have basically 0 regulatory framework and only one major exchange. It's like the financial institutions aren't even trying.
Meh, there isn't really a need for a regulatory framework for crypto. Its just ForEx. ForEx is overregulated already.
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The U.S. barely has a decent regulatory framework for social media, which is pushing 20 years.
None for Crypto, which is 10 years old.
AI regulation is going be implemented approximately 40 years after the singularity, at this rate.
Inept regulation may have also made institutional players feel more comfortable about jumping into crypto, which could have made situations like the FTX collapse worse.
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