Decidedly, the year 2018 is rich in ads destabilising for crypto-currencies. After all the adventures we have experienced during these last few weeks, it was the turn of Bloomberg weigh down the atmosphere by publishing an article revealing that a summons sent to the address of Bitfinex and its crypto-currency, Tether. Storm in a glass of water ? Real problem ? Let’s point out what we know.
Summons from Bitfinex : the facts
Before going into the heart of the matter, we should note that the summons sent to the companies that manage Bitfinex and Tether by the CFTC, the regulator american, date of… December 6, 2017. Therefore, it’s been almost 2 months. We can still question the timing of the publication of this “revelation” not very cool on the part of Bloomberg.
Nevertheless, the new who is not really, as one would expect, has done it again rocking the complex crypto-currency, which was beginning slowly to recover after taking in water on every side. For its part, Bitfinex has just made it known that she was regularly subject to legal proceedings and claims, legal information, and that their policy is not to comment on these applications.
Nothing to report, then ? Not really, because it only sweeps not the charges that weigh on Bitfinex and Tether. If there is still no evidence of fraud, many of the concrete elements must be at least arouse mistrust. It is, in any case, my opinion, and I will explain why.
Bitfinex, a company little transparent
It is not necessary to tell stories, the sector of the platforms of crypto-currencies is still nascent, hence poorly or not regulated. This opens the door to fraud and amateurism. But among the awards, there are the actors who we can be relatively confident and those who are really doubtful. Transparency is one of the ingredients of the trust. It clearly has not been included in the recipe, however to be successful, Bitfinex. For example, you will not find anywhere on the website of the platform the name of the company that manages it, in which jurisdiction it is located, its reference bank. He has even had the leak of the Paradise Papers to know the names of some leaders, such as the director of Tether, Phil Potter. This lack of transparency is not reassuring.
Of the banks, which, in turn, are throwing in the towel
The rate at which the firm’s foreign exchange bank is another signal disturbing on Bitfinex. Wells Fargo has decided not to accept the platform among its customers last year. The last I heard, it uses an account in ING bank in the netherlands after having had recourse to the services of a small Polish bank. This carousel bank does not prove anything, but it is all the same curious.
$ Source – Pixabay
Tether : the dollar reserves exist they really ?
The big cloud which hovers above the head of Bitfinex, it is his currency house, Tether. For those who are not familiar with USDT, the idea is simple : it is a crypto-currency whose value is pegged to the dollar. A USDT corresponds to a dollar. In principle you are able to exchange 1 USDT against 1 dollar. This means that the issuer must hold reserves in dollars, which correspond to the penny to the number of tokens USDT issued.
In theory, all this is perfect, except that the proof of its reserves is non-existent. In addition, the emissions of USDT have literally exploded in recent weeks. Tether was in the process of producing an independent audit by the company Friedman LLP, but it was cancelled due to the dissolution of the contract between the 2 companies. The decision was justified through the following statement :
“We confirm that the relationship with Friedman is dissolved. Having regard to the procedures terribly detailed, used by Friedman to analyze the books relatively simple Tether, it was clear that the finalization of the audit was not going to be possible in a reasonable period of time. Saw that Tether is the first company of this ecosystem to be the subject of such a procedure and want to attain this level of transparency, there is no precedent to guide the procedure, or a benchmark to measure its success. “
In this regard, I agree with Bitfinex, the procedure should be simple : the money is there, or not ? Why does it take so much time ? CoinDesk has wanted to know more on the side of Friedman, but the auditing company has not deigned to respond to the demands of the media.
Emissions of Tethers – source CoinMarketCap
In conclusion : the blur reign
For the moment, there are heavy suspicions that weigh on Bitfinex and Tether. The presumption of innocence is one of the basic principles of law. That said, the evidence in our possession make me say that it is better to be careful with these 2 actors. Before the implosion of Mt Gox, many rumors have been circulating.
Source : Coindesk, Bloomberg