Controversial Bitcoin Exchange Bitfinex and Startup Tether Receives Subpoenas from CFTC
The has been a growing suspicion in the cryptocurrency community about Bitfinex alleged involvement with startup Tether in raising USDT tokens that are actually not backed the equivalent U.S Dollars. Many analysts have pointed questions to Bitfinex for manipulating the price of Bitcoin with this method.
Recently, Tether also broke its relationship with audit firm Friedman LLP, which has been a topic of hot discussion in the crypto space. According to the latest report by Bloomberg, U.S regulators have been closely observing the operational behaviour of crypto exchange Bitfinex.
The report says that the U.S Commodity Futures Trading Commission (CFTC) has already sent subpoenas to the Bitfinex exchange and startup Tether, last month on Dec 6, 2017, said a source familiar with the matter.
In an email statement to Bloomberg, Erica Richardson, a CFTC spokeswoman said: "We routinely receive legal process from law enforcement agents and regulators conducting investigations. It is our policy not to comment on any such requests.”
Tether’s USDT coins have been one of the popular substitutes for U.S Dollar and are used largely by the exchanges. The value of each USDT coin is equal to one U.S Dollar. Survey says that there are a total of $2.3 billion outstanding USDT tokens in the market and Tether claims that all of these coins are backed by the U.S Dollar and are being held in their reserve.
However, a lot of questions have been raised recently on Tether’s holdings, to which Tether has not yet come clean on the matter and its recent breaking of ties with audit firm has kept the suspicion growing. Many also speculate that Tether is creating a fractional reserve and issuing more tokens that those that are actually backed by USD, and further sending them to Bitfinex. However, the exchange has threatened that it will pursue legal action against those who are pursuing “patently false” allegations on the company.
Moreover, one of the major suspicious thing about Bitfinex and Tether is that they don’t disclose where they are based and who are the people in charge of its operations. Also, having recently broken ties with audit firm Friedman, Tether told Bloomberg “Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable timeframe.”
Analysts believe that if Tether continues its suspicious behaviour this can trigger a major “bloodbath” in the crypto markets and especially in the price of Bitcoin. Today, Bitcoin has slipped below the crucial $10,000 mark and is trading at $10,325 at the press time, as per our data.