Crypto News

Bitfinex and Tether worries crypto investors

BitfinexSome people in the Bitcoin community are worried that the price is being artificially propped up by speculators on the Bifinex exchange. It is not just Bitcoin that has invested concerned, but also other digital tokens. Bitfinex has a history of hidden business practices and hacks, so the exchange has already become known for being a bit shady.

Bitfinex and Tether

The digital currency that Bitfinex issues is called Tether. What sets Tether apart is that it is back by fiat currency, the US dollar. One dollar is worth one token, and to get a token, you must be an investor. Tether is used by many users to buy Bitcoin or another virtual currency. Tether recently found itself with hundreds of millions of new tokens created. Users were noticing that when the price of virtual currencies goes down, the number of Tether tokens went up.

Why are they being investigated?

So, last December a US regulatory agency, the Commodity Futures Trading Commission subpoenaed Bitfinex following these reports. According to Joey Krug, the co-chief investment officer at Panter Capital, “This became more and more concerning, because every time the markets went down, you have seen the same thing happen. It could mean that a lot of the rally over December and January might not have been real.”

Bitfinex and Tether are two separate companies, and both have the recipients of CFTC subpoenas. There is no word as yet on what information the CFTC is asking for or what they are investigating. Bitfinex attempted an audit by an American Firm, Friedman, but they stopped the review before completion. Some fear that Tether is not doing what it is expected to do. The company is supposed to keep all the money invested in holding, so Tether has the backing of the US dollar. However, there is a possibility that the company is not holding its end of the bargain and no dollars are backing Tether.

A history of problems

For Bitfinex and Tether, this is the third hack in three years. Previous hacks in 2015, 2016 and the end of 2017 saw loses over $100 million. Tether could be a good thing for cryptocurrency security due to its connection with the US dollar. However,

In recent months, there has been a range of issues coming out of the world of cryptocurrency. Coincheck, a Japanese virtual currency exchange was hacked, resulting in around a $500 million loss. The difference between virtual currency exchanges in Japan and the US is that the Japanese already have regulatory oversight while the US has none.

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