For those unaware, Bitconnect was a Bitcoin-based ponzi-scheme that had operated 'successfully' for quite some time. I don't say 'ponzi' as an insult in the way some do for cryptocurrencies, it was quite literally just a bare-bones ponzi scheme, where you deposit your money (Bitcoin) on their website, buy their token, 'lock' your funds for some amount of time, and you are promised very high interest rates while encouraged to re-invest your returns.
What has happened today is Bitconnect has closed the exchange on their website, and so users flocked to some of the only other exchanges (of dubious reputation, since no reputable exchange wanted to list the BitConnect coin) in order to sell their now-worthless tokens, resulting in losses of around 90% today: https://coinmarketcap.com/currencies/bitconnect/
Many famous Youtubers and other individuals with influence convinced hundreds of people to put their money into BitConnect in order to profit off of referrals, leading to a lot of unfortunate losses and a lot of delusion and misinformation among devoted investors. The general sentiment towards those that lost money due to BitConnect has been a mocking attitude in the cryptocurrency investment communities, as BitConnect has been referred to by many as a blatant ponzi scheme for months.
> Famous Youtubers and other individuals with influence convinced hundreds of people to put their money into BitConnect in order to profit off of referrals
If you lost money in this scheme and are in the United States or Canada, contact your state securities regulator [1]. Mention any such referral sources. Those individuals may be liable for securities fraud under state and federal law.
If you're in the United States, send a copy to the SEC [2]. If you lost more than a token amount, I would also recommend contacting an attorney.
This was a known ponzi scheme. Can participants actually recoup losses here? Shouldn't they be held just as accountable/guilty as any other participant?
What does it mean to be a _known_ ponzi scheme? How many people outside of the core conspirators are required for it to be reclassified from _suspected_ to _known_?
Doesn't that just mean 3 different companies? It's not actually unusual for what you might think of as a single company actually to be a group of companies - e.g. a holding company and a set of subsidiaries.
@Bitfinexed [1], who tracks all kinds of scams (the Tether one is going to be the real doozy when that unravels) has been diligently saving Bitconnect videos, tweets, etc. He is pseudononymous, so the question now is how to effectively get these (apparently) hundreds of gigs of videos archived/shared. [2] I can't imagine he's the only one to have thought to do this, though. Bitconnect was simply too blatant of a skeezy ponzi for no one to have bothered tracking down who all these people were...
They should get in touch with Jason Scott or Archive Team in general to get them in the Internet Archive, or upload them to the Internet Archive themselves.
EDIT: I don't have Twitter, if someone wouldn't mind, could they connect @Bitfinexed to @textfiles?
I love these comments because they highlight the ambivalence of the HN commentariat. If google actually had copies of deleted user data, the privacy-minded would lose their heads. And they’d be right because there are all kinds of laws around this. Deleted user data has to be really gone, even from backups, within a finite time.
There is no law (that I'm aware of in the US) that requires Google to purge any user data except GDPR (which applies only to EU residents after May 25, 2018), or perhaps the EU's "right to be forgotten" (which isn't going to supersede preserving evidence for an investigation).
Those Youtube videos exist, if not with a "is_deleted" flag, in Youtube backups. Some are already in the Internet Archive.
I'd rather websites did not keep my private data when I delete my account but I have no problem with the archival of public content. Of course with social networks pushing their users to overshare all the time the line can be pretty fuzzy with comment history and things like that but I don't see how anybody could consider archiving a video published on Youtube as a breach of user privacy.
The fact that the videos are "taken down" from public view doesn't mean that they won't be available in google's archives when the authorities file a subpoena for them.
This breaks the HN guidelines. Other people being dumb (assuming that's the case) is not a license to be brutal, and in any case you owe the community much better when commenting here.
That seems both cruel, and needlessly harsh. Surely you yourself have weaknesses which could be exploited, and I hope that you’re not prepared to kill yourself over it. By the same token, telling people that they are too stupid to live is pointlessly cruel, unhelpful, and frankly wrong.
You can be intelligent, but old and suffering from MCI, or a more advanced dementia. You could be mentally ill, or brilliant in one field, but utterly ignorant of finances, or human nature. You could be a genius with TBI, or you could b young and foolish.
