Bitfinex Hides $850m Loss
Controversial cryptocurrency, Tether, and popular crypto exchange, Bitfinex, have been accused of cooking the books to the tune of $850 million by New York’s top cop. Now that’s some serious cheddar!
The recent allegations against Tether have revived doubts about its claim that every one of its ‘stablecoins’ is backed by $1 of assets. Being backed by the US Dollar is the main source of the crypto’s legitimacy, with traders relying on it as a direct substitute for the Dollar and a source of relative stability in the volatile crypto market.
Unable to find a bank to work with their high risk business model, Bitfinex’s backdoor dealings with a company called Crypto Capital led to the suspected loss or theft of $850m in client deposits…A fact Bitfinex never disclosed to is investors.
Instead, Bitfinex has been accused of colluding with Tether to access $900m of Tether’s cash reserves (which supposedly back its coin one-to-one) to cover up the loss, leaving Tether’s supposed ‘stablecoin’ un-backed, and illegitimate.
The announcement sent Bitcoin, Tether and the broader crypto market tumbling and may be poised for more downside if the court finds the parties to be guilty. Bitfinex and Tether have denied the allegations, but the truth will inevitably come out in the wash. Keep your eyes peeled for more developments.