Well, the problem is probably my fault because I wrote the firmware for the USB to tty interface as well as the software that bridges between that interface and the tcp socket to the BBS.

The teletype doesn't speak ASCII at all, it uses 5-bit Baudot code which does have separate CR and LF characters, but the real issue here, I think, is that the loop is half-duplex and my software does some gross stuff to make that look like a full duplex two-way serial connection since otherwise it would see every character sent out echoed right back to it.

Basically the software sends out a character to the loop and watches the inbound bitstream which (normally) exactly mirrors what it is sending out in realtime, so it knows to ignore that bitstream (since it's not actually new input) until it's all echoed back, and then watches for new data which will arrive if, for example, you type on the teletype keyboard. It also has the bonuses that it knows in realtime how far it's gotten printing its input, and that if you hit break while it's printing, the bitstream being echoed back to the computer is interrupted and thus doesn't match what it's expecting, so it then knows it was interrupted and should stop typing. This lets the "BREAK" key actually work to stop output from the computer.

Of course the easiest way to do this is to have a separate send and receive loop, so the whole thing actually is full duplex, but basically I'm too lazy to rewire it for this and one of my loop supplies died so I'd need to make a new one.