I can’t see what you’re saying as anything other than venting of spleen. Maybe it makes you feel better as a mechanism to cope with frustration, but I’d encourage you to reconsider that attitude toward your fellow humans.
To have that line of defense, the youtubers would have had to phrase their claims very carefully. I am willing to bet a fistfull of dogecoin that this was not the case of all of them.
Make them discover these actions have consequences, I can only see good sides to this.
When actual attorney's are talking about legal issues, they'll usually say something like "I am not your lawyer" as a defense against entering into an attorney-client relationship which creates a bunch of complications.
So I guess the "I am not a lawyer" is sort of a corruption of that, a magic spell invoked by not-lawyers to save themselves from not-problems.
Practicing law without a license is an offense in many jurisdictions; providing legal advice is in some cases within the scope of legal definitions of practice of law. (For people in certain roles outside of but around the legal profession, even implicitly holding oneself out as a lawyer or person qualified to practice law may have additional concerns.)
While public comment for which no one has been charged money may be outside of the bounds of what would be covered by most such laws, some people view it as best to be clear (and, in any case, such a disclaimer served as meta-legal advice that the matter at hand is one on which you should consult a lawyer if you have critical concerns.)
And, there are other concerned for lawyers in communications that might be mistaken for providing legal advice.
All that combined to justify disclaimers that include some or all of, as applicable:
I am not a lawyer.
I am not your lawyer.
This is not legal advice.
(Incidentally, I am not a lawyer, I am not your lawyer, and none of this is legal advice.)
I always understood it to be a caveat that the speaker does not have much or any formal legal education (much less in the specific state/country relevant to the conversation) and that nothing should be taken as actual legal advice by the reader, even if their situation seems similar.
It's an attempt to inoculate against the charge of practicing law without a license--which might seem incredibly unlikely, but that's how they got Ulysses Everett McGill.
But that doesn't require a disclaimer, if anything that just requires you to not claim to be a lawyer. Additionally: what recourse does someone have even if they read a random internet comment as legal advice. Pretty much zero.
I believe the reasonable person test would result in a court coming to the conclusion that he had presented himself as neither a lawyer nor that he was giving legal advice.
However, I am not a lawyer and this is not legal advice
I got told this from a friend that studied law (but is not a lawyer). That to put a disclaimer of "I am not a lawyer" when giving opinion about legal matters is so that they will not be prohibited from practising law in the future, or prosecuted for misrepresenting or impersonating a lawyer.
I guess someone that has studied law more or is an actual lawyer can weigh in on this in an unofficial capacity (because we are not paying them for advice!).
I always assumed that the "this is not legal advice" part (and similarly, "this is not medical advice") are meaningfully used by actual lawyers (or doctors), so that you can't sue them for malpractice over something they said that was tangentially related to what they do for a living.
It’s less CYA than a reminder that one should seek legal advice if the subject matter is personally relevant. I would hate for someone, who watched a YouTube video and then lost more than they could afford to BitConnect, to mis-step because they mistook my Internet comments for authoritative advice versus banter and commentary.
Realistically nothing will happen. Law enforcement only deals with financial crimes where they have assets to seize or their is some PR benefit. They will probably take action against a few people at the top, especially if there is a pot of gold at the end of the rainbow for them, but low level shills are not worth the effort.
Ponzi scheme work because people believe the fraud (promise of high returns).
If they said, deposit your money and we'll pay you back only if enough people after you also deposit their money then you'd have an interesting point, although I'm sure it's still illegal even if you announce your intentions before doing something illegal.
With Ponzi schemes the situation is even wrose for the perpetrator: they are explicitely illegal and you can't get out of legal ramifications even if you are completely honest and upfront.
> Ponzi scheme work because people believe the fraud
That is not always the case. Sometimes you have a Ponzi like Madoff where it may seem legit to investors but most ponzis are blatant and the people involved know it is a ponzi but think they can profit by selling it to greater fools.
Of course they will all express shock and feign ignorance when they are trying to get their money back or defend themselves from the angry people they hustled.
In the US, as the Madoff case showed, if it can be shown that you are a sophisticated enough investor to realize that it is probably a Ponzi scheme, your profits can be clawed back and used as partial restitution for the victims. Any scheme that is upfront about what it was doing would significantly lower the bar on making that case.
