BitConnect Closes Exchange as States Warn of Unregulated Sales

One scam down at least, next the Tether printer and BitFinex boys. Clean up in aisle HKG please.

I'm aware that tether's reserves are a little doubtful, but could you elaborate on why Bitfinex is sketchy?

For starters, they don't deal in USD at all. They deal in "USDT", which isn't at all USD but a token called a tether that is somehow magically supposed to be pegged so 1 USDT == 1USD that you can... well... I dunno what you can do with a tether but one thing you can't do is turn it into actual fiat money on Bitfinex. You might be able to convert it to cold hard fiat on some other exchange though, but odds are good said exchange will be even more sketchy than Bitfinex.

Better still, the "market cap" for tether is over 1.6 billion USD with 5.5 billion in volume today. What happens when people actually want to turn that 1.6 billion of outstanding tether into dirty fiat? Who is gonna buy all those sells into USD? The exchanges? You think those guys are holding 1.6 billion in actual fiat money?

So if you like the idea that the most active "USD" exchange (bitfinex, according to coinmarketcap) isn't actually trading in "USD" but some kind of funny money that is supposed to always be pegged to the dollar but backed by absolutely nothing at all.... Consider what will happen when the crypto bubble collapse really starts to pick up and all those tether holders want back into filthy dirty American dollars. Good fucking luck.

It's just another facet of what makes the crypto "space" so fascinating. It is just layer upon layer of scams. Scammers scamming scammers. And yet people, even some supposedly smart people here on HN, continue to fall for the crypto scam every day.

PS: for a good time read the tether TOS: https://tether.to/legal/

The fact that Tether does not guarantee in their terms and conditions that they'll exchange Tether back into equivalent reserve currency makes it _super_ sketchy from my point of view.

The only way that Tether should be considered backed by and equivalent to USD (risk-reduced) is if Tether is contractually obligated to convert it back into USD. Instead, this is what their TOS says:

> Tethers are not money and are not monetary instruments. They are also not stored value or currency. There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money.

> We make no representations, warranties, or guarantees to you of any kind, including with respect to any right of redemption or exchange of Tethers for any property.

For more on this, see my previous comment exploring the idea of "Tether being worthless": https://news.ycombinator.com/item?id=15997658

I'm by no means an expert, but I'm wondering why the people responsible behind Tether do this? Why don't they ask people for a dollar for each Tether coin and then store those dollars indefinitely, wouldn't that guarantee that the currency is pegged? They would always be able to exchange the Tether back to a dollar.

It turns out to be a lot more profitable if you just make USDT out of thin air...