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Todd Carlisle avatar
Todd Carlisle
@tcardizzle
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This is an important post. Sounds egotistical but it's not about me. This post will be ignored by some. That number could even skew towards most but if even one person reads this post and it saves them from becoming a victim then it is worth it. For those who are predisposed to dismissing anything written about cryptocurrency that isn't over the moon positive, I'm sorry. I get it. You see the whole world stacked against regular people and in cryptocurrency you see the potential to upend that. Unfortunately some of the things you like most about cryptocurrency have become the very attributes that are being used to exploit it. No matter what the subject in question is there will always be those who seek to take even the most noble of ideas and twist it into a tool to enrich themselves at the expense of others. I would imagine that everyone is familiar with Bernie Madoff. For anyone who isn't, Madoff was an American fraudster and financier who ran the largest Ponzi scheme in history, worth about $64.8 billion. He was at one time chairman of the NASDAQ stock exchange. He advanced the proliferation of electronic trading platforms and the concept of payment for order flow. He was investigated 3 separate times by various agencies. Each of those times he was cleared of wrongdoing. Each of these times the investigators made a terrible mistake. For over 30 years, Madoff produced returns that seemed impossible. The market was down? Bernie was up. He amassed a huge list of clients from pension funds to royalty. Year after year he was significantly beating the market by a wide margin. Everyone wanted in on the action. The fact is that he was fabricating the returns. He was using money invested by one person to fake returns for another. This scheme worked perfectly until events in the market made it such that a large number of clients wished to forgo returns and liquidate into cash. He didn't have the cash. He never had the cash. So despite over 30 years of giving the appearance of super hero returns in the end he was just a common thief. Why am I talking about Bernie Madoff when I led off with cryptocurrency. Well I'm sure some of you may have noticed the crypto market taking a bit of a dive recently. As soon as 3 weeks ago $BTC was sitting at a new all time high. Then suddenly and very rapidly it lost over $20k in value. I'm sure you've heard "COVID worries" or it "sold off in sympathy with the Stock Market." These explanations are wrong. The rise of Bitcoin to all time highs and the subsequent rapid collapse can be traced to a single source. Bernie Madoff may have been the man behind the biggest financial fraud in history at the time but he's been supplanted at the top by a new, more dangerous champion. If you have followed my posts at all you'll be familiar with USDT (Tether). In at least 4 posts this year I've gone through the growing list of offenses committed by the people running Tether (same as the people behind the cryptocurrency exchange Bitfinex). I'm not going to rehash those here. I'll enclose a link for those who aren't aware of the substantial history of fraud perpetrated by Tether going back to 2016. To summarize I'd like to share a quote from a judge's ruling in the most recent settled case where tether was accused of manipulation of the cryptocurrency market in the amount of over $1 trillion dollars. In her ruling late September of this year Failla advanced allegations that DigFinex ""printed' the crypto-equivalent of money 'out of thin air,' and then used that counterfeit 'money' to purchase cryptocommodities" in a bid to inflate "prices divorced from any legitimate market forces." "A rational market actor would be unlikely to make large purchases of cryptocommodities when the prices of those commodities dropped significantly," as DigFinex allegedly did, the judge wrote. She rejected the idea that the suit describes only intermittent acts of market rigging and the related argument that the crypto investors leading the case had to tie their individual losses to specific trades by DigFinex affiliates. If that doesn't concern you I'm not sure that anything will. Here you have a judge stating as fact that Tether had not intermittently, but consistently printed tethers as a method of manipulating the cryptocurrency market. How have they been manipulating it? There are two ways that they have manipulated the cryptocurrency market, Bitcoin specifically. The first method is through wash trading. Simply put wash trading is selling an asset to yourself to create the illusion of a large volume of trades occurring. This was done to promote interest in cryptocurrency by promoting the illusion that assets were heavily traded when in fact they weren't. Several studies have shown some coins have nearly 80% of their entire trading volume