Prediction Markets, Explained
Feb20

Prediction Markets, Explained


Every question answered about prediction markets.

What are Prediction Markets?

At its core Prediction Markets are Futures Markets.

 

It’s based on a binary event where something either will or won’t happen. In the finance world, participants trade with contracts where the payoff will vary depending on the outcome of a future event. Prediction markets make the result of this future event tradeable.

Essentially it’s placing a bet on the probability of specific results in certain situations, such as elections, sales of a company, price fluctuations of commodities, even changes in the weather.

The value of a bet will in most cases reflect the probability of an outcome materializing.

We use the word ‘bet’, but how is it different from gambling?

The outcome becomes more predictable over time.

 

This is because the payoff depends on the accurate prediction of an outcome of an event. Therefore, people will put in more effort to come to the most accurate conclusion.

As a larger number of people do more market research to come to the most likely conclusion, the predicted outcome will lean more favorable to one side.

If you place a bet on a coin flip, the outcome will always be 50% heads, 50% tails. There are no external market conditions that will influence the outcome. Luck plays a major role, and this is called gambling.

But prediction markets rely on the collective wisdom held by a group of people on the probability of a future event materializing.

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How do prediction markets work?

It is often tied to a contract based on the outcome of a future event.

 

A good example to use is presidential elections.

Futures contracts can be structured to pay $1 if the predicted outcome materializes and $0 if it doesn’t.

If a futures contract, stating that Candidate X will become president trades at 70 cents, that means, according to the market, there’s a 70 percent chance that Candidate X will win the elections.

If Candidate Y’s contract trades at 30 cents, the market puts their chances at 30 percent.

If the contract that you bought supports the eventual outcome, you will get $1 for that contract. If the outcome goes the other way, you get nothing.

As time goes by and more and more people buy the contracts, the prices will fluctuate depending on market conditions and the combined information held by market participants.

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Why are prediction markets so efficient?

It relies on the collective view of many, not just one person’s research.

 

It is assumed that a group of people will hold more substantial and a wider range of information on the market as a collective, than individuals would as singular entities.

Participants are also putting down real money towards the outcome of a future event. The economic incentive is, therefore, to either make sure you are an expert in the field or do extensive research and analysis to come to the most likely outcome.

The theory is that if you have a stake in the outcome, you will put more effort and research into coming to the most accurate conclusion.

What impact does Blockchain technology have on prediction markets?

The biggest advantage is decentralization.

 

Decentralization means the removal of a middleman or central authority that has to administer trades and bets.

As a result, fees are significantly reduced because there’s no third party involvement necessary. Blockchains are trustless environments which mean participants can simply enter a predictive contract without the need of a broker to manage the trade.

With a centralized platform, information regarding the prediction market might be withheld by the central authority to give them an advantage over the market participants.

With a decentralized system, there is no central authority, and all information regarding the market is publicly available to everyone.

How does the concept of prediction markets apply to real case usage?

It becomes really useful when voting in dispute resolutions.

 

These markets are created to trade the outcome of events and can be used as oracles as well, so they have wide application.

Let’s take a decentralized freelancing market, for instance.

A freelancing market built on top of a Blockchain network comes with all the benefits of a decentralized system, such as reduced fees, no censorship and no limits as to the value and complexity of tasks.

But it does also mean there’s no centralized authority to handle disputes. A dispute resolution system in such a market, therefore, become very important and is generally achieved through voting, similar to consensus achieved in prediction markets through the wisdom of the masses.

There is a big problem though, and that is scalability.

Why is scalability a problem?

Funnelling voting resources create a bottleneck.

 

On other networks where consensus is reached through a voting mechanism, everyone can vote on everything. There is no voting hierarchy. That’s like having just a Supreme Court in a traditional legal system, they have to hear all cases, thus creating a bottleneck.

This is not feasible for a decentralized freelancing marketplace as there might be several disputes going on at the same time between different freelancers and job creators. They need to be resolved as quick as possible for the freelancer to get paid and for the task creator to get the finished product.

How can decentralized freelancing networks achieve better scaling in dispute resolution?

The answer lies in how voters are selected.

 

A Blockchain-based freelancing network like, for instance, CryptoTask, introduces review panels that are randomly selected for each task. Reviewers can check off-chain if they were selected for a specific task dispute and vote if they were. All they have to do later is to prove on-chain that they were in fact selected to vote.