In different places (states, countries) there are a variety of rules, the goal of which is generally to let people have things like a fun Xmas raffle without opening up the opportunity to run "The Numbers Game" or similar.
To allow a raffle, dodges often enshrined in law include:
* Very low prize limits (e.g. max $100) but donated prizes don't count towards that limit. So your local charitable raffle has no problem getting a nice bottle of Scotch, dinner for two with wine at a nice place, family portrait, whatever local merchants want to donate, and it's all fine, so long as they don't buy it.
* Exemptions if you can only buy tickets in one place, or if you only sell them to members of your organisation that exists for some other purpose (e.g. a local church, employees at a factory)
* Exemptions if the profits of the gambling go to a recognised charitable organisation.
* Exemptions if there's no profit at all, all is spent on prizes that go to ticket buyers randomly, so the whole operation only moves money around randomly inside a group of participants.
Raffles guarantee a winner. Picking a single person from a group of people have a very different probability profile than picking a number from a set of numbers that may not have associated lottery tickets.
My understanding is that lotteries are quite open about the expected return that is heavily negative (and most people do understand that the expected return is negative). So they do not work the same way.
No, Ponzi schemes are illegal. Even if you write in huge bold red letters "HEY THIS IS A PONZI SCHEME" before people "invest" it wouldn't change anything legally.
I know a few people who fell for this, despite my warnings. When you tell someone "these returns are astronomical, teams of PhDs in hedge funds cannot come anywhere close, do you think they're so dumb that they wouldn't put billions in this if it were legitimate" and they reply "yes, I do", there's no helping them.
Exactly. My father is one of such people, and believe me, I've tried everything: I explained him rationally, I talked to him nicely, I showed him examples, I even threatened him -- nothing helped. Finally I gave up, he went bankrupt and only that changed him somewhat (though he still buys lottery tickets in small amounts).
You can add to that that "experts" are pretty clueless as well, 2000 and 2008 are reminders of that.
Close to none saw it coming and the ones that did where laughing stock amongst them, you have to be a pretty remarkable person to swim against National bank presidents, government officials and other high ranking people like Alan Greenspan, that was a super respected economist but also has made some of the worst mistakes in history of the world economy and still has power to swing things around
I really distrust any finance specialist, but I am also aware that if any high yield information ever reaches me it's either a crime or a scheme to take my money away from me.
So it's tricky.
Perhaps then your definition of 'expert' is incorrect? Would it not be that the ones who saw it coming were really the experts? And those who laughed at them were anything but? I would argue that those who laughed at the doomsayers of 2000 & 2008 are the same as those now arguing that BitCoin can only go up. Your reply is a rather odd justification for self-destructive financial behavior.
> Would it not be that the ones who saw it coming were really the experts?
No, because there are people that predict fiscal doom all the time.
* People predicted that 2016 would have a huge crash.
* People predicted that 2017 would have a huge crash.
* People predicted that 2018 would have a huge crash.
* People will predict that 2019 would have a huge crash.
* People will predict that 2020 would have a huge crash.
If there's a huge crash in 2019, are you sure the people that predicted the 2019 crash are geniuses? Perhaps some of them were simply lucky. You have to be super careful if you are going to go by a small sample of past predictions, because there are a lot of people that make a lot of predictions. Statistically, some of them will make predictions that are correct by random chance.
It is impossible for people to predict the future perfectly (this is why diversification in investment is so important). "Don't try to time the market" is also generally considered good advise. It's impossible to know exactly when a crash occurs.
That said, it is possible to use market indicators, historical factors, and other numeric qualifications for reasons to be wary, because the investment asset looks too expensive. For instance, up to the 2008 crash, two important indicators -- the price to income ratio, and the price to rent ratio, were very high, indicating real estate was significantly overvalued. The same thing applied to the sky high prices of many .com stocks in 2000, who really didn't have any profit or even cash flow behind it to back the valuation up.
There were plenty of experts raising warning flags on these bubbles. Even from a broader perspective, The Economist was wary of Internet stocks in 1999 (https://www.economist.com/node/183809) and was wary of the housing bubble that caused the 2008 crash in 2005 (http://www.economist.com/node/4079027).
