U.S. Regulators Send Tether and Bitfinex Subpoenas

[gulubal]

There’s been a lot of discussion and controversy surrounding Tether (USDT) a digital asset that claims to be backed by the U.S. dollar. Now according to reports, the U.S. Commodity Futures Trading Commission has subpoenaed the cryptocurrency exchange Bitfinex and the company Tether for unknown reasons.

The CFTC Sends Bitfinex and Tether a Subpoena
U.S. Regulators Send Tether and Bitfinex SubpoenasA lot of skeptics believe that the digital currency Tether USDT is not backed by the U.S. dollar and may have pumped the entire cryptocurrency economy during 2017’s phenomenal year. Just recently news.Bitcoin.com reported on Tether severing ties with its auditor, so cryptocurrency enthusiasts are still left in the dark regarding USDT’s so-called backing. Tether has still not proven that it holds $2.3 billion USD in reserves. Now according to the financial publication Bloomberg the CFTC had sent subpoenas to both Tether and Bitfinex on December 6, “a person familiar with the matter” explains.

Bitfinex and Tether Say Legal Requests Are Routine While the CFTC Declines to Comment
U.S. Regulators Send Tether and Bitfinex Subpoenas

Tether and Bitfinex did respond to a question regarding the summons in an emailed statement sent to the news outlet. 

“We routinely receive legal process from law enforcement agents and regulators conducting investigations,” explained Bitfinex and Tether representatives.

It is our policy not to comment on any such requests.

Furthermore Erica Richardson, a CFTC spokeswoman declined to comment on the subject concerning the digital currency businesses. Very little public information exists on why the CFTC has sent Bitfinex and Tether the notice.

However, the news follows a lot of speculation about both of these companies from various media sources and well-documented reports. This past week Professor Nouriel Roubini otherwise known as ‘Dr. Doom’ said, “regulators are asleep at the wheel while $2 billion of fake money was created via this scam.” With Bitfinex and Tether being subpoenaed by the CFTC, it seems regulators may be very aware of Tether and exchanges like Bitfinex who are ‘tethered’ to the digital dollar business.

What do you think about Bitfinex and Tether being subpoenaed by the CFTC? Let us know in the comments below.

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[novakwil]

we elect government to eat on our money , their stomach never gets filled , they get into panama papers , they get bandits like those in terrorist countries and then ask for safety via england , all those politicians are eating people anyhow

[ulhaq]

Presumably the results of the CFTC inquiry will be made public? Is there an estimated timeline?

[Pursuer]

Presumably the results of the CFTC inquiry will be made public? Is there an estimated timeline?

this is not something that will be finished in a short time! there will be a lot of lengthy legal debate between the two sides and they will prolong it as much as they can and meanwhile continue operating the way they were before.
not to mention that bitfinex is planning on moving to Switzerland which may even make things a lot easier for them to win the subpoena!

[Seetheummerallyeah]

we elect government to eat on our money , their stomach never gets filled , they get into panama papers , they get bandits like those in terrorist countries and then ask for safety via england , all those politicians are eating people anyhow

This might be the case for other matters, but in Tether/Bitfinix's Case there definitely needs to be regulation. Bitfinex needs to prove that each Tether is in fact backed by 1 USD. They have not done so with a credible source at this current time. If it is found that they don't have the $2,520,000,000.00 in reserve to back tether 1:1, the market will collapse.

[jjacob]

Presumably the results of the CFTC inquiry will be made public? Is there an estimated timeline?

Government agencies do not work according to timelines. If at all they are not satisfied, you will see sudden and drastic action. Tether has the potential to bring the entire crypto market down and we should all be aware of it. It is not the fed’s power but tether’s weakness that we should be scared of.

[TheQuin]

Presumably the results of the CFTC inquiry will be made public? Is there an estimated timeline?

this is not something that will be finished in a short time! there will be a lot of lengthy legal debate between the two sides and they will prolong it as much as they can and meanwhile continue operating the way they were before.
not to mention that bitfinex is planning on moving to Switzerland which may even make things a lot easier for them to win the subpoena!

This story went quiet very quickly, there still doesn't seem to be any firm information as to what the subpoena is for. It is also quite difficult to see how the Commodity Futures Trading Commission of the US has any jurisdiction over foreign exchanges even before moving to Switzerland.

[jseverson]

This story went quiet very quickly, there still doesn't seem to be any firm information as to what the subpoena is for. It is also quite difficult to see how the Commodity Futures Trading Commission of the US has any jurisdiction over foreign exchanges even before moving to Switzerland.

I don't think that there will ever be any information with regards to this thanks to their company policy:

“We routinely receive legal process from law enforcement agents and regulators conducting investigations,” Bitfinex and Tether said Tuesday in an emailed statement. “It is our policy not to comment on any such requests.”

Regarding jurisdiction, wouldn't they be able to exercise at least some authority because they operate within their country? They could probably be barred from doing so if they don't comply.

I'm not a fan of Bitfinex and Tether, but I'm more inclined to believe that this is routinary considering how the story broke late and how quiet it has been since then. Tether is worth billions, and if it has been proven to be a scam, I doubt they'll be able to keep it under wraps. Probably just people making a mountain out of a molehill.

[TheQuin]

I don't think that there will ever be any information with regards to this thanks to their company policy:

“We routinely receive legal process from law enforcement agents and regulators conducting investigations,” Bitfinex and Tether said Tuesday in an emailed statement. “It is our policy not to comment on any such requests.”

I was more surprised that the Commodity Futures Trading Commission doesn't have to go public.

Regarding jurisdiction, wouldn't they be able to exercise at least some authority because they operate within their country? They could probably be barred from doing so if they don't comply.

