You have $1M in dirty money. Wire it to Tether for some Tethers. Go on Bitfinex and buy lots of bitcoin. Transfer the bitcoin to a legitimate exchange. Sell for clean USD.
This could be a very valuable (and lucrative) service in certain circles, I have no doubt. One thing that could jeopardize the livelihood (...and lives?) of people running a business in this space would be a steeply falling Bitcoin price. They would probably do anything to keep the price up. Like issuing more magic tethers and buying Bitcoin with them.
What does the extra layer of USDT really add legally, except for some added obfuscation that a few extra "intra-bitcoin" transactions would add as well?
(Genuine question, this is one of the more fascinating stories I've heard in a while :-)
It's my understanding that Tether transactions aren't traceable because there isn't a public blockchain...and possibly not even a blockchain at all. So the obfuscating step is the USD->USDT transaction. The rest of the process is getting clean money back.
Bitfinex doesn't accept USD, so if you want to buy on Bitfinex you have to use USDT.
I can imagine that there are bank accounts out there full of USD that, let's say, wouldn't pass KYC/AML. Those people can't use Coinbase/Gemini, but maybe they are welcome at Bitfinex.
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In all seriousness, who needs USDT when you (supposedly) got USD? Who would wire millions of actual USD to buy USDT to buy other coins?
Money Laundering?
You have $1M in dirty money. Wire it to Tether for some Tethers. Go on Bitfinex and buy lots of bitcoin. Transfer the bitcoin to a legitimate exchange. Sell for clean USD.
This could be a very valuable (and lucrative) service in certain circles, I have no doubt. One thing that could jeopardize the livelihood (...and lives?) of people running a business in this space would be a steeply falling Bitcoin price. They would probably do anything to keep the price up. Like issuing more magic tethers and buying Bitcoin with them.
But even then...
Why USD -> USDT -> BTC -> USD?
Why not USD -> BTC -> BTC -> BTC -> USD?
What does the extra layer of USDT really add legally, except for some added obfuscation that a few extra "intra-bitcoin" transactions would add as well?
(Genuine question, this is one of the more fascinating stories I've heard in a while :-)
It's my understanding that Tether transactions aren't traceable because there isn't a public blockchain...and possibly not even a blockchain at all. So the obfuscating step is the USD->USDT transaction. The rest of the process is getting clean money back.
Tether is on Omni layer. Its transactions are registered on the Bitcoin blockchain and I think that makes it traceable.
USD -> USDT and back is traceable using standard investigations of books and banking transcripts of entities dealing with Tether's managers.
Also, Tether is by now an internet-wide phenomenon. It's in the spotlight. And yet it keeps growing.
Bitfinex doesn't accept USD, so if you want to buy on Bitfinex you have to use USDT.
I can imagine that there are bank accounts out there full of USD that, let's say, wouldn't pass KYC/AML. Those people can't use Coinbase/Gemini, but maybe they are welcome at Bitfinex.
some exchanges don't deal in USD (only USDT)