The Tether and Bitfinex Drama Continues: Auditor Pulls Out?
Throughout 2017, there were three potentially massive concerns facing the cryptoverse: 1) government crackdowns on cryptocurrency users, 2) the fallout of Bitconnect collapsing, and the popping of Tether if the project really is fraudulent.
Image via Currency Echo
For those of you unacquainted with Tether (USDT), here's a quick elevator pitch. It's a crypto token billed as a "stablecoin" -- you put your money into tethers aiming for each of these tethers to maintain a price of approximately $1 USD, etc. The goal is to avoid cashing out to fiat while also avoiding the insane volatility of other cryptocurrencies.
But ... something's rotten in the state of Denmark, as Shakespeare noted in Hamlet. Concerns that tethers aren't backed 1:1 by fiat assets have stoked intense paranoia. If Tether "popped," then the crypto markets could crash violently. The situation has been made all the more complicated by the fact that Tether also shares a CEO with popular cryptocurrency exchange Bitfinex.
So as things may be getting more dire, we'll walk you through the recent happenings.
Auditor seemingly backs out
One of the things that Tether and and Bitfinex have been doing in recent weeks to fight off naysayers is by saying they've been working with a third-party auditor to reveal the whole truth to the cryptocurrency ecosystem.
But no audit's been forthcoming, at least for now. And things have gotten sketchier as the auditing firm Tether had apparently been working with in the past, Friedman LLP., has seemingly severed ties with the stablecoin project.
At some point between December 2017 and January 2018, the firm removed mention of Tether from its website.
As you can imagine, this surreptitious walk out has stoked conspiracy theories out the wazoo in the crypto community.
The most popular theory, though obviously unconfirmed, is that Friedman LLP. saw something in Tether and Bitfinex's records that made them get the hell out of Dodge, as it were.
So while that's certainly not definitive proof that Tether is fudging its numbers, it surely doesn't help the perception.
Tether is printing a lot of USD
It's become a common occurrence for Tether to print $100 million worth of tethers over consecutive days.
And, with reports that Tether has been having trouble finding banking partners, everyone's wondering: where's the money coming from, and where has it been?
The nightmare scenario is that Tether is pumping these tokens "out of thin air," with no real fiat backing. That means fake money -- literally -- could be propping up cryptocurrency prices right now.
Bitcoin price 50% from tethers?
A new website has cropped up from an anonymous author called "The Tether Report." On the site, the author goes through various analyses and arrives at, well, a horrifying proposition:
"If there is questionable activity, the author believes a 30-80% reduction in BTC price could be forecast."
That means the entire crypto economy would crash down acutely with Bitcoin if Tether really did implode and if tethers really have been propping up the Bitcoin price artificially.
Let's all hope that's not the case; but let us also prepare for the worst.
Featured Image via Steemit
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.