The total market cap of the cryptocurrency space has lost about $8 billion following news of an alleged Bitfinex-Tether scandal.
One Company’s Problem Leads to Crypto Missing Out
Bitcoin, for example, is now trading for less than $5,100 at press time. This is disturbing, considering the currency had hit the $5,600 mark less than 48 hours ago. Bitfinex shows that distrust still exists, and that currencies are still too vulnerable to outside market influence.
Bitfinex has been accused by the New York Attorney General’s office of potentially hiding an $850 million loss that occurred over a year ago. While transferring the money to a digital payment platform in Panama, the money virtually disappeared and Bitfinex potentially tried to hide all evidence of the transfer, according to AG Lelita James.
In a statement, James states:
Our investigation has determined that the operators of the Bitfinex trading platform, who also control the Tether virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds. New York State has led the way in requiring virtual currency businesses to operate according to the law, and we will continue to stand up for investors and seek justice on their behalf when misled or cheated by any of these companies.
As with any story, there are two sides we can potentially look at. The first is New York, a state long known for its anti-crypto attitude. While crypto businesses can exist within the Big Apple’s borders, they must acquire a BitLicense, which requires heavy fees and documentation and arguably stifles innovation within the space.
At the same time, theft and loss are quite common in the digital asset world, and New York may just be looking to keep traders as safe as possible. Incidents like Mt. Gox, Coincheck and others have resulted in hundreds of millions of dollars disappearing. Many traders must then wait months or even years to be reimbursed.
Then, we can also look at Tether, a company that allegedly offers a stable currency with a questionable history. Tether has long claimed it has the U.S. reserves necessary to back up its official currency, though these claims have never been verified by a U.S.-based auditing company, leaving many to speculate just how truthful Tether has been regarding its status.
Bitfinex claims that the Attorney General’s office’s findings are written in “bad faith.” It is telling customers that the funds were not lost but rather “seized and safeguarded.”
The Evidence Is False?
In a statement of its own, Bitfinex claims:
We are and have been actively working to exercise our rights and remedies and get those funds released. Sadly, the New York Attorney General’s office seems to be intent on undermining those efforts to the detriment of our customers.
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