Market News… Go Back...
The Tether-Bitfinex Scandal Deepens
Leaked Documents Seem to Confirm $900M Loan
As previously mentioned, both Bitfinex and Tether have been in some hot water. Bitfinex, the popular exchange and Tether, the well-known stablecoin are both owned by the same parent company, iFinex. Tether has claimed for years to be fully backed by a fiat reserve, and that 1 tether equals 1 USD in a safe somewhere. It became apparent recently that this is no longer the case.
Apparently Bitfinex had $850M USD frozen by its payment processor, Crypto Capital. The funds in Crypto Capital's safekeeping was frozen by multiple countries, including Portugal, Poland and the U.S. due to lack of regulation & licensing. It is currently unclear if the $850M USD will ever be returned to Bitfinex.
This caused massive cashflow problems for Bitfinex, who began to struggle paying out client withdrawals. As per allegations from the N.Y. Attorney General, their solution seems to have been as simple as it was unethical.
Without notifying share holders, token holders, or the public, Bitfinex took a $900M USD loan from sister company Tether. This loan most likely made a serious dent in Tether's fiat reserves and demolished Tether's "fully backed" promise.
In a recent leak by Twitter user @Bitfinexed, court documents appear to confirm the allegations leveled against Bitfinex & Tether. This seems to give weight to all the allegations.
We've reached out multiple times to both Tether & Bitfinex on Twitter for any form of confirmation or comment but have received no response.
Bitfinex Tokens Coming Soon?
Many have speculated for years that Bitfinex would follow the same route as Houbi and Binance and issue an exchange token. Recently, some credibility has been added to that theory. Notorious Twitter leaker Dovey Wan has recently tweeted [JG1] some intriguing information.
Dovey Wan gained the spotlight and credibility by revealing the Bithumb hack before official sources as well as uncovering other scandals.
According to the information she provided, Bitfinex is planning an IEO (initial exchange offering) with a goal of $1 B USD. The most interesting part of the IEO is that Bitfinex aims on raising the funds in Tether (USDT).
Both the timing of this IEO and the specifics leads to a few questions. Are Bitfinex and Tether trying to reorganize Tether's reserves? Will Tether later audit their reserves? Will the IEO be done solely to cover Bitfinex's frozen funds?
As one of the worlds oldest and most popular exchanges, bad news for Bitfinex could mean bad news for crypto in total.