[2019-04-26] CNBC: Bitcoin price falls on NY AG Bitfinex probe

[figmentofmyass]

more unwanted attention for bitfinex and tether.

the new york attorney general has filed court orders against bitfinex and tether. the state alleges tether is defrauding clients, citing an $850 million "loss" that bitfinex allegedly covered using tether customer funds. more fuel for the fire re the tether insolvency rumors eh?

https://www.cnbc.com/2019/04/26/cryptocurrency-bitcoin-price-falls-on-ny-ag-bitfinex-probe.html

• The cryptocurrency market shed about $10 billion in value in the space of an hour late Thursday, CoinMarketCap data showed.
• New York’s top lawyer alleges Bitfinex used at least $700 million from Tether’s cash reserves to cover up an $850 million loss.
• Questions have arisen over whether Tether has enough dollar reserves to justify its token’s dollar peg and whether it was used to manipulate prices.

bitfinex quickly issued a response: https://www.bitfinex.com/posts/356

Earlier today, the New York Attorney General’s office released an order it obtained – without notice or a hearing – in an attempt to compel Bitfinex and Tether to provide certain documents and seeking certain injunctive relief.

The New York Attorney General’s court filings were written in bad faith and are riddled with false assertions, including as to a purported $850 million “loss” at Crypto Capital. On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded. We are and have been actively working to exercise our rights and remedies and get those funds released. Sadly, the New York Attorney General’s office seems to be intent on undermining those efforts to the detriment of our customers.

Bitfinex and Tether have been fully cooperative with the New York Attorney General’s office, as both companies are with all regulators. The New York Attorney General’s office should focus its efforts on trying to aid and support our recovery efforts.

Both Bitfinex and Tether are financially strong – full stop. And both Bitfinex and Tether are committed to fighting this gross overreach by the New York Attorney General’s office against companies that are good corporate citizens and strong supporters of law enforcement. Bitfinex and Tether will vigorously challenge this, and any and all other actions, by the New York Attorney General’s office.

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[IconFirm]

Good, it's about time someone took Bitfinex down - totally untrustworthy exchange with a history of scammyness & dodgy dealings. Pretty sure this has nothing to do with BTC price though, they're simply not big enough to have any impact.

[CryptoBry]

Good, it's about time someone took Bitfinex down - totally untrustworthy exchange with a history of scammyness & dodgy dealings. Pretty sure this has nothing to do with BTC price though, they're simply not big enough to have any impact.

I am also sure that this development has not been the reason for the recent slide of Bitcoin as it is now back to the $5100 level but still it is fine as there should be some contractions from time to time allowing some good momentum to develop naturally. Now, about Bitfinex there seems to be some problems with this exchange and I hope the people behind this firm should work hard to make their image or reputation be good again. We need more and more players in this industry who are not clouding their business with stupid decisions and bad reputation.

[Kemarit]

Price seems to be fluctuating after the release of this news. So I'm not really sure if this is the main culprit although another news has surfaced that the coins from Bitfinex hacked has moved, (coincidence?). I agree with @IconFirm, time for someone to look at Bitfinex, also need to look at some bad actors from behind. Maybe this case would drag in years, so just brace ourselves if ever there is a negative effect from this news.

[riritsurya1202]

I still don't understand why people would sell their crypto when the subject being discussed/judged here is one exchange and one stable coin. I mean, if they eventually go down, won't that mean USDT and Bitfinex will just disappear but BTC will stay?

Sometimes the market is really weird. As long as it's bad news for whatever reason it can move the sentiment quickly.

[hatshepsut93]

Sad to see Bitcoin's price still being shaken because of one big company, to me it's a sign that Bitcoin ecosystem is still very far from being mature. Regardless whether accusations against Bitfinex are true, today the fear and uncertainty that surround Tether and Bitfinex are strong enough to cast shadow on Bitcoin. I hope Bitcoin is strong enough to not plunge into a bear market if the worst outcome will come true.

[suzanne5223]

Good, it's about time someone took Bitfinex down - totally untrustworthy exchange with a history of scammyness & dodgy dealings. Pretty sure this has nothing to do with BTC price though, they're simply not big enough to have any impact.

I don't trust the exchange in subject either but I'm still surprised that a lot cryptoneir still make use of the exchange despite their previous history and for Tether to be inconjuction with the is something that will make Tether team loose their reputation. I hope justice prevail this time but the situations was not the reason for the dump in price.

[cr1776]

Sad to see Bitcoin's price still being shaken because of one big company, to me it's a sign that Bitcoin ecosystem is still very far from being mature. Regardless whether accusations against Bitfinex are true, today the fear and uncertainty that surround Tether and Bitfinex are strong enough to cast shadow on Bitcoin. I hope Bitcoin is strong enough to not plunge into a bear market if the worst outcome will come true.

I think it is one of those "sell the news" events where people hear the news and panic. 

[Slow death]

more unwanted attention for bitfinex and tether.

Bitfinex is always getting involved in controversies and these controversies appear whenever the price increases a lot. this becomes very annoying and creates fear in people... we need to use other  stablecoin to replace USDT

Sad to see Bitcoin's price still being shaken because of one big company, to me it's a sign that Bitcoin ecosystem is still very far from being mature.

I agree, but one day this will all change, we just have to be patient

[1Referee]

I still don't understand why people would sell their crypto when the subject being discussed/judged here is one exchange and one stable coin. I mean, if they eventually go down, won't that mean USDT and Bitfinex will just disappear but BTC will stay?

