3 years ago
182 Bitfinex executives have come out to deny allegations that Tether (USDT) is used to manipulate the bitcoin price. Tether is a stablecoin that is backed 1-to-1 to the US dollar. It is used as a digital dollar to facilitate different transactions between cryptocurrencies.
Craig Sellars, Reeve Collins, and the 2020 American presidential candidate Brock Pierce created the USDT coin and termed it a successful experiment of putting fiat currencies on a blockchain.
Tether alleges that it issues new coins to respond to the market needs. However, many critics say that the token is used in a clear scam to purchase and ramp up the bitcoin price.
Based on a 2018 study by researchers from the University of Texas, Tether seems to have been used to manipulate and stabilize the price of bitcoin. Bitfinex executives have come out strongly to deny these claims. JL van der Velde, Bitfinex CEO, said in response to the result of the 2018 research:
“Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex.”
While speaking to ‘What Bitcoin Did’ host Peter McCormack, general counsel Stuart Hoegner and Bitfinex CTO Paolo Ardoino thwarted these allegations. They confirmed that the biggest crypto is among the reserve assets that Bitfinex uses to peg USDT. They discussed Tether FUD, the allegations of not being fully backed, and bitcoin price manipulation.
However, they dismissed the idea that Tether is issued only to acquire Bitcoin. Ardoino insisted that Bitfinex can use the fiat money in its reserves to acquire bitcoin.
Transparency Challenges
Hoegner also said that the stablecoin is entirely backed by assets like cash equivalents, cash, and bitcoin amid reports that just 74% of USDT is backed. However, Ardoino and Hoegner refused to say that the exact makeup of Bitfinex’s reserve assets. Ardoino said:
“The bitcoins in reserves are a good amount remaining from the past acquisition that we likely did in 2015/16. The bitcoins, which we bought for a good price in 2015/16, will probably be enough for perpetuity.”
For now, Bitfinex is not hiring any external auditors to conduct a fully transparent audit. Hoegner justified this move with consulting reports from a law firm and an accounting firm, coupled with a report from Bitfinex bankers.