(Of course, The Economist in 1999 used Amazon as the example of an overvalued stock. Whoops. Shows that you "never know". But they wouldn't have been wrong if they had used, say, pets.com.)
The difficulty lies not in predicting a crash successfully, but in being able to do so consistently.
At any given time, there is someone who is saying that it’s all about to fall apart. There might even be someone who gets the timing and the reasons right.
The hard part is doing so consistently, and there’s little evidence that anyone can do this, which indicates that luck is the primary factor in various famous “crystal ball” economic predictions.
> Would it not be that the ones who saw it coming were really the experts?
Maybe, maybe not. Without a track record of doing it a whole bunch of times, it's far more likely they made a lucky guess, stumbled into information, etc.
Some are even right but don't get the timing correct. For example, this guy wound up losing everything and owing $106k on a margin call... but if you look at the stock value today he was absolutely correct in shorting it. https://www.marketwatch.com/story/help-my-short-position-got...
They are probably not as clueless as you think. There's a difference between what they believe and what they say. Try asking any sales professional if buying something they get a 2% commission on is a good idea or not.
The fact that you invest in crypto is thinking you are smarter than many well respected experts like Warren Buffet. If you invest in cryptocurrencies (and I do), you are not any more clever than those who bought into BitConnect.
No they're not - they are separated by the fact that one's sole purpose is to commit fraud, while the other actually has to do - however much - with technical merit. The however much part exists in every other type of market..there is a subset of people that will always try to game the system of any system they exist within. This is nothing new. That subset can vary in size based on qualities of said market, yes, but the intent of the market is not solely to enable those people.
Saying cryptocurrency only recently broke away from this is just a conclusion of your premise, which I disagree with entirely due to the existence of material like Bitcoin's whitepaper. To say they are on the same spectrum is just misleading.
Sure. It's basically the fact that the sentiment regarding crypto in the traditional world of financial advising has been equated to ponzi schemes. The value of the technology hadn't been validated or proven to point where holding BTC had any inherit value beyond what others who wanted the BTC were willing to pay for it. The market pressures weren't real.
However, smart contracts and the adoption of the blockchain by technology's bigger players has provided some validation to what's happening. Regardless of the white papers, and how one individually assessed the thesis, it didn't have market adoption and it wasn't as if BTC was actually producing something. So investing in BTC (a virtual commodity in limited value) had no real business purpose.
So crypto was in the same boat as ponzi schemes, until very recently. Now it's being taken seriously due to providing actual value.
The only thing BTC is really good for right now is to act as an intermediary between it and alts--since you can buy BTC and ETH with fiat, then transfer those to alts. BTC isn't a valid currency for transactions for a variety of reasons. It is simply the backbone of the crypto economy at this point, and the grandfather of the technology--so there's some lure to it as a limited asset that, so long as someone wants it, someone can sell.
Some people will eventually just want to prove that their freedom to make their own decisions is more powerful than rational arguments, no matter how good.
"You may be right on all points, but it's still my decision to make, you can't do anything about it."
Yes, but I was afraid that saying "even a basket of the 500 top securities can't come close to that, do you think the basket is so dumb that it wouldn't just put its money into BitConnect" wouldn't have the same impact :P
I mean, this being the internet, it could have started as a tongue in cheek joke and then when the money started rolling in the founders just kind of went with it.
Which I think is a potential lesson for HN readers: something can be funny, but still be fraud.
No. My USDT is on them deliberately putting that crap on the site in order to weed out anybody with a functioning brain. It's kinda like Nigerian prince scammer emails are full of deliberate grammar and spelling errors. You gotta filter out the noise in your conversion funnel.
Lots of crypto-coin stuff, including virtually all "name brand" crypto's, do the same thing. Most of the marketing is full of complete political, financial, and computer science nonsense. Anybody educated in any of those topics takes one look at the crypto space and goes "nope. sounds too good to be true. pass". What's left is a much more, shall we say, naïve set of marks to go after. You know, the kind that won't likely sue the shit out of those at the top of the pyramid... or even report them to the authorities. A very nice feature of Bitcoin is it specifically targets those with an anti-authoritarian bent--the kind who blather on about tax-theft, how the police should be deregulated, free market private industries and how the system of law should be replaced with cold, hard, unfeeling computer programs. If you were a scammer, wouldn't you want to target a group of people who wouldn't in a million years report you to the police?
