Bitfinex and Tether Respond to Allegations
Bitfinex has suffered quite a bit of bad press recently.
Firstly there was the hack of Tether where a hacker was able to extract up to $30m worth of the cryptocurrency. This of course ignited all of the same concerns that people had about the legitimacy of the cryptocurrency.
Then, there was the news yesterday that a large amount of traders were closed out of their positions and their accounts liquidated way below their stop levels.
However, Bitfinex has finally broken their silence and decided to go on the offensive with a media blitz aimed at dispelling the rumours that they saw as harmful to their brand.
Using a newly hired spokesman, Ronn Torossian, both companies claimed that the concerns were being raised by "questionable actors" and that Bitfinex is "committed to becoming the most transparent crypto exchange in the industry".
They then zeroed in on one particular critic who they claimed was behind the news reports. They mentioned the anonymous blogger called "Bitfinex'ed" who they said was responsible for the lengthy medium posts that tried to discredit the company. He said:
Who is Bitfinex’s biggest critic? An anonymous online Twitter user who throws allegations around without ever revealing his or her own identity,
He claimed that the mere fact that someone who was anonymous was lobbing such accusations was an indication itself that they were spurious accusations.
He claimed that this was in contrast to the manner in which Bitfinex has been operating with a "strong management team". These claims may be encouraging if we were to have the credentials of these individuals on the Bitfinex website.
According to the spokesman, the CEO of the company is Jan Ludovicus van der Velde, the CFO is Giancarlo Devasini and the chief strategy officer is Phil Potter.
Although there has not been any official confirmation of the link between Tether and Bitfinex, the spokesman made the disclosure official.
Many were able to speculate as the connection given information that was leaked as part of the paradise papers. This showed that Potter and Giancarlo were a director and shareholder respectively.
Moreover, there were similarly no disclosures of the directors at Tether on any of their public records like a website etc. Nevertheless, Torossian said that the company would dispel all rumours by completing a full audit.
He also cited a previous report that claimed that the company had over $442.9m in cash on the 15th of September. This report was completed by an auditor in New Jersey called Friedman LLP.
Yet, if one were to dig a bit more into the report, you would find that there were one or two red flags. One was that the money was held in the name of a trustee and that there was no guarantee that the funds could be accessed by Tether.
He also claimed in a separate interim report that he could not verify the exact terms of the funds in the bank account. This meant that he could not confirm that tether had the ability to withdraw these funds from the account.
When asked about the Tether hack that took place, Torossian said that they were working closely with Law Enforcement in order to locate the perpetrator.
Torossian also apologised for the lack of communication from Bitfinex and Tether in the period in question. He claimed that the excessive demand from users meant that they could not devote enough resources to these issues.
He also addressed the losses that Bitfinex has suffered in the way of banking relationships. As many may know, Bitfinex was forced to stop accepting US clients when they lost their account at Wells Fargo.
Yet, Torossian claimed that they were able to fully diversify their banking relationships around the world and stated that:
providing the vast majority of its customers with a diversified and resilient banking network to provide consistent liquidity
Questions Still Remain
Although having some communication from Bitfinex is better than the radio silence of the previous few days, there were still some questions that were not addressed.
One of those was the principle claim that was made by Bitfinex'ed that the exchange was printing the Tether tokens in order to increase the price of Bitcoin.
Perhaps these questions will be addressed in the next media blitz by Torossian, Bitfinex and Tether.
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Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.