Unlike prediction markets, where the value of an outcome on an event will continuously change as participants place bets, the value of a task in the decentralized freelancing market is predefined.

Task markets, therefore, scale much easier as a review process is only necessary in the case of a dispute. In the majority of instances, however, the freelancer and the task creator will not need to enter into arbitration.

How will a review process work and what are the benefits?

It starts with putting down a deposit.

 

With a review system like that of CryptoTask, reviewers are token holders that stake an amount equal to the task value that they are putting themselves forward for as a potential reviewer. It means that being a stakeholder, you already have a chance of being selected. That chance is directly proportional to that individual's stake, so this prevents sybil attacks.

If they do, however, get randomly selected to be a reviewer and the task goes into dispute, they are required to cast a vote on whether or not they think the task was actually completed. If a reviewer votes against the consensus or does not vote at all, they do not lose any certain percentage of their staked amount.

Some of the benefits of such a system include:

  • Selection happens in secret to prevent reviewers from influencing the consensus through collusion.
  • A two-stage voting process (secret commit and then reveal) means reviewers can’t wait to see how other reviewers voted and then just go with the consensus.
  • Reviewers would generally be professionals with a relatively large token stake and therefore in a good position to escalate and vote on a dispute.

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Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.



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Bitcoin, Ethereum, Bitcoin Cash, Ripple, Stellar, Litecoin, Cardano, NEO, EOS: Price Analysis, Feb. 19
Feb20

Bitcoin, Ethereum, Bitcoin Cash, Ripple, Stellar, Litecoin, Cardano, NEO, EOS: Price Analysis, Feb. 19


The latest top 9 cryptocurrencies analysis, make sure you check it to find out what’s going to happen with the prices.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

The market data is provided by the HitBTC exchange.

After failing to stem the rising popularity of cryptocurrencies through their warnings, the central banks have stooped down to funding anti-crypto campaigns. This move will only reduce the confidence in the central banks and encourage new investors to enter the crypto world.

At the same time, the Venezuelan government is planning to launch a new cryptocurrency called the petro. Each new coin will supposedly be backed by one barrel of oil. However, there is a big question on the central bank’s credibility that is issuing the petro. Analysts believe that the petro is most likely to end up not bringing the expected results.

On the other hand, Bitcoin continues to attract big-ticket investments. After the recent fall, there are reports of a trader buying about $400 million worth of Bitcoin between Feb. 09 to Feb. 12.

People are gradually turning positive on Bitcoin once again. Shark Tank’s Robert Herjavec believes that Bitcoin will top its 2017 mid-December high of about $20,000 in the short-term.

Let’s see what does the chart pattern forecast?

BTC/USD

Traders who follow us are carrying long positions that triggered on Feb. 15. We had recommended booking 50 percent profits at the 50-day SMA, and most traders should have sold when Bitcoin rallied to an intraday high of $11,348.99, yesterday, Feb.18.

We had also recommended trailing the remaining positions with a suitable stop loss. As every trader has a different trading strategy, we did not provide any specific trailing stop loss.

BTC/USDThe BTC/USD pair is trading inside an ascending channel. As long as it trades above the support line of the channel, it can reach $12,000 levels.

In case of a fall, the support line of the ascending channel and the 20-day EMA will be acting as strong support. If these two levels break, the price might fall to $8,400. Therefore, traders who are still left with 50 percent positions should keep the stop loss at $9,800.

We did not recommend closing the complete position because Bitcoin will become positive once it sustains above the descending channel.    

ETH/USD

Ethereum rallied close to the 50-day SMA yesterday, Feb. 18, reaching an intraday high of $979, close to our target objective of $1,000. Hope traders would have book profits on 50% positions.

ETH/USDFor the past four days, the ETH/USD pair has been taking support at $900 levels. Therefore, we recommend raising the stop loss on the remaining position from $775 to $900. The target objective is a move to the resistance line of the descending channel.

If the bulls succeed in breaking out of the channel, a move to $1,200 is likely. On the other hand, if the bears break down below $900, there might be a fall to $780 levels.

BCH/USD

Our target objective on Bitcoin Cash was a rally to the 50-day SMA, close to $1,800 levels, however, yesterday, Feb.18, it turned down from $1,639.251 levels.     

BCH/USDOur initial stop loss was placed at $1,100. We want to raise this stop loss to $1,400 because if most cryptocurrencies turn down from their resistances, the BCH/USD pair might follow suit.

