A week after allegations of Bitfinex’s $850 million Tether ‘cover-up’ broke, the story is still dominating crypto-twitter. And although Binfinex challenges the claims, the ripples from the splash are already affecting both its business and Tether’s.
The Story Bitfinex Wish Would Die
For anyone who missed it, the New York Attorney General accused Bitfinex of covering up a large hole in its finances using money borrowed from Tether reserves. Bitfinex argued that the $850 million hole was just temporary, and the Tether money was simply a loan (with interest).
But this was not enough to stem the flow of funds and traders away from the platform. It was forced to withdraw, first 17k and then a further 12.6k bitcoin from its cold wallets, to cover the exodus. The story has also shaken confidence in Tether, causing a $300 premium on bitcoin price on Bitfinex, as traders exchange Tether for bitcoin and leave the site.
One of the main points of concern for investors is that Tether is supposedly 100% USD-backed, not supported on…