Good stuff. The "crypto space" is an amazing thing to watch. Never a dull moment.
I disagree, lots of smart people who know it's bullshit are still involved (because it's very easy money if you know what you're doing). Any sort of tangible value is utterly irrelevant, what matters is future market opinion. Quite the same for gold, stocks, forex, or anything else, just with much greater volatility.
> If you were a scammer, wouldn't you want to target a group of people who wouldn't in a million years report you to the police?
Most of the fresh faces that make the bubbles happen don't care about any of that stuff, they are just blinded by greed and will get burned for it. The ancap/libertarian ideologues who have been involved for years are the ones who are worth ridiculous amounts of money these days.
The fact that it's a relatively large community of fresh millionaires/billionaires (they won't tell you, but that's a huge percent of people involved in crypto for 5+ years) with an unwillingness to convert to fiat currencies (revoking citizenships to avoid taxes, even) does mean that there's a willingness to put money in marginal opportunities.
People don't get involved with pyramid schemes because they're too dumb to see that they're pyramid schemes (well some might). They do it because they delude themselves in to thinking that they're getting in near the top.
There are plenty of large long-running "pyramid" structured marketing companies that are totally legal though. Just because it's a pyramid scheme doesn't mean it's a ponzi scheme nor automatically imply that it's exploiting people.
Just wanted to make that distinction. Not commenting on BitConnect directly.
Useless pedantry. A scam is a scam no matter what you call it. Getting caught up deep in terminology is a great way to for shysters to obfuscate any wrongdoing. These "business structures" are all part of the broader category called "things that are a scam".
Multi-level marketing is perfectly legal if you are selling a real product. If you are selling stock in your business that doesn't actually produce anything except for marketing materials to sell stock then not so much.
Funny thing, I noticed because it is using an old version of our 3D player on their home page (the 3D robot), and they are getting an incredible amount of traffic.
It's almost shocking how transparently dishonest they are. And yet people put real money (well, I suppose real bitcoins) into a black hole like this...
Through my experience watching people in MLMs (and getting way too close to the event horizon once), I learned that scammers and greedy people tend to hang out together (the latter usually becoming either victims or overzealous lieutenants of the scammers).
Was bitconnect cheating though? I totally thought it was possible that they were a ponzi scheme until I ran my own bitcoin trading bot.
But, don't take my word for... if you look at bitcoin trading bots that you can run yourself (many example on youtube of people running their own), bitconnect's return rate was significantly lower than typical bitcoin trading bots.
So, if bitconnect was getting typical returns (and it's safe to say they should be getting at least 2%, which only puts them in the top ~60% of bitcoin bot operators), they could have been taking more than 1% for themselves and still returning their "high" level of returns -- without running any sort of ponzi scheme!
Seeing my own bitcoin trading bot in action led me down the path of investigating stock trading bots and high speed trading within banks. The more I learned, the more I realized the real ponzi schemes are the national banks. That sounds crazy until you realize that with fractional reserve banking, they can take (for example) $1000 that you deposit and lend out 90% of it -- they only have to keep 10% of deposits deposits in reserve! Yet, most of them pay you less than 1%/year in interest. If I can make 4%/day on $1000 in my basement, how much do you think giant banks can make with your $1000?
I would highly recommend running your own bitcoin trading bot if you've got $1000 to spare. I'll refrain from recommending a specific one for fear of sounding biased, but it will completely change your outlook on what bitconnect could be. More importantly, it'll probably make you a decent chunk of change that you can cash in at anytime (unlike bitconnect's CD model).
Bitconnect claimed to be running a trading bot but everyone said they were just running a ponzi scheme because the returns were about 1%/day... even though they refunded everyone's coins when they stopped the lending bot program. I've never heard of a ponzi scheme that can return everyone's money when it closes up.
Not to mention, I think it's completely possible they were actually running a real trading bot because you can run your own trading bot and earn more than 1%/day very easily. People here really don't like to hear facts because it's easier to go with your gut feeling about some paradigm you've never heard of than doing the research, so they downvote any comment that says bitconnect was anything other than a ponzi scheme (or they'll call it a pyramid scheme if they really want to prove they don't know what they're talking about).