So let’s not lose money on it.

On the upside, please book partial profits above $1,750 and hold the rest with a trailing stop loss for a target objective of $2,000.  

XRP/USD

Contrary to our expectation, Ripple continues to trade in a tight range. It has not participated in the pullback like the other top cryptocurrencies. The only consolation is that it is sustaining above the 20-day EMA for the past four days.

XRP/USD

We had suggested an initial stop loss of $0.86, but we should raise this stop higher because if the top currencies turn down, the XRP/USD pair will also fall sharply. Please raise the stops on the complete position to $0.95.

If the tight range resolves on the upside, please book profits on 50 percent position at $1.45. Trail the remaining position for a second target objective of $1.74.         

XLM/USD

Stellar also has been stuck in a tight range for the past four days. It is trading close to our suggested buy levels of $0.45.

XLM/USD

We anticipate a move to the upper end of the range at $0.63. But for that, the XLM/USD pair will have to break out of the 50-day SMA.

On the downside, supports lie at the 20-day EMA, the horizontal line at $0.41, and the channel line at $0.38.

For now, please maintain the stop loss at $0.30 on a daily closing basis (as per UTC). We need to consider raising it in a couple of days.

LTC/USD

In our previous analysis, we had recommended to book profits on 50 percent positions at $240, and Litecoin reached an intraday high of $239.5 on Feb. 16. We hope that the traders would have sold half of their positions established at $180.

LTC/USD

For the past four days, the LTC/USD pair has been trading in a range of about $208 to $240. A breakout of this range will be a positive move, and we anticipate a rally to $270 and then to $307.

Our stop loss is currently at breakeven. We want to reduce our risk and pocket some of the paper profits. That’s why we should raise the stops on the remaining 50 percent long positions to $200.

ADA/BTC

We have been bearish on Cardano for the past few days because it has broken down of the bearish descending triangle pattern. Though a pullback to the breakdown levels of 0.00004070 is possible, the cryptocurrency remains negative as long as it trades below the downtrend line of the descending triangle.

ADA/BTC

The ADA/BTC pair is likely to slide to the next support level of 0.0000246. Our bearish view will be invalidated if the digital currency breaks out of the downtrend line, because a failure of a bearish pattern is a bullish sign.

NEO/USD

As NEO is trading inside a descending triangle pattern, we had recommended a quick trade with a long at $121 and a target objective of a rally to the downtrend line of the descending triangle pattern.   

NEO/USD

The NEO/USD pair reached our target objective on Feb. 17, reaching a high of $138.35, where the traders must have closed their positions.

An attempt by the bears to sink the cryptocurrency failed Feb. 18. It is currently trying to break out of the downtrend line of the descending triangle, which will invalidate the bearish pattern. If the bulls sustain the breakout, we might see a rally to $169.

On the downside, the moving averages and the horizontal line at $120.33 might act as strong support.

EOS/USD

As expected, EOS turned down from the downtrend line yesterday, Feb. 18. The 20-day EMA is at $9.76, and the 50-day SMA is at $10.8.

EOS/USD

We believe that the bulls will face stiff resistance in the zone of $9.76 to $10.8. Therefore, traders can initiate long positions above $11, if the EOS/USD pair sustains the level for four hours. The target objective on the upside is a rally to $15 levels.

The stop loss can be placed at $8.8.

The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.



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Don’t believe the hype. The five largest “ICO exit scams”: Expert Take
Feb20

Don’t believe the hype. The five largest “ICO exit scams”: Expert Take


More than $20 million stolen by five largest ICO exit scams.

In our Expert Takes, opinion leaders from inside and outside the crypto industry express their views, share their experience and give professional advice. Expert Takes cover everything from Blockchain technology and ICO funding to taxation, regulation, and cryptocurrency adoption by different sectors of the economy.

If you would like to contribute an Expert Take, please email your ideas and CV to a.mcqueen@cointelegraph.com

The majority of the world's financial markets are now tightly regulated, and for that reason, fraud is becoming increasingly rare. Enterprising scammers are turning to fintech innovation which is currently unregulated – cryptocurrency.

Essentially, a crypto scammer aims to persuade 'unwitting investors' to buy fake coins by transferring either fiat currencies or cryptocurrencies. In this column we will only focus on the so-called ‘ICO exit’ scam, not thefts, hacks or Ponzi schemes.