But they don't. They closed access to anyone residing in the US but even that isn't a legal definition of 'operating in'. For example, I reside in the UK and trade on the CME. The CTFC regulates the CME, not the UK FCA. It is where the exchange is located not the customers.

I'm not a fan of Bitfinex and Tether, but I'm more inclined to believe that this is routinary considering how the story broke late and how quiet it has been since then. Tether is worth billions, and if it has been proven to be a scam, I doubt they'll be able to keep it under wraps. Probably just people making a mountain out of a molehill.

This is the most balanced view I've seen about what is really going on with Tether.
https://blog.bitmex.com/tether/

There's no doubt the US would rather it didn't exist and will try and find ways to shut it down, but there's no evidence it is a scam.

[Pursuer]

Presumably the results of the CFTC inquiry will be made public? Is there an estimated timeline?

this is not something that will be finished in a short time! there will be a lot of lengthy legal debate between the two sides and they will prolong it as much as they can and meanwhile continue operating the way they were before.
not to mention that bitfinex is planning on moving to Switzerland which may even make things a lot easier for them to win the subpoena!

This story went quiet very quickly, there still doesn't seem to be any firm information as to what the subpoena is for. It is also quite difficult to see how the Commodity Futures Trading Commission of the US has any jurisdiction over foreign exchanges even before moving to Switzerland.

well the news was mainly being spread in the media in order to cause panic, in other words it was some sort of FUD to push the price even lower. if you check the dates of the news you can see it started coming out and filling the media months after the actual Subpoena was sent to bitfinex!
and now price is rising, nobody cares about negative news like this so even if there is some development in that front we will not hear it unless there is a correction or some big drop or something!

[swissgang]

we elect government to eat on our money , their stomach never gets filled , they get into panama papers , they get bandits like those in terrorist countries and then ask for safety via england , all those politicians are eating people anyhow

This might be the case for other matters, but in Tether/Bitfinix's Case there definitely needs to be regulation. Bitfinex needs to prove that each Tether is in fact backed by 1 USD. They have not done so with a credible source at this current time. If it is found that they don't have the $2,520,000,000.00 in reserve to back tether 1:1, the market will collapse.

Today they have possibly enough usd to back usdt, but in the past? has the usdt in the market been always backed by usd? I think a deep investigation is required for tether to clarify everything.

[Safebit.io]

Any news on this? Seems like this issue is menacingly floating in the air.

[jseverson]

But they don't. They closed access to anyone residing in the US but even that isn't a legal definition of 'operating in'. For example, I reside in the UK and trade on the CME. The CTFC regulates the CME, not the UK FCA. It is where the exchange is located not the customers.

Oh, I didn't know they closed up shop in the US. I'm very confused, but it does look like the CTFC has, or at least had, some authority over them as they have been fined in the past despite being based in Hong Kong:

https://www.cftc.gov/PressRoom/PressReleases/pr7380-16

Maybe it depends on the industry?

[TheQuin]

But they don't. They closed access to anyone residing in the US but even that isn't a legal definition of 'operating in'. For example, I reside in the UK and trade on the CME. The CTFC regulates the CME, not the UK FCA. It is where the exchange is located not the customers.

Oh, I didn't know they closed up shop in the US. I'm very confused, but it does look like the CTFC has, or at least had, some authority over them as they have been fined in the past despite being based in Hong Kong:

https://www.cftc.gov/PressRoom/PressReleases/pr7380-16

Maybe it depends on the industry?

They told all US based customers to close their accounts late last year.

TBH I just don't get how the US thinks it has jurisdiction over the entire world. Does that mean that every Futures Commission Merchant (FCM) anywhere in the world has to register with the CTFC? For example, if I was to open an account with a UK broker using a UK FCM to trade LIFFE futures, what business is that of the US?

Edit:
A couple more thoughts about that. Bitfinex moved the company registration to the British Virgin Islands after that case. Maybe there's some Hong Kong - US based agreement they were in breach of. It also stands out that the fine was only $75,000 which in CTFC terms is peanuts and makes it as serious as a parking ticket. This new subpoena could easily be as irrelevant.

[Killrbit]

Yes the story seems to have gone completely, but feels that its gonna be hanging over our heads for awhile.

As for bitfinex moving to switzerland and not being within the jurisdiction of the USA, google the  liberty reserve which operated out of Costarica.
 Its honestly got a lot of similarities with tether, and assuming that tether is backed 1 to 1 with dollars somewhere, the liberty reserve case shows that it could very easily still get shut down for money laundering.

Heres the wiki https://en.wikipedia.org/wiki/Liberty_Reserve.


Also rember reading an article somewhere which stated that around 350 million was seized from accounts belonging to bitfinex in poland.

[TheQuin]

Yes the story seems to have gone completely, but feels that its gonna be hanging over our heads for awhile.

As for bitfinex moving to switzerland and not being within the jurisdiction of the USA, google the  liberty reserve which operated out of Costarica.
 Its honestly got a lot of similarities with tether, and assuming that tether is backed 1 to 1 with dollars somewhere, the liberty reserve case shows that it could very easily still get shut down for money laundering.

Heres the wiki https://en.wikipedia.org/wiki/Liberty_Reserve.

The article I linked to above makes the comparison with Liberty Reserve as well.
https://blog.bitmex.com/tether/

Also rember reading an article somewhere which stated that around 350 million was seized from accounts belonging to bitfinex in poland.

The article was incorrect. That was a payment processing company that Bitfinex no longer use.

[galkinig]

Any news on this? Seems like this issue is menacingly floating in the air.

It had been floating for months now and I do not think there is any thing serious here. These people might be getting a number of legal notices frequently because of misunderstanding of the crypto business.