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Cryptos Dive As CFTC Subpoenas Bitfinex And Tether Who Maybe, Maybe Doesn’t Have That $443 Million

Cryptos were already on the back foot Tuesday, so things probably didn't need to get any worse, but they just did anyway.

Oh, good! Another opportunity to remind the crypto crowd that they’re completely fucked.

See, here’s the thing. If you’re trading cryptocurrencies, you’re trading something that is worthless. It’s not an asset. There is no underlying rate of return. There’s no salvage value if it goes to zero. None of it is backed by anything other than your mistaken belief in some kind of decentralized future where central banks inexplicably cede their monopoly on currencies to a cabal of anonymous netizens.

But if you can get past the inherent absurdity, there are two other glaring issues here. First, the entire space is a spectacular bubble (with Bitcoin surpassing the tulip mania as the most egregious example of speculation in history last month) and second, regulators across the globe are starting to get serious about cracking down on this charade.

 

Last week, everyone got a rather poignant reminder of the other risk: hacking. Coincheck was robbed of $400 million in NEM coins in what may very well end up being the largest heist in crypto history.

Well cryptos were already on the back foot Tuesday, so things probably didn’t need to get any worse, but they just did anyway when, just days after hacking risk came calling, regulatory risk was back. To wit:

  • CRYPTO EXCHANGE BITFINEX, TETHER SAID TO GET SUBPOENAED BY CFTC

Cryptos aren’t lovin’ that:

Crypto

Of course this should come as no surprise. There have long been questions about Tether and Bitfinex and if you recall, Tether suffered a “theft” back in November that briefly rattled the market.

“While Tether and Bitfinex don’t disclose on their websites or in public documents where they’re located or who’s in charge, Ronn Torossian, a spokesman for the firms, said in a Dec. 3 email that Jan Ludovicus van der Velde is the CEO of both,” Bloomberg reminds you, before recalling that “last year, Wells ceased to serve as a correspondent bank “through which customers in the U.S. could send money to bank accounts held by Bitfinex and Tether in Taiwan.”

Basically, folks want to know if the money Tether claims it has actually fucking exists. Here’s what they said they had in September:

Tether

Thanks to the redactions, there’s no way to know where that money is or if it even is. But as you can see by the Tether token outstanding line item, the idea is that Tether is backed by dollar reserves.

Again, there’s nothing “new” about these question marks as regards Tether and Bitfinex. What’s “new” are the subpoenas and this just further underscores our contention that this entire space is rife with fraud.

Bear in mind that past a certain point, a few bad apples will indeed spoil the whole bunch because regulators are going to get sick of having to deal with this and opt instead for a “one size fits all” solution where that means heavily regulating the exchanges or else just shutting them completely down.

So you know, as usual, feel free to ignore the writing on the wall until all of it goes to zero, which some people already are as there looks to be a buy-the-dip bid taking hold already.

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