Bitcoin will obviously stay, but there are close to 2.9 billion Tether tokens in circulation; if that exits the market entirely, we're going to take a massive plunge, and I am quite certain that if it was to happen today, sub $3000 is what we will be looking at.

The thing however is that people don't seem to care anymore about Tether. People as stupid as they are will keep using it because of the utility it offers. I have seen even influential people on social media admit that Tether is very likely a scam for the most part, but it offers a good hedge, therefore they will use it.

The situation as it is right now = we finally have the evidence we need to know that Tether is a fractional reserve financial institution.

Never in a thousand years will I ever sell one single satoshi for USDT. Fuck that.

[IconFirm]

Never in a thousand years will I ever sell one single satoshi for USDT. Fuck that.

Absolutely the truth. +1

[LeGaulois]

I don't know all the story about the couple Bitfinex & Tether, but where are the funds currently???
There is one party who claims that the funds are lost and the other party who says in defense that no it's "seized and safeguarded". What is the truth in that? It's playing with words you might think, but it makes all the difference. From a neutral point of view, I do not see where this insolvency is. And as proof, the funds seized.

[BitHodler]

I don't know all the story about the couple Bitfinex & Tether, but where are the funds currently???
There is one party who claims that the funds are lost and the other party who says in defense that no it's "seized and safeguarded". What is the truth in that?

As far as I can understand from all the articles that I have read, the funds aren't lost but seized by the authorities of different countries. The positive aspect here is that the funds aren't lost.

It's very interesting to see how Tether updated its reserve policy recently, where with the current developments it's clear why they did that. Tether's loan (the debt) to Bitfinex is considered valid backing according to their terms.

It means that if every owner of USDT wants to cash out right now, it's not possible. No one is going to agree to owning Bitfinex's debt. If Bitfinex implodes tomorrow, they can't pay back the loan. Bye bye backing.

[bbc.reporter]

I am bewildered on how Bitfinex's executives are good in problem solving. The exchange has been in the middle of bad controversies but appears to get out of them without anyone of their executives going to prison. That is impressive hehehe!

[gentlemand]

I still don't understand why people would sell their crypto when the subject being discussed/judged here is one exchange and one stable coin. I mean, if they eventually go down, won't that mean USDT and Bitfinex will just disappear but BTC will stay?

Sometimes the market is really weird. As long as it's bad news for whatever reason it can move the sentiment quickly.

The thing that many people worry about is that Bitcoin's dollar value has largely been created by Tether - quasi dollars created out of thin air. That will cause everyone to wonder about the valuations they've taken for granted. Tether absolutely dominates trading volume, though of course most of that trading volume is fake so it's kind of moot.

Tether has always had more power in the market because of its nature as well. Every time they issue more of it it's new money entering, not the same old money sloshing around.

These revealments at least point to Tether having the backing they always to claimed to have, until Bitfinex helped themselves to it of course.

[bbc.reporter]

@gentlemand. However, what is your assessment of this new Bitfinex issue? Will they get out of it or is this finally their time?

My hope is they get out of it to show everyone that regulators cannot and will not have any way to enforce any type of regulations in the cryptospace effectively hehehe.

[buwaytress]

Wonder how they even came to know about it. Must have been a whistleblower because the way everything was done they were more than prepared, and the response less than. I'm not sure where I stand on this, lacking more information. I remember Coinbase talking about fighting injustice and declaring partial victory when the IRA asked them to give up customer information.

On one hand, dislike this meddling and demands, on the other, these big corporates shouldn't feel like they can do anything with impunity. Anything Tether-related's always been shady to me too.

[gentlemand]

@gentlemand. However, what is your assessment of this new Bitfinex issue? Will they get out of it or is this finally their time?

My hope is they get out of it to show everyone that regulators cannot and will not have any way to enforce any type of regulations in the cryptospace effectively hehehe.

Getting the original sum back is 100% out of their hands by the sounds of it. If their money got caught up with cartel laundering it could take forever to untangle.

Either way Bitfinex are a throwback and they should've buggered off a long time ago. They're like a fart from 2012/13 that refuses to dissipate.

If I were them I would completely abandon fiat and go full alt which is what they should've done many years ago, and that includes Tether. The way they choose to operate is fundamentally incompatible with the conventional finance system and mingling with it is a one way trip to doom.

[figmentofmyass]

I am bewildered on how Bitfinex's executives are good in problem solving. The exchange has been in the middle of bad controversies but appears to get out of them without anyone of their executives going to prison. That is impressive hehehe!

phil potter left bitfinex in june of last year, which was an ominous sign to me. after all they've been through over the years, if phil is jumping ship, there's probably real cause for concern. the feds very well may be closing in on bitfinex as we speak.

These revealments at least point to Tether having the backing they always to claimed to have, until Bitfinex helped themselves to it of course.

that seems plausible, especially when we consider their TOS change earlier this year which specified USDT is fully backed but not necessarily by fiat reserves. this bit looks especially bad for bitfinex/tether. it means the money was gone and tether issued a loan to bitfinex secured only by shares in ifinex:

Under this transaction, the line of credit is secured by a share charge over 60,000,000 iFinex Inc. shares owned by DigFinex. which DigFinex agreed not to otherwise encumber. That transaction closed on or about March 19, 2019.

[bbc.reporter]

Reading between the lines, I reckon that this fud had the real purpose of trying to damage Tether and USDT. How politically influencial are the Winklevoss brothers in New York? They might want the whole Tether stablecoin market conquered by their own Gemini stablecoin.

Also, why is no one mentioning of the fraud that Cryptocapital did to Bitfinex? Will the New York attorney general also investigate that?