Bitfinex, Tether could be in hot water
The two have to answer for more than $850 million in funds that went missing
Bitfinex and Tether have always had a close – and questionable – relationship. The cryptocurrency exchange has reportedly assisted Tether in managing the USDT stablecoin project and that management may have gone above and beyond its acceptable limits. The New York Attorney General (AG) has launched a lawsuit against iFinex, the parent company of Bitfinex, for fraud after it surfaced that the company had tried to hide a loss of $850 million for which it had no records.
The AG reportedly determined that iFinex had tried to use Tether to cover the losses, which were detected last year. It was also found to have been commingling customer funds with its own in violation of US laws.
Making things worse, iFinex had been working with a partner, Crypto Capital, which reportedly absconded with millions of dollars as part of the ordeal. That theft, which has yet to be confirmed, was made possible because iFinex reportedly never signed a contract with the company.
There is also evidence that Bitfinex had been working with Tether – as well as Crypto Capital at one point – to manipulate the price of Bitcoin (BTC). In a series of messages that were uncovered as a result of a subpoena, a Bitfinex executive was caught talking to someone at Crypto Capital and said, “BTC could tank to below 1k if we don’t act quickly.”
The AG investigation is only the beginning. The fall of Tether has been predicted for the past couple of years and the indications that it is anything but stable are profoundly evident. There has always been a concern that stablecoins could not be as solid as reported, but Tether’s demise is imminent and it is going to confirm that previous analysis.