We define a project as a scam only when it is proven that the money collected during a pre-ICO or ICO was stolen and the team has disappeared. This means the fraud was preplanned and the theft of investor funds deliberate.

PlexCoin ($15 million)

The PlexCoin ICO was halted in December 2017 by the US Securities and Exchange Commission (SEC) in response to an official complaint that founder Dominic Lacroix was defrauding American and Canadian investors. The complaint alleged that Lacroix was advertising an astronomically high return of 1,354% (that the SEC determined was unable to be delivered), pushing forward a group of fake experts to bring legitimacy to his project, and trying to obscure his past financial crimes, which included defrauding investors in a micro-loan venture.

The SEC has frozen all of the $15 million gathered by the ICO from its launch in August 2017. Lacroix was jailed, and the PlexCoin parent company fined $100,000. About $810,000 was still being held by payment processing company Stripe while the rest of the funds were located in various cryptocurrency wallets belonging to the Lacroix. It’s unclear exactly what charges will be brought against Lacroix and what will happen to the money deposited in his wallets. However, PlexCoin was one of the largest attempted ICO exit scams in history, which thankfully was nipped in the bud.

Benebit ($2.7 – $4 million)

Benebit claimed to use a Blockchain token system to unify customer loyalty programs, like frequent flyer miles. This ICO had all the trappings of legitimacy, including a moderated Telegram channel with over 9,000 members, a marketing budget of over $500,000, and promotions for the token pre-sale. With a novel concept, a serious-sounding white paper, and some well-spent marketing dollars, the Benebit team were able to generate a good deal of hype, and investors began to buy in.

However, things started to go south when someone noticed that photos of the team appeared to have been stolen from a UK school for boys. Passport details provided by the ‘founders,’ were all fake. After this revelation, the team behind the scam began pulling down anything related to Benebit, including the website, white paper, and social media accounts. Estimates vary, but the scammers are believed to have walked away with at least $2.7 million and as much as $4 million.

Opair and Ebitz ($2.9 million)

A motivated community of small-time investors who put money into Opair and Ebitz are trying to track down a mysterious developer known only as Wasserman, the apparent mastermind behind two ICO scams which netted a combined total of 388 BTC.

Opair promoted a decentralized debit card system using its own token, XPO. Users discovered that the LinkedIn profiles of some of the team were fake and Opair rapidly vanished, but not before generating just under 190 BTC in its ICO in the summer of 2016.

Amateur investigations carried out by duped investors revealed that the mail servers for Ebitz were rerouting to the domain of Opair, which billed itself as a clone of ZCash with some small changes. The team, a self-described “group of ethical hackers,” were hoping to raise 500 BTC through their ICO, which started on November 28 2016. In two days users of BitcoinTalk spotted the shady connection of Ebitz’ MX records to Opair.

The Ebitz website was taken down soon afterwards, but the ICO did manage to gather about 200 BTC before disappearing; although many users speculate that the BTC mostly came from the developers to provide ‘fake volume,’ or the impression that many people had already invested in the project in order to boost trust and lure other investors to buy their token.

REcoin and DRC ($300,000)

On the face of it, REcoin (Real Estate coin) and DRC (Diamond Reserve Club) tried to do something ambitious and daring – create a cryptocurrency that was backed up with real-world assets – real estate and diamonds. Their founder Maksim Zaslavskiy claimed that both startups were fully staffed, lawyered up, and had already formed relationships with retailers and investors – none of which was true.

The SEC alleges that neither REcoin nor DRC had any “real operations”, that both startups had misrepresented their total level of investment, and that neither of the proposed projects had any tokens or anything to do with Blockchain whatsoever. SEC decided that REcoin and DRC weren’t ICOs at all and were actually securities, which led to Zaslavskiy’s arrest on September 29 2017. According to the SEC, Zaslavskiy did manage to rake in about $300,000 before being caught, despite he initially saying that funds raised from both ICOs amounted to over $2 million.

PonziCoin ($250,000)

Yes, PonziCoin is a real cryptocurrency, and yes, some very gullible people were separated from their money after investing in it. Even more surprising, the most recent PonziCoin, which bills itself as “the world’s first legitimate Ponzi scheme,” is actually the second PonziCoin to exist. The first one came out in 2014 and made off with about $7,000 in cryptocurrency, which by some estimates could have been worth over $2 million today.

