applancer Advertise

Bitfinex been accused of many things and pushing up prices is latest in the list

Feb 04, 2018 Posted /  2025 Views

Bitfinex been accused of many things and pushing up prices is latest in the list

Bitfinex has been under fire for some time now and now the virtual currency investors are worried that prices of Bitcoin and other digital currencies have been artificially inflated by the crypto-exchange. You can blame Bitfinex bad history and opaque business practices for it that investors have lost faith on the exchange.

In December last year, Bitfinex was subpoenaed by the Commodity Futures Trading Commission, an American regulatory agency. The news was confirmed to Bloomberg through a source but was not publicly disclosed as the investigation was going on in the matter. The news led to selling off in many virtual currencies lately.

Read More Related Articles

Then Bitfinex upper management came up with a virtual currency called Tether. It was assumed that the currency was built to different standards and can be pegged to the United States dollar. The Tether was issued when investors gave them dollars and one dollar was worth one token. It can be said that Tether worked on the credibility of the US Dollar which can be said as one of the world's most powerful fiat currency. And, Tether was started being utilized as a virtual currency that could be used to buy other virtual currencies like Bitcoin.

Tether and alarming bells

Lately, many investors started raising alarm bells about Tether. The doubt came when Tether worth hundreds and millions of dollars were started being created. This happened mostly when the prices of other virtual currencies were heading down. The Tether could be utilized on the Bitfinex exchange to make huge purchases of Bitcoin and other tokens, which pushed their prices back according to recurring analyses of data from Bitfinex.

“This became more and more concerning, because every time the markets went down, you have seen the same thing happen,” said Joey Krug, the co-chief investment officer at Pantera Capital, which runs several virtual currency hedge funds. “It could mean that a lot of the rally over December and January might not have been real.”

The Opaque Activities

The news on the subpoena was just revealed recently, however, Bitfinex, which is assumed as the most widely used trading platform than any other Bitcoin exchange in the world, had gained a character of opaqueness and a puzzling model. The exchange has European executives, offices in Asia and registration in the Caribbean.

Even the Tether tokens are issued by a separate company called Tether. Tether is criticised majorly for the same reason because it is being run and operated by the same people as Bitfinex.  The C.F.T.C. subpoenaed that company at the same time that it subpoenaed Bitfinex, according to Bloomberg's source.

The exchange has not commented on the subpoena or the latest reports about Tether. However, when exchange’s executives and spokesman was asked about the matter recently, they said that its customers are simply using Tether to buy virtual currencies as they might otherwise use United States dollars.

The Friedman Audit

Bitfinex had contracted with an American firm, Friedman, to audit its records and prove that its operation with Tether is fair and broad. But last week the news flowed that Bitfinex had suspended its ties with Friedman, after waiting months for it to finish the audit. This news generated more suspicion about the exchange and its operations. Jill Carlson, a former trader at Goldman Sachs who now consults with a variety of virtual currency companies says

“It’s a signal to the market of what those who have scrutinized the situation already believe: There is a problem here.” He further adds, “The dissolution of a relationship between an auditor and a company is very rarely a good sign that the company is behaving in accordance with market best practices.”

The Last Hacks

Bitfinex was hacked in 2015 and again in 2016, and Tether was hacked at the end of last year with the cumulative losses calculating more than $100 million. The company accorded few explanations about the hacks. But after the biggest theft, in 2016, it was cut off by Wells Fargo and its banks in Taiwan.

“This absolutely reeks of price manipulation,” a security researcher and market analyst, Tony Arcieri, wrote on his blog in mid of January.

“My personal biases make me inclined to believe that Bitfinex is not using Tether to manipulate the price of Bitcoin,” said Jeremy Gardner, a managing partner at the investment firm Ausum Ventures. “If they have attempted to do so, which would be deeply concerning, it’s hard to imagine that such fraudulent issuance at its current volume could single-handedly buoy the price of Bitcoin.”

Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .

For more details on how you can submit an opinion or any news , view our Editorial Policy or email [email protected].

Tags: Bitfinex Tether about Tether

Hottest Blockchain Newsletter

For updates and exclusive offers, enter your e-mail below.