The trading bot uses BTC, ETH or USDT as a base currency and then buys alt coins with the base currency then sells them back to the base currency of your choice using an exchange. If it's configured right, it will make dozens of trades a day for small profits, which add up through the day (and night).
I personally run the bot called "Profit Trailer" and use it with the exchange "Binance". I use Binance because you can buy their coin and get lower fee trading by using their coin to pay for the fees.
Yeah, HitBTC has the most volume, and it has a terrible reputation. See all the reports of "maintenance issues" when a coin traded there can be sold at a higher price on another exchange.
HitBTC sucks less than a lot of other exchanges IME. It's not my favorite exchange but it's decent enough that I rank it pretty highly.
I have noticed that if you look at reviews for different exchanges, most will have a large amount of negative reviews. Some deserve it but I suspect that a lot of the reviews are not real - competing exchanges may have paid someone to write fake negative reviews.
Not saying HitBTC is the best or anything.
As an exercise, try this: Take the name of your absolute favorite exchange, combine it with the word "review" (sans quotation marks) and do a Google search for that. Look through the results.
Remember when MtGox was transparently dead, and people were still sending in bitcoins? There are an awful lot of incredibly gullible people into this stuff.
> SEC seizing remaining assets (if any) and re-distributing then?
That is unlikely to pay out to someone who bought after BitConnect was shut down.
Generally speaking, when a regulator resoles a Ponzi scheme they take the promoter's assets and help put it into trust. That trust has two jobs. One, to sue those who sold their BCC before the scheme unraveled [1]. And two, to distribute cash to those who lost money.
> it was quite literally just a bare-bones ponzi scheme, where you deposit your money (Bitcoin) on their website, buy their token, 'lock' your funds for some amount of time, and you are promised very high interest rates while encouraged to re-invest your returns.
> What has happened today is Bitconnect has closed the exchange on their website, and so users flocked to some of the only other exchanges (of dubious reputation, since no reputable exchange wanted to list the BitConnect coin) in order to sell their now-worthless tokens, resulting in losses of around 90% today:
> Many famous Youtubers and other individuals with influence convinced hundreds of people to put their money into BitConnect in order to profit off of referrals
One of the Youtubers, Cryptonick said clearly on his Youtube account that he was 17 years old.
Do you know that as a fact? I'm not trying to defend bitconnect, I just think it's dangerous living in a world where people state things as facts that have not been proven.
People often cite the high rate of return from their trading bot as "proof" that they're a ponzi, but I don't buy that because run my own bitcoin trading bot and the returns are more than triple bitconnect's average.
People much smarter than I who are running the same trading bot get even higher returns than I do. I think bitconnect's return rate was low because they were skimming the returns, which explains why they would take other people's money even though their bot works... because they can make even more by providing it as a service.
Worse, fake BitConnect support accounts on Twitter are “helping users expedite” BCC to BTC by having them send their BCC to these pop up Twitter accounts. One has over 30k BCC. Yes the price crashed but still..
I've been to a MLM conference once (or well, a conference by a company who distributed purely via MLM) and I saw people buying into it as well. When I googled them (this was back around 2006), I saw tons of domains and websites with these products all from people with their own "company" (lol).
You know what sells? Sampling, and success stories. The first thing I got told is that I must believe in the product. Yeah, that's true with any product, but where's the proof? Well, you can convince people with sampling. As for the success stories, people high on the pyramid are around at these conferences as well. The brother of my aunt (cold side) had earned more than a million with this MLM scheme. Which got me to check out the conference in the first place. At the conference he appeared to be well respected within the scene. I didn't know this beforehand (my aunt told me afterwards even though she got me in contact with him) but what did he do before that? Well, he was in a cult. Now he was a hardcore Christian in a MLM scheme. As they say, "the apple doesn't fall far from the tree."
I'm not at all surprised there's these MLM-esque videos related to cryptocurrency out there. As far's I'm concerned, BitConnect is just the tip of the iceberg. We haven't witnessed the mask falling from Tether yet (many red flags have been raised though), nor Bitcoin in general (many red flags as well). Bitcoin value has been going down the past days, btw, even before BitConnect announcement. You can esp see the decline from Jan 15.
