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Bitfinex and Tether still in the eye of the storm

Photo of: Joseph Stone
by Joseph Stone

Tether and the Bitfinex platform have been under investigation in the United States for several months. This affair is taken very seriously by the cryptopshere given the notoriety of Tether. Recently, however, the ongoing investigation has experienced some delays and some results are therefore expected to arrive later than expected. A look back at the latest elements of the investigation.

Tether is certainly less known than Bitcoin and Ethereum. However, behind these two cryptos, Tether completes the podium of the giants of cryptocurrencies in terms of capitalization. Thus, at the time of writing this article, Tether is capitalized above $20 billions.

The investment in stablecoin is complementary to the purchase of cryptocurrencies. Indeed, since the price of a stablecoin does not vary, it is an excellent solution to protect your assets against volatility. For example, between two investments, you can secure your gains by buying Tether.

The Tether is therefore a stablecoin backed by the dollar. The stability mechanism of the Tether (and stable corners in general) ensures that for every Tether purchased, the platform sets aside one dollar in equity. It is precisely this mechanism that is being closely watched by the American judiciary at the moment.

Bitfinex is the custodian company of Tether and its trading platform Bitfinex. After several failures to create partnerships with banks, Bitfinex turned to Panama. In 2018, a bank in Panama held almost all of Bitfinex’s equity. The problem was that as a result of this financial arrangement, Bitfinex was not able to respond to its clients’ requests to withdraw money.

“Our investigation determined that the Bitfinex platform operators who also control the Tether concealed the loss of approximately $850 million belonging to their customers and companies.” said Letitia James, New York General Counsel in charge of the Tether Investigation.

The ongoing investigation is therefore aimed at shedding light on this breach and the possible cover-up from Bitfinex. For the moment, Bitfinex has already sent more than 2.5 million pages to the courts in its defense, according to its general counsel, Stuart Hoegner.

However, the judicial calendar still called for the production of other documents by Bitfinex by January 15. However, in agreement with the court, it has just been decided to postpone the issuance of these documents by 30 days, as announced by the Financial Times. This is already the second postponement since the beginning of the investigation. It must be said that these documents are very significant! Indeed, they should allow justice to determine whether Bitfinex should be prosecuted or not.