Another PonziCoin project appeared in 2017 using the same web address.

Initially intended as a gag, it featured a public and open admission on its website that it was a scam. However, that didn’t stop some investors from pouring money into the ‘product.’ In total, a project, which openly admitted to being a scam, raised over $250,000, and, surprise, surprise, the ‘founder’ ran away with the cash (after being baffled that anyone would invest at all given their openness and honesty).

Six questions to ask

ICO exit scams thrive in the current environment of unbelievable profits, overwhelming hype, and the time-constrained nature of ICOs, which make investors feel like they need to invest quickly or risk losing out on a good deal. No matter if you are just starting out or are a seasoned investor, every single decision needs to be analyzed thoroughly – there is no substitute for due diligence. If you are considering investing in an ICO, we highly recommend taking the following steps:

  1. Read the ICO white paper thoroughly. Does the concept make sense to you?
  2. What problem is the product solving? Does it make business sense?
  3. Study the team and their experience. Get in contact with representatives and ask difficult questions. Dig into their history, LinkedIn profiles, and previous jobs. Helpful hint: scammers will sometimes use fake pictures. Google’s reverse image search will work wonders.
  4. Check forums to gain insight into what the cryptocurrency community is saying about the project. Many people there have been victims of ICO scams, so they will have a sharper eye for red flags.
  5. Make sure that the ICO is planning on using a trusted escrow company to handle funds for their ICO. Escrow gives you an additional layer of protection, ensuring that you will at least receive the promised tokens from the ICO before parting with your hard-earned capital.
  6. Take a look at what rating companies are saying about the ICO. If the new project isn’t rated, there’s a high chance that it’s a scam. Also be sure to check and compare risk scores.

We believe that cryptocurrency is the future and that this current period of uncertainty is temporary, it is still wise to be cautious and prudent before investing your hard earned fiat or cryptocurrency in new ventures.

The views and interpretations in this article are those of the author and do not necessarily represent the views of Cointelegraph.

Brian Kean is the Chief Business Development Office at the investment evalutation agency, ICORating. He has extensive experience in investment funding and communications in retail businesses worldwide.



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Tezos Co-Founder Kathleen Breitman: Platform Will Soon Be Launched
Feb20

Tezos Co-Founder Kathleen Breitman: Platform Will Soon Be Launched


Tezos’ co-founder Kathleen Breitman has promised to launch the platform in several weeks, despite ongoing lawsuits and no access to ICO funds.

Kathleen Breitman, the co-founder of the self-governing Blockchain protocol Tezos, has promised to “go rogue” and launch the platform in several weeks, despite ongoing lawsuits plaguing the project. The announcement took place during the UCLA Blockchain Lab’s Cyber Days conference Feb. 17-18.

Tezos raised a record-breaking $232 mln during its Initial Coin Offering (ICO) in July 2017. The project has since been a subject of scrutiny and multiple lawsuits over the question of its compliance with the U.S. Securities and Exchange Commission (SEC) regulations, among other things.

It is alleged that the tokens sold to US investors during Tezos’ ICO were actually securities. Since the company has not registered them with the SEC, this would constitute securities fraud.

However, at a UCLA conference which took place last weekend, Kathleen Breitman promised to “[go] rogue in the next few weeks” and release the “tezzies” tokens (XTZ) on their own terms, despite legal troubles. “Things needed to move forward. It’s unfair, but we need to ship the code,” Breitman added.

Notably, Tezos is managed separately, with Kathleen Breitman and her husband and co-founder Arthur Breitman controlling the project’s source code, and the Tezos Foundation controlling all the funds collected during the ICO.



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Wyoming Introduces New Bill To Exempt Crypto From Property Taxation
Feb19

Wyoming Introduces New Bill To Exempt Crypto From Property Taxation


A new bill proposed in the Wyoming state senate would exempt virtual currencies from property taxation.

A new tax bill has been introduced in the Wyoming state senate on Feb. 16 that would exempt virtual currencies from state property taxation, and suggests an effective date be provided for the tax exemption implementation.

Wyoming Senate Bill 111 was introduced by senators Ogden Driskill, Tara Nethercott, and Chris Rothfuss, along with representatives Tyler Lindholm, David Miller, and Jared Olsen. All are Republicans with the exception of Senator Rothfuss.

The bill received 26 “ayes,” from a mixture of Republicans and Democrats, 3 “nays,” all from Republicans, and 1 “excused.”

