Old news; The U.S. Commodity Futures Trading Commission sent subpoenas to Tether and Bitfinex on December 6, 2017.
By now, we have all been exposed to a variety of opinions and information on the much-acclaimed cryptocurrency, Tether (USDT). Tether is supposedly tied to the United States dollar, hence its ticker, USDT, and has been known to be suitable as a point of retreat during market declines due to its stable nature through its link with the USD. There have been a series of claims against Tether to prove the formal relationship with the US dollar, but the link has yet to be publically established. Therefore, we are still not even certain if USDT is pegged with USD.
It was reported in an article published on Bitsonline earlier this month that there was a discrepancy between the amount of Tether coins in circulation and the relative dollar reserves. This is significant due to the fact that Tether claims, and is supposed, to have a 1:1 ratio with the USD.
“Concerns about Tether and its day-to-day activities continue on with suspicions growing that the company does not actually hold dollar reserves equal to the amount of Tethers (USDT) currently in circulation.”
The article further delves into the increasingly advertised issue of increased Tether printing.
“These suspicions are fueled by the fact that Tether has substantially increased the amount of USDT in circulation in recent months, all without publishing the findings of their most recent audit.”
In mid-January, Tether was noted to have printed around $400 million USD worth of their token and issued within the space of four days. This was made evident through the fine work of @TetherPrinter, a Twitter account focussed on tracking the Tether printing process on the blockchain.
So how does Bitfinex tie into this unfolding tale? Late last year, the Paradise Papers (confidential documents in an electronic format relating to offshore investments) had information leaked to the public that stipulated a relationship with Tether and Bitfinex containing overlapping ownership. This almost reinforced the crypto community of a long-held suspicion, which was that Tether was regularly sending newly printed tokens directly to Bitfinex.
In a recent development, to add to the mountain on top of Tether, its relationship with the auditing company Friedman LLP has ended. A spokesperson for Tether released an email statement to CoinDesk saying:
“We confirm that the relationship with Friedman is dissolved. Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame. As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success.”
On December 6 2017, US regulators sent a subpoena, a summoning letter, to both Bitfinex and Tether. It was not exactly clear at the time as to the purpose behind the subpoena, but we can assume that the U.S. Commodity Futures Trading Commission issued this letter to acquire information on the procedures and numerics of the two organisations. Since then, however, no notable update has been released and the market went on to have a stellar end of year/start of year run.
Now that we have established the facts and topics, let’s look at the bigger picture here, albeit a form of speculation. Firstly, it is almost confirmed that there is foul play in the hands of Tether and/or Bitfinex and that it needs to be sorted. Secondly, the dissolution of the relationship with Tether’s auditor is not good. This is on the back of all the other problems we have been made aware of within the world of Tether. Lastly, and probably most significant today, the subpoena was sent out almost two months ago and we have now all of the sudden seen mass reporting on the topic again overnight. Why? Why was this issue brought up again at this time? We are sure you have all seen the effect this news had on the market in the past 12 hours.
Large media organisations such as Bloomberg and Reuters have reported on this issue in this time frame. Bloomberg’s article, U.S. Regulators Subpoena Crypto Exchange Bitfinex, Tether, did not even have the actual date of the subpoena issuance in their initial publication, only to later edit the date in. Surely a professional, mega-media platform such as Bloomberg would not forget to include crucial information such as dates, right? So it seems that the market is reacting to the old news, news that is not actually supposed to affect the market today. Rather, it has affected the emotions of coin/token holders.
It is obvious there is a large amount of negativity and criticism out there against Tether, more in the past couple of weeks, and the recent news has capitalised on shoveling more dirt onto it by digging up old stories. Tether definitely isn’t looking too flash at the moment, but for those invested in this market, do not worry. Do not succumb to the tactics of today’s media and throw in the towel on your holdings.
Here is our outlook on the ball game right now (bear in mind this is our speculation and not factual). Tether may either disappear or remain, but it does not affect the longevity of the industry and the relative success. Why? Because whether it is here or not, we will still have all the other groundbreaking, amazing projects out there looking to change the world and we will still have people investing in them. Think about it, what caused this dip in the market? It was people’s emotions. People became worried after hearing this negativity in today’s sensitive market and sold their holdings. Sure enough, it will come back up as it always does after times of despair so stay strong and remain positive. If anything, maybe it is better for the industry to have Tether removed as it will leave peoples retreats of value and pairing purchases to the actual projects aimed at promoting this exciting industry we are a part of.
Let us leave you with this thought, why was it that this negativity arose in the media just in time when we were on the road to recovery? Here’s some food for thought. Are some big players manipulating the market to keep the price down? Why would they be doing that? Are they keeping the price down to stock up for the imminent bull run? And more importantly, when moon?