as wash trades. While deceptive and illegal, wash trading doesn't on its own harm anyone. The second way that Tether has manipulated the cryptocurrency market is through the creation of USDT tokens. Here's how it works. They mint tethers, they then use these tethers to purchase cryptocurrencies (overwhelmingly Bitcoin), because of the massive scale of their purchases the price of Bitcoin rises substantially, they then liquidate their Bitcoin holdings and wind up with Fiat currency. A lot of fiat currency. In fact since March of this year more than $60 billion in tethers have been minted. Each and every time a fresh batch is minted the price of Bitcoin rises. Why are they doing this? They've had 3 cases where they've been accused of fraud settled this year. One in New York for $18.5 million. One for $41 million by the US Commodity Futures Trading Commission (CFTC) over not having sufficient monetary reserves, consistently enough, to say the stablecoin was fully backed by US dollars. (The CFTC said over a 26-month period across 2016 to 2018, Tether only had sufficient fiat reserves to back issued tether tokens 27.6% of the time.) And most recently one brought by traders settled for an undisclosed amount. In each of these settlements they admitted no wrongdoing. Why would they even blink an eye at a monetary fine of any amount? They have what amounts to a defacto money printer. The final case settlement included a mandate that Tether submit a quarterly attestation as to their holdings. And here's where that ties in to the recent Bitcoin price movement. That ruling occurred on 9/29/21. Immediately after that ruling Tether began minting over $3 billion worth of USDT. Then over the next month the price of Bitcoin rose to new all time highs. On December 4 at around 12:30am the price of Bitcoin fell dramatically. This can be traced to a single whale selling a massive quantity of Bitcoin. This sale and corresponding drop in the price of Bitcoin triggered a huge wave of liquidations which drove the price down even further. Why did Tether sell? The had an attestation later that day and needed to put actual cash in the account. They got this cash by inventing tethers out of thin air and then using Bitcoin as a method to turn those freshly minted, unbacked coins into Fiat currency. This isn't the first time they've done this. It likely won't be the last. This is only a surface level overview of this situation. There are layers here that go on for days. The El Salvador deal for the volcano powered Bitcoin City was struck with Tether. This deal was predicted MONTHS in advance by the person who's been at the forefront of exposing Tether since the very beginning. This deal was another part of their plan to pass the court mandated attestation. To be clear: An attestation is NOT an audit. It is merely them hiring someone to come in and say "I saw the assets." Tether still refuses an independent audit. This has a catalyst this week. The US treasury department released a report on stablecoins just over a month ago after over a year of investigation. The report detailed many recommendations for regulating the stablecoin industry but explicitly put the ball in Congress's court to take action. The first step in that action happens 12/8 when the heads of leading stablecoins and cryptocurrency exchanges are being called to Washington to testify. Tether is so concerned they've minted over $1.5 billion in USDT TODAY!! You can choose to ignore this but it isn't going to make it go away. Remember: Bernie Madoff operated for over 30 years producing market beating returns. In the end he cost people billions of dollars. Evaporated. Gone. The scam of USDT exceeds the dollar amount in the Madoff case by over $10 billion. This isn't going to have a happy ending. Sources https://m.economictimes.com/markets/cryptocurrency/stablecoin-giant-tether-sheds-no-new-light-on-crypto-reserves/articleshow/88078530.cms ///// https://news.bloomberglaw.com/antitrust/tether-fraud-antitrust-case-advances-against-issuers-exchanges ///// https://www.theverge.com/22620464/tether-backing-cryptocurrency-stablecoin ///// https://newrepublic.com/article/160905/tether-cryptocurrency-scam-enrich-bitcoin-investors //// https://slate.com/technology/2021/10/tether-crypto-danger-ben-mckenzie.html ////// https://finance.yahoo.com/news/tether-settles-1-trillion-lawsuit-094242892.html ///// https://www.investopedia.com/news/bitcoins-2017-rise-was-market-manipulation-tether-study/ ///// Anyone Seen Tether’s Billions? https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether //// https://thehill.com/homenews/house/583884-crypto-firm-top-executives-to-testify-before-congress /// It's absolutely impossible to track everything on your own. Come join our discord and enjoy the benefit of multiple sets of eyes. https://discord.gg/emntYaQkDu //// #tcardizzle #cryptocurrency #bitcoin #tether
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