In case you missed it last week, NY attorney general has shut down Bitfinex and USDT transactions to all New Yorkers. Link Below to original article.
Now I know this isn't exactly THE biggest market on the planet. Or the most important, but it's all part of the crypto-fuck you- soup that's got the market in a slump right now.
Is anyone else noticing a pattern lately? First SEC is roasting Ripple for "not being a currency." Now an exchange and another crypto are blocked off to another major swath of the crypto market in the US? NY's population is #4 after CA, TX, and FL in the US. And it's also the 3rd wealthiest state as measured by GDP.
If those investors got spooked, it would explain some of the recent bear-ish (I said bear-ish, not bear market before anyone says "he said bear market) moves happening.
As I understand the scandal correctly, Tether was minting more USDT than actual assets it had as collateral to back the price of the stable coin (tether).
TLDR: - If 10 USTD = $10 because USDT had a total circulating supply of 10 USDT and said it had 10 dollars in the bank, but actually had $5, then each USDT is now worth $0.50.
Here is a link to the recent article.
https://coingeek.com/crypto-crime-cartel-the-end-is-nigh-for-tether/
Make no mistake, this is at its core, a VERY real issue for BTC? why? well BTC was invented as a hedge against inflation. Hence the havlenings and limited supply. But what poor Satoshi never realized, was that a stable coin company can simply MINT worthless tokens and inflate, BTC's price.
You have to laugh a little right? I mean, the SAME thing that's happening when "the printer goes brrrr." For those who are uninitiated into crypto-talk, that's how crypto enthusiasts describe the US's quantitative easing (printing more money) policy. And why BTC is destined to be the ultimate hedge against Uncle Sam printing new money.
Can you taste the irony? It's pretty bitter right? So how can this impact the price? Aside from the short term correction we're in now.
Let's assume the 850M minted in USDT was backed by only 425M in assets. If that is the case, the dollar wise, only $450M actual dollars went into BTC, which means, the current value of BTC must be discounted by 425M to reflect the price. And that's drop in the bucket right?
Well what if we factor in other intangibles and unknowns? Could other projects have minted more coins to pump into BTC? If so, how many? whose over looking these projects? Please do not say 3rd party audits... They're about as reliable as a fox in chicken coup....
Remember my guide to DeFi Introduction Part I? What did I say at the end?
"Make no mistake, DeFi projects are just an extension of the current financial system. They're just being re-branded and re-packaged. Gas fees be damned..."
Well I suppose now, it just applies to all crypto. That's right my readers, the strongest aspect of Bitcoin being an anti-inflationary asset, just got destroyed. Its supply can't be inflated, but its value can, by inflating the supply (and "implied value") of other crypto coins. And I think the fallout from this is just starting...
I'm not sure if I want to curl up into a ball, or celebrate that this nastiness is out of the bag now. We can all break out of the spell that crypto had us under. And we can re-examine it with some new eyes. And maybe it becomes stronger if / when fail safes are added.
Be weary fellow investors, a lot of wolves out there trying to sell you an idea that has failed for millennia now. I'm not saying you can't be wealthy from investing in cryptos, I'm saying, always question the reasons for someone else is selling you theirs... After all, behind every transaction, there's someone who thinks its equally going to go down, as you believe its going up....
OGF
As always : THIS IS NOT INVESTING ADVICE. DO YOUR OWN DUE DILIGENCE AND RESEARCH. THIS IS JUST ME SHARING MY STORIES AND EXPERIENCES / news updates.
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Alphanova.crypto
Above .crypto address for anyone who wants to shoot me some cheddar for my thoughts. Please no BTC or ETH. Network fees are killer. Stick to LTC, XRP, ADA, or TRX. The last 3 are almost free in terms of network fees. Remember - no matter how much you send to anywhere, choose a coin that's low in network fees. Anything besides ETH / BTC really...
