The New York Attorney General’s office recently opened a very public investigation into the firm. They allege much to the contrary. Tether Limited subsequently admitted it only has 74% of the reserves for its more than $2 billion stablecoins in circulations.
You read all of that right. Ardoino didn’t mean “cringeworthy” though you may read that on first glance if you’re of a particular mind.
Bitfinex is one of the earliest exchanges to offer fiat on-ramps, and for a long time served as the only way to effectively off-load Tether (USDT) for bank wires. That situation morphed last year when Bitfinex announced “Tether neutrality.” Translation: it began listing other stablecoins, including PAX and USDC.
In response, Tether announced a change in its withdrawal fee structure.
Despite that move, Tether is still the most actively used stablecoin on Bitfinex.
Paxos Standard Token, for example, had less than $500 in activity in the USD/PAX market over the last 24 hours, while USDT/USD had more than $13 million. A Paxos Standard representative wrote to this reporter at the end of last week to report a 30% increase in issuance since the Tether scandal broke, saying:
“With PAX market cap increasing 33% and transaction volume increasing 83% over the past week, this indicates that there is a new demand from both retail and institutional clients for a regulated stablecoin.”
CCN.com has not verified this statistic, but we’ll take them at face value. The implication is that traders are fleeing from Tether, which is known to be using a type of fractional reserve issuance (without the benefits of FDIC or other regular banking protections).
Bitfinex is executing some big moves directly in the wake of what would be a “black swan event” for many other companies in most industries. Meanwhile, bitcoin and other cryptos are booming upward.
Admittedly, a $1B fundraising round for $LEO comes mainly from investors (privately) via their parent company, iFinex.
Bitfinex has previously been accused of manipulating the market by researchers and conspiracy theorists alike.
The bitcoin market is a highly emotional one, as previously discussed.
Its vulnerability to manipulation is a primary factor in its lack of exchange-traded funds.
Given all we’ve learned over the past 10 years, it would be an oversimplification to say that regulators are “uneducated.”
We know that Mt. Gox’s trading bots manipulated the price as part of a scheme to replace lost funds, for example, when the market was much smaller. We know that Bitfinex fell victim to one of the largest bitcoin heists in history. We know that New York State won’t believe anything Bitfinex says until they prove it.
But wait, isn’t that the way we’re all supposed to behave in this market?
Right now, we’ve got bright minds from cornerstone firms actively partnering with Bitfinex.
And then we’ve got a fundraising event for a new token, with influential voices pumping it:
A lot of pieces, but no complete picture.
Yet, onward the bulls run.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.com.
Last modified: March 4, 2021 2:31 PM