Re: Is BitFUnix and the Tether dollar USDT about to crash the Bitcoin market?

Because Bitfinex is making news that they can pay back the former thefts which no one thought to be mathematically possible, so it means that Bitfinex is trying to raise confidence so more people will put their money there, so it indicates they need money. It also indicates they stole the money from Peter to pay Paul. The likely source of the money is perhaps coming from printing USDT out-of-thin-air.

The conversion of BFX tokens to shares of Bitfinex completed and was the catalyst for full token redemption on the exchange. Interestingly, the amount of capital raised is 54513657[1]. This number is quite close to the total authorized line and, since Bitfinex is associated, I have to wonder whether there's any connection.

I've been opposed to the idea of a pegged unit well before Coinapult had its "locks" and still view such a system with suspicion for anything beyond very short-term utilization.

[1] https://bnktothefuture.com/search/pitches

Is your thought process including the possibility that USDT was issued surreptitiously by paying USD to themselves, then traded to repurchase the BFX tokens which were subsequently redeemed for equity in Ifinex? With the final redemption of remaining BFX tokens by paying themselves.

Quote from: http://themerkle.com/converting-bfx-tokens-to-ifinex-equity-is-not-as-lucrative-as-it-seems/

While it is true Ifinex is the parent company of Bitfinex, they are also a subsidiary of another company. DigIfinex is the name of this conglomerate, which has relations with RenRenbee Limited, Tether Holdings Limited, and various other Bitcoin corporations. No big surprises there, although it makes one wonder how useful ownership in Ifinex will be in the long run.

(chart of alleged corporate structure)

So a possible scenario which could explain recent events is Bitfinex pretending to be blocked from sending USD so as to force those who want to trade BTC to USD to either trade for USDT or move BTC to an exchange which can do USD withdrawals. So if exchanges have fractional reserves of BTC, then Bitfinex for example could be employing the hypothesized USDT hoard to purchase BTC to maintain sufficient reserves for increased (possibly accelerating) BTC withdrawals. The rapidly accelerating BTC price over the past days concomitant with the widening USD/USDT spread could potentially be explained this way, combined with specifically timed miner manipulation of the public confidence leading to wild price swings. OKCoin blocked USD deposits, which could potentially have the motive of increasing perceived legitimacy of Bitfinex's claim, and more plausibly to block Bitfinex withdrawals in BTC from being exchanged for USD on OKCoin (since no new USD can enter to offer on bid) thus to keep more cows locked inside the hypothesized USDT slaughterhouse of this hypothesized speculative explanation.

Quote from: http://www.nasdaq.com/article/bitcoin-price-analysis-exchange-rates-vary-but-remain-bullish-cm776349

Knowing that Bitfinex is having trouble processing USD means that in order to leave the exchange, you must first buy a digital currency and move the money off. For most people, this is just easier than dealing with the current USD restrictions.

Although it's unlikely the bullish move is entirely due to users exiting the exchange, it likely plays a role and may partly explain why Bitfinex's price is so much higher than the other exchanges.

If Bitfinex and USDT default, would Poloniex also default? Thus far, the evidence presented by @tunctioncloud seems to suggest that Poloniex's exposure is small. But what if there is a generalized stampede of withdrawals from exchanges employing USDT as the only mechanism for trading BTCUSD pairs. Could there be a domino effect on Poloniex if Bitfinex defaults? I'm trading tokens on Poloniex so I am genuinely concerned. I'd appreciate all well reasoned discussion of this matter.

I cannot rule out suspect activity on the part of Bitfinex through use of USDT. There are questions about Poloniex as well, though again uncertain about the veracity. I do not think Poloniex would default and the relative holdings of USDT are minor compared to other coins, the exchange being primarily crypto-crypto and explicitly showing USDT as such whereas Bitfinex only displays it as USD.

Regardless, I am highly cautious at this point regarding having funds on exchanges. If Bitsquare had volume, I would certainly be using that instead of most others.