This Republican and Democratic backed bill comes as a growing bipartisan movement of US lawmakers are calling for more crypto regulation.

The bill is short and to the point, proposing a list of “intangible items” that should qualify for property tax exemption, like fiat currency, gold, cashier’s checks, and “virtual currencies.” Virtual currencies are defined as anything that digitally represents value as a medium of exchange or unit of value, and as well as not being recognized as legal US currency.

Taxation requirements for cryptocurrency profits in the US are a relatively grey area, with US citizens’ crypto assets being subject to federal property and payroll taxes. However, the personal finance service Credit Karma reported that only 0.04 percent of customers reported their crypto assets to the US Internal Revenue Service (IRS) in 2017 as of Feb. 13.



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Bitmex: Tether ‘Possibly’ Has Enough Cash Reserves, Could Still Be Shut Down
Feb19

Bitmex: Tether ‘Possibly’ Has Enough Cash Reserves, Could Still Be Shut Down


A report on Tether published by Bitmex Research shows that while it ‘possibly’ has enough fiat reserves, it is at risk of a shutdown by regulatory bodies.

Bitmex Research released an in-depth report on Tether today, Feb. 19, detailing the reasons why Tether is most likely backed by sufficient fiat reserves after all, and what problems with regulatory bodies Tether will most likely encounter in the future.

Tether is a digital token backed by fiat currency, supposedly pegged 1:1 with the US dollar. Due to Tether’s lack of enough publically released bank audits, there are rumors that Tether does not actually have enough fiat in reserves to redeem all Tether tokens with US dollars if the need would arise.

The Bitmex report attempts to refute those rumors by showing a possible correlation between the rising cash reserves of the International Financial Entities (IFE) banking category in Puerto Rico, under a section entitled “The lack of transparency may not indicate fraud.”

Cointelegraph recently reported that Puerto Rico may be emerging as a “crypto tax paradise.”

The Bitmex reports puts forward Puerto-Rican-based Noble Bank as a possible candidate for holding Tether’s cash reserves, mainly because it is the one of the two full-reserve banks in Puerto Rico that publicly operates with crypto.

However, there is no way yet to know for certain where Tether’s cash reserves are located despite the Bitmex report, for although their website’s “Transparency” page lists their current balances and claims they are “regularly audited” and “fully transparent,” the company actually dissolved ties with their New York-based auditor in January before releasing any full audits publicly.

The report also covers the Nov. 2017 hack of around $31 mln from Tether, which led to the company, in essence, demanding users upgrade their software in order initiate a hard fork and freeze the stolen funds.

The Bitmex report writes that this “demonstrated that Tether is effectively in complete control of the ledger, as they can force a hard fork at will and reverse any transaction — although there may not have been any doubt about Tether’s control beforehand.”

The report then questions why Tether “bothers to put the database on the Bitcoin and Ethereum blockchains at all,” arguing that it would be actually more cost-efficient for Tether to not pay miner fees and create its own public database.

The report also brings up the subpoenas delivered to Tether and the Bitfinex exchange in Dec. 2017, after which relationship between the two companies was officially disclosed, i.e. that they have an almost identical management team.

Bitfinex’s involvement with Tether had publicly been questioned by critics, most famously anonymous blogger Bitfinex’ed, who saw the arrangement as suspicious in part due to the fact that no third-party audit has yet been released of Tether’s reserves.

In response to the vitriol against Bitfinex posted online by Bitfinex’ed, the exchange has vowed to pursue legal action.

Bitmex’s research report writes that this relationship between Bitfinex and Tether actually was relatively public even before the temporarily-posted disclosure on Tether’s “About Us” page, citing Tether founder Craig Sellars’ Linkedin, which lists both companies.

The report ends with a listing of case studies of various online money-sending services that have been shut down by regulators over the years due to violations of money-laundering restrictions. This correlation drawn between these now-defunct services and Tether leads Bitmex to conclude that Tether “may also attract criminals and ultimately suffer the same fate.”

Bitmex has two concrete takeaways from their research into Tether, which it also recommends that investors do not hold onto long term:

“1. Reform the system to include KYC/AML procedures that allow the operator to easily block transactions or freeze funds. In order to do this […] Tether would just be turning into a traditional (or full reserve) bank.

2. Continue as is and risk being be shut down by the authorities at some point.”



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