A Non-Exhaustive List of Bitfinex and Tether’s Misdeeds and Red Flags

This is a living document that I intend to continue to update as I continue to research Bitfinex and Tether. I hope it will serve as a useful reference material for anyone who needs to try to keep in mind their many inappropriate behaviors. If you find any I missed, feel free to leave a comment. Update: since this is a living document I wanted to provide you an archive link of the original so you can see any changes that are made. You can find that here. If you believe I made a mistake then feel free to leave a comment. It is not an introduction or summary. For that you can look here:

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A Simple Deductive Argument Proving There Were Unbacked Tethers

There are certain claims and objections that I have to respond to frequently. Some people will still claim that Tether has never had unbacked Tethers. I am attempting to create a valid and sound deductive argument that will conclusively prove that is untrue. I love philosophy and deductive reasoning, so may do a few of these. If you want to respond, please respond in a manner that addresses the deductive argument, either in form or in challenging the soundness of the premises.

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Sunday Reads – Things I Found Interesting 2021-05-23

Stu claims many things, all on his personal Medium

Stu felt he had to respond to posts like mine here:

SafeMoon the US Based, Ponzi-like, FBI Related Token

SafeMoon is a popular cryptocurrency (especially on places that prey on unsophisticated investors like TikTok) and based on reporting by Protos Media it seems to be a shit-show. Founders are US based, apply for government contracts, and may even be paying people to shill it.

USOCC Signals Caution

As the former agency head departs for Binance US, the new head signals caution and review of crypto guidance. From Nikhilesh De at CoinDesk.


Helen Rosner wrote a brilliant piece at the New Yorker about the nature of exclusivity for restaurants.

Books I Read

Perennial Seller by Ryan Holiday – This was an excellent book that summarized creating and marketing ‘long-tail’ projects. Art and creations that you want to continue generating forever. I also highly enjoyed Trust Me, I’m Lying by Ryan as well.

Tabletop Roleplaying Games

Mustangsart showed off some prosthetics they were working on for a Witcher RPG, but they are a brilliant inspiration item for any other game masters.

TBM Games has a really cool homebrew for a time-traveling rogue.


Miguel Grinberg has a new Flask library I am really excited about thanks to its potential to keep me from having to write Javascript.


I appeared on the COINTELPRO podcast:

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The Best Case Scenario for Tether’s Activities in 2017

In 2017 Tether was issuing unbacked Tethers. This has been confirmed as part of their settlement with the New York Attorney’s General office. As an exercise in trying to ensure that I have not become overly biased around Tether what I will attempt to do in this article is construct the best case scenario for how Tether’s business was operating.

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Raphael Nicolle and the Founding of Bitfinex

Raphael Nicolle is the founder of Bitfinex. Before that he had an interesting path.

By day a helpdesk technician, during his free time Raphael became active under the account ‘unclescrooge‘ on BitcoinTalk. From this account he makes some interesting posts, including occasional climate change denialism, saying he would invest in illegal businesses, and at least one joke about underage prostitution to make bitcoin. First he got into pyramid schemes, schemes that were not legally registered, and then he got really into pyramid schemes, and then he started defending a pyramid scheme scammer (repeatedly), and then he lost all the bitcoins he gave that scammer.

Shortly after this, Raphael decides he will start his own OTC desk and his own lending program. People will lend him Bitcoin and he will guarantee them a 2% return per week. To make this money he said he would be performing arbitrage, which he described as ‘buy low and sell high’. (Astute readers will note that this at best an extraordinarily simplified definition of what arbitrage is.) This program appears to not have taken off, perhaps due to questions from other forum members about his advocacy for pyramid schemes in the past. The text of the post was later deleted.

After this Bitfinex launched! (Though Raphy could be found still trying to do what look like OTC trades.) Bitfinex was a brand new ‘Meta-Exchange’ that would allow people to trade at either Mt. Gox or at Bitstamp through the BitFinex interface. They also had their own exchange that was based on stolen Bitcoinica code. Bitcoinica was an exchange that was rife with security issues that had recently shut down. The unique feature for Bitfinex that made it attractive (besides the ability to aggregate liquidity across multiple exchanges) was the fact that they had margin and lending integrated into the platform. However, the fact that it was built on stolen code with a multitude of issues in the early months. However, eventually they started to even out. However, there were still some interesting posts including at one point Raphael even made sure to point out that his exchange was a bucket shop. (This was a fact that Vitalik Buterin had warned about in Bitcoin Magazine.)

Raphael gradually took a less and less public role in Bitfinex until (according to his LinkedIn) left his role as CTO the same month that the Bitfinex hot wallet was hacked. He is now interested in anti-aging and looking for an executive producer (he should get in touch with the chairman of Deltec).

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My Appearance on The Blockchain Debate podcast with Larry Cermak and Patrick McKenzie

You can find it here.

I had a ton of fun recording this podcast, however, due to time constraints I was not able to get to all my notes on whether or not Tether acts in good faith. I would like to summarize a few of the things I was not able to get to here:

  1. Bitfinex has used the bank accounts of friends and family of Bitfinex in order to service withdrawals.
  2. The firm who provided Tether’s last attestation is no longer operational, and Freeh, one of the lawyer behind it UPDATE: is no longer a lawyer is no longer practicing law, but may still be licensed.
  3. Tether advertised no KYC swaps between Bitcoin and Tether.
  4. Tether held tens of millions of dollars in the bank account of their General Counsel.
  5. The founder of Bitfinex was promoting ponzis right up until he announced Bitfinex.
  6. The founder of Bitfinex once described his own exchange as a bucket shop.

There are many more, but I just wanted to give you a taste of some of the stuff we ran out of time to get to.

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Predictions and Outcomes

At one point I tried to learn about a token called Kimchi. That token no longer has any volume or value to speak of.

I decided to summarize some facts about the failed crypto entrepreneur Jacob Kostecki. Today, the class action lawsuit against him has entered default judgement.

I wrote about a deeply exploitive scam called The Billion Coins. Unfortunately, that coin is still active and is still taking advantage of people. They have tried to rebrand to make themselves look more official, but are still the same group of scum.

I once wrote about a worthless token called slidebits. Now the creator himself removed the blockchain from his app.

I wrote an article presenting a bearish case for a token when I was applying to a crypto hedge fund. That token has a market cap 1/10 of it’s all time high. Though I must admit, it has not seemed to be affected by any of the issues I pointed out. Sometimes things just break your way.

I wrote an article taking an in-depth look at the Basis Protocol. In that article I suggested both that part of the system could be a security. Basis shut down to avoid securities scrutiny.

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