Had a very similar experience - a friend of our family (also a member of a, let's call it, high-intensity christian denomination) got started in a MLM (MonaVie) and invited me to their "internal" event (one aimed at people already in the network).
Oh. My. God. What I saw there was a textbook definition of a cult, a pure affective death spiral[0] instantiated in our material world. People were literally one-upping one another in telling how happy they are by being the part of this MLM, and how happy they will be when it makes them rich. The overall atmosphere was pretty similar to that Bitconeeeeeeeeeect video.
> The first thing I got told is that I must believe in the product.
Yeah, that's the thing that kept me from getting recruited into MLMs back when I was more naïve about people involved - I could tell the products were bullshit, and selling them required you to lie about either the qualities of the product or your expertise on the topic (in case of financial products). Both of which I find to be despicable behaviour.
"An affective death spiral (or happy death spiral) occurs when positive attributes of a theory, person, or organization combine with the Halo effect in a feedback loop, resulting in the subject of the affective death spiral being held in higher and higher regard. In effect, every positive thing said about the subject results in more than one additional nice thing to say about the subject on average. This cascades like a nuclear chain reaction."
I'd never heard of MonaVie so I Google'd it and read the Wikipedia page - was slightly surprised to get Amazon adverts for $40 bottles of fruit juice at the same time....
On the one side you've got an exciting unregulated universe developing at a very fast pace (with some really dodgy characters). On the other side you've got the traditional press, government and banking world, half tempted to embrace it but scared and quick to dismiss it... In the middle are the pundits mostly losing money.
It's a great time to be alive, this time will definitely be remembered in a few years, like the dot-com boom is.
That's only because people wanted to reduce exposure to crypto today, and USDT is the closest approximation to that available for some exchange-committed funds.
Isn't the entire point of it to be pegged 1USDT === 1USD? Obviously it fails at that by being backed by nothing like enough USD, but what does it being worth $1.07 even mean? Also, where do you sell Tethers given Bitfinex won't exchange them for USD?
You can't without difficulty, you have to convert them to BTC or ETH and send them to Coinbase or other reputable exchange then cash out in fiat, in a window where all three securities wallets at respective exchanges aren't in maintenance, network isn't blocked by cryptokittes, and you've passed all AML/KYC including possibly justifying where incoming has came from. There are a lot of people that will find cashing out to fiat very difficult hence why some are parking in Tethers even though they aware of the dubious nature, and thus tether is trading at greater than a dollar. Personally, I wouldn't want to touch tether even for a few minutes, as sod's law it would be my luck that Securities & Futures Commission of Hong Kong or Hong Kong police decide to act just at that moment I buy tethers (well technically the problem will be once it's on TV and value drops to 0).
doesn't the fact that its trading at 1.07 mean that tether doesn't have easy access to USD or an easy way to exploit the arbitrage. tether as a company can take USD and print tethers. so they could take USD $100, print 100 tethers, exchange them for USD $107 and walk away with $7 profit. i don't think people would even be mad if they did this. this is exactly what they should be doing to preserve the peg.
People have, in fact, been getting mad when it appears they may have been doing this because people are weird like that. (Though I don't think there's enough market depth for that particular Tether-related arbitrage to be profitable, unlike some of the other options.)
I continue to be astounded that the BitFinex boys haven't been locked up for the blatant fraud they've committed. If the feds don't get them, the Russian mobsters will.
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.
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.
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.
>> Why don't they ask people for a dollar for each Tether coin
AFAICT they cannot bank in dollars at the moment, which is where the origins of the tether currency lie in the first place. They say that theey have the money to back it... but given they minted a quarter billion over the last three days seems a little less than credible.
> 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.
They could do that, but why would they when they can instead ask people for a dollar for each Tether coin and then spend those dollars on crack and hookers?
Well, someone might do what you describe - or, instead, they might say that they will store those dollars indefinitely but actually spend them. Why should they care about being always able to exchange the Tether back to a dollar, when they can simply take the cash instead?
Nothing can be more legit about a half remembered third hand account from an anonymous Internet source.
My default assumption when I see a cryptocurrency exchange is that it is either fraudulent or incompetently run, because that has been the case overwhelmingly in the past. It takes extraordinary evidence to make me trust one.
