The Saga isn't Over Yet
The Saga isn't Over Yet

Bitfinex Tether Seems to Be in A Downward Spiral

We have covered the topic of Bitfinex - Tether and the New York Attorney General (NYAG) as well as their IEO extensively. Unfortunately for Bitfinex, things seem to keep getting worse. Coinmarketcap has recently removed Bitfinex from Bitcoin's price aggregator. Seeing that Coinmarketcap is one of the internet's most popular website for cryptocurrencies, this is something that might affect Bitfinex. Coinmarketcap have not made any official announcement regarding this. It was simply updated on the website without a blog post or official notice.

Bitcoin Price Premium

On Bitfinex currently the price of Bitcoin is higher by roughly $300 USD than most other exchanges. The reason for that is simply because they can. This might be seen as an attempt by Bitfinex to raise additional funds. By selling Bitcoin at a higher price than other exchanges, it can hypothetically engage in massive arbitrage with other exchanges.

LEO Token

The timing of this IEO is one of the biggest questions regarding this token sale. It has been announced only days after the NYAG began investigating Bitfinex & Tether for fraud. The token sale aims on raising $1B USD in the form of Tether tokens. This might be seen as an attempt for a "buy back" of sorts and would allow Tether to reorganize their finances.

Trading Volume

The trading volume on Bitfinex has declined in the past week or so. It went from being #32 exchange by adjusted volume as per April 24, 2019 to #42 currently. Ever since the news broke about the NYAG It appears that traders are avoiding Bitfinex.

Tether also has a plethora of issues. While its trading volume has not declined yet, this may be a result of Bitfinex's IEO, LEO token. Bitfinex *only* accepts Tether as a form of payment for LEO token, which helps it maintain its value. In addition to that, many challengers have risen. Besides USD Coin (USDC) and Gemini Dollar (GUSD), Binance have issued a stablecoin as well. Seeing that Tether has publicly broken its 1-to-1 backed by the USD promise, traders might be better off trading with alternatives.


While Tron still supports Tether as a stablecoin in its ecosystem, it appears that Tron founder Justin Sun has concerns. In an announcement Tron has halted all Tether based reward program since May 1st. It is unknown if it shall be relaunched.


iFinex Fires Back

Tether & Bitfinex's parent company iFinex responded back to the NYAG claims in a recently uncovered court document. They have claimed that they have not committed any wrong doing & requested that the investigation be closed.  One of the most interesting parts of the document is that iFinex claimed the following:

"The undisputed facts show that there was no ongoing fraud, and no "victims" in need of the drastic remedy of an injunction to protect them.  Specifically, there is no dispute that Tether disclosed that its reserves could consist of loans to affiliates, and did so before the line of credit transaction the Attorney General challenges."

In layman's terms, Bitfinex deny any wrongdoing or fraud.

In another interesting statement, iFinex admitted the harm caused to Bitfinex as part of this investigation:

The impact on Bitfinex has also been significant.  As reported by The Wall Street Journal, the balance of some of Bitfinex's "cold wallets" - the digital equivalent of a bank vault for customer funds - "have fallen sharply, an indication that customers have been drawing down their holdings.  Since the attorney general's report became public, about 30,000 bitcoin worth about $170 million, has come out of one wallet. About 1 million ether, worth about $165 million, has come out of the other wallet.".


Will Bitfinex Bite the Dust?

Most documents and statements seem to indicate that iFinex, and by relation Bitfinex & Tether are in serious financial trouble. The massive fundraising and price premium on Bitcoin are also highly worrying. Should the investigation drag on, it could spell the end for Bitfinex as a trusted name in the world of cryptocurrencies.


Written by Jonathan Ganor

Writer & cryptocurrency aficionado

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