Again suprised this thread isn't getting more action. This Tether situation is getting a lot more attention and it doesn't look good.
New York Times is now mentioning the Tether situation which means that it's now an issue that will be dealt with shortly.
The single question that needs to be answered is "Is Tether backed 1 to 1 with USD or not?" If not, this will be a significant revelation as Tether is an extremely important tool in the entire crypto trading space.
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Again suprised this thread isn't getting more action. This Tether situation is getting a lot more attention and it doesn't look good.
New York Times is now mentioning the Tether situation which means that it's now an issue that will be dealt with shortly.
The single question that needs to be answered is "Is Tether backed 1 to 1 with USD or not?" If not, this will be a significant revelation as Tether is an extremely important tool in the entire crypto trading space.
If it is found that the recent growth was completely manufactured via price manipulation, you will definitely see a rush on the banks type of situation.
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It is not yet clear what information the regulators are seeking. Technically, the Tether tokens are issued by a separate company (called Tether) that is owned and operated by the same people who run Bitfinex. The C.F.T.C. subpoenaed that company at the same time that it subpoenaed Bitfinex, according to a person familiar with the matter.
Although it's not exactly clear as to the information that was requested, if it cannot be proved that they can answer yes to the question "is each USDT token backed by 1 USD" they are done. This makes any inquiry very simple and luckily it cannot be evaded.
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Bitfinex had contracted with an American firm, Friedman, to audit its records and prove that its operation of Tether is above board. But last week, Bitfinex said it was cutting ties with Friedman, after waiting months for it to finish the audit. That news generated more suspicion.
I highly doubt that Bitfinex cut ties because the auditing firm took too long. This entire thing could take 1 day. Friedman probably wasn't being given access to the records and data it needed to to their job. I honestly believe that Bitfinex/Tether was just stalling the entire process in order to get their ducks in a row to keep the cash cow going longer and to devise some sort of exit strategy.
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Tether offered a preliminary report last year from Friedman, the accounting firm, suggesting that it had bank accounts with dollars corresponding to all the Tether that had been issued. But the report was far from conclusive and Tether has never produced a real audit, leading to suspicions that Bitfinex may be printing virtual money backed by nothing.
Again, there is absolutely no reason for an audit like this to take so long.
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Bitfinex has not commented on the subpoena or recent reports about Tether, and company officials did not respond to repeated requests for comment. In the past, the exchange’s executives and spokesman have said that its customers are simply using Tether to buy virtual currencies as they might otherwise use United States dollars.
They are not defending themselves.
Could Tether actually be backed on a 1 to 1 basis? Absolutely. Would I want to bet my money on it? Nope.
I took all of my holding out of Bitfinex. I'm also going to get all my holdings out of the Tether based exchanges as well (Binance, Poloniex, Bittrex).
I suspect that the people who are on the inside that have large short positions on the CME exchanges (fiat not tether) could use their influence to hold off on any significant legal action (i.e. arrests) until just before the next expiration date of the BTC futures contracts.