If you trade it for bitcoin someone is selling you that bitcoin for tether. That person will go ahead and trade that tether for some other coin.... rinse repeat, but in the end someone is holding that Tether, if exchanges stop accepting tether eventually your only option is to cash out to USD. USDT is basically being used as a trade coin, to avoid cashing out (maybe to avoid taxation) or to speculate on USD with the intent to eventually redeem for USD.
At some point someone will try to cash out on the tether. And that's when we'll find out if Bitfinex really has the USD reserves to back that as they say they have.
But it's getting harder and harder to believe that money really exists.
Tether keeps getting printed by the millions specially when bitcoin is on a downtrend (just today 200M was printed). For some reason I doubt someone wrote them a check for 200M USD today.
Also Bitfinex never completed or released audits they promised.
The more you dig the more it looks like Bitfinex is printing fake money to pump cryptocoins.
I keep trying to wrap my head around the economics of this and maybe give Tether the benefit of doubt. I think the most damning technical detail is that there is no client-side wallet. We can't trade Tether amongst ourselves or engage in any trades that Tether doesn't have at least indirect control of.
The most damning thing for me is that none of the many exchanges trading tethers allow you to trade them for US dollars. The only way to cash out of tether now is to buy cryptocoins and transfer them to a non-tether exchange.
Basically I think the tether are fraudulent. I do not have proof but they likely are. What is the best way to make money on them? Can one short tether?
They say it's their "institutional investors", they never release who these are (some people say it's Bitfinex themselves), they never release what bank they use or which country is the money deposited in.
It's rotten to the core... The consensus is that they either don't have that money at all (most likely scenario) or that if they do it's all dirty money and they are operating a money laundry scheme....
Unless they would prove to the public and/or competent regulatory authorities that they definitely have done that, they should be considered as "printing" this money.
Proven reserves count, claimed reserves don't. If USDT is "covered" by reserves that are claimed but not verified, then USDT is not covered.
Bitfinex buys cryptos with them on their own exchange. They get free cryptos, and everybody else gets monopoly money in exchange. Tether is such a scam it's unbelievable.
Bitfinex should then sell that crypto for real USD on other exchanges. They could make a killing and then somehow launder the money so that when the Tether scam is exposed, they are safe with real hard USDs.
That's what I'm saying. If they are actually able to always trade at very close to USD every day for over a year, does not that show stability in the coin? If it is, in fact, printed money, then it keeps working so far. Just like USD.
They did give arguably one of the best memes in the cryptocurrency community though. [1] I'm sure you will see many a cryptocurrency thread today with some variant BITCONNNNNEEEEEECCCCC as a top rated comment.
BitConnect is definitely a ponzi, but I think this sets the wrong precedent. Exchanges should have voluntarily delisted BCC (many already have, but it still trades on some markets and is listed on coinmarketcap) rather than being forced by threats from the government. This gives regulators credence as our protectors and suggests they will try these strongarm tactics again in the future.
The regulators exist because the entire history of our financial and legal system demonstrates that companies frequently don't "voluntarily" do the right thing when there's money to be made.
Nice to see a photo of something other than two golden Bitcoins. People who take & sell photographs of golden Bitcoins must be making almost as much money as Bitcoin investors, jeez.
I don't understand the law here. Are ponzis only illegal when you make money on it? How all those 'victims' are able to sue 'scammers' while only difference is they were late to the scheme?
A couple people I follow have called it a complete ponzi scheme for months. I hope those behind this get what they deserve: a lot of bitcoin and a lot of flaming paper bags on their porch.
What has happened today is Bitconnect has closed the exchange on their website, and so users flocked to some of the only other exchanges (of dubious reputation, since no reputable exchange wanted to list the BitConnect coin) in order to sell their now-worthless tokens, resulting in losses of around 90% today: https://coinmarketcap.com/currencies/bitconnect/
Many famous Youtubers and other individuals with influence convinced hundreds of people to put their money into BitConnect in order to profit off of referrals, leading to a lot of unfortunate losses and a lot of delusion and misinformation among devoted investors. The general sentiment towards those that lost money due to BitConnect has been a mocking attitude in the cryptocurrency investment communities, as BitConnect has been referred to by many as a blatant ponzi scheme for months.