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CTFC Subpoena Crypto Exchange Bitfinex, Tether FUD – B...
Bitcoin, Featured

CTFC Subpoena Crypto Exchange Bitfinex, Tether FUD – Bitcoin Crashes

Bloomberg has reported that the U.S. Commodity Futures Trading Commission (CFTC) sent subpoenas on Dec. 6 to virtual-currency venue Bitfinex and Tether, a company that issues a widely traded coin and claims it’s pegged to the dollar, according to a person familiar with the matter, who asked not to be identified. The firms share the same chief executive officer.

Many in the crypto world have called this a well timed piece of FUD designed to suppress the price of bitcoin:

There was an interesting comment from Charlie Lee, the creator of Litecoin as he tweeted:

While Tether has said all of its coins are backed by U.S. dollars held in reserve, the company has yet to provide evidence of its holdings or have its accounts audited. Skeptics have questioned whether the money is really there. Tether’s coins have become a popular substitute for dollars on cryptocurrency exchanges worldwide, with about $2.3 billion of the tokens outstanding as of today.

The irony of the US government calling anyone out on not backing reserves was not lost on Erik Voorhees, founder of Shapeshift.io:

Bitfinex and Tether said in an emailed statement today:

“We routinely receive legal process from law enforcement agents and regulators conducting investigations. It is our policy not to comment on any such requests.”

 

The Bitcoin price tumbled 11% to $9,986.92 at the time of writing, possibly off the back of this news.

While Tether and Bitfinex don’t disclose on their websites or in public documents where they’re located or who’s in charge, Ronn Torossian, a spokesman for the firms, said in a Dec. 3 email that Jan Ludovicus van der Velde is the CEO of both. Phil Potter is a Tether director, according to documents recently leaked by the International Consortium of Investigative Journalists. He’s also the chief strategy officer at Bitfinex.

Last year, Wells Fargo & Co. ended its role as a correspondent bank through which customers in the U.S. could send money to bank accounts held by Bitfinex and Tether in Taiwan. The firms sued the lender, but later withdrew the complaint. Torossian previously declined to identify the banks used by Bitfinex unless a non-disclosure agreement was signed, which Bloomberg News refused.

Audit cancelled

While little public information exists about how tethers are created, market pricing suggests traders believe that each coin is worth $1. A document on Tether’s website, compiled by accounting firm Friedman LLP, shows it had $443 million and 1,590 euros ($1,970) in bank accounts as of Sept. 15. Tether tokens were valued at $420 million that day, according to Coinmarketcap.com. Tether hasn’t identified the banks where that money was held, and their names were blacked out in the document.

Friedman said in its report that it didn’t investigate the reliability of Tether’s records. The accounting firm and Tether have recently cut ties, Tether said in a separate statement Monday as reported here in this article by coindaily.co

The timing of the recent news reports by Bloomberg and other mainstream media seems a little bit suspicious to say the least. Many in the cryptocurrency world have to be asking themselves if this isn’t just another convenient FUD to keep the price down despite the wide array of good news that has surrounded Bitcoin tech.

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coinmag

Writer, Bitcoin investor

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