Wednesday, January 31, 2018

U.S. Regulators Subpoena Crypto Exchange Bitfinex, Tether

U.S. regulators are scrutinizing one of the world’s largest cryptocurrency exchanges as questions mount over a digital token linked to its backers, reports Bloomberg.

The U.S. Commodity Futures Trading Commission 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 Bloomberg.

The firms share the same chief executive officer.

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 Tuesday. While Tether has said all of its coins are backed by U.S. dollars held in reserve, the company has yet to provide conclusive evidence of its holdings to the public or have its accounts audited. Skeptics have questioned whether the money is really there.

Bloomberg continues:
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 -- dubbed the Paradise Papers -- recently leaked by the International Consortium of Investigative Journalists. He’s also the chief strategy officer at Bitfinex....

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.
Given all this, I would never put any money with these guys. This is an extremely opaque operation with more questions than answers.

  -RW

1 comment:

  1. As usual, rich irony when statists report on troubles in the crypto-currency world:

    "... the company has yet to provide conclusive evidence of its holdings to the public or have its accounts audited. Skeptics have questioned whether the money is really there."

    Seems to ring a bell about the Fed and gold ...

    ReplyDelete