Bitfinex- Too big to fail?
Where there’s smoke, there’s fire. The charges brought against iFinex, the parent company for Bitfinex and Tether, are an indicator of the opaqueness surrounding the operations of Bitfinex and Tether.
House of Cards
When the NYAG made her charges formal, Bitfinex and Tether released a statement arguing that there was “no ongoing fraud” and that the OAG made the charges based on “Incorrect or incomplete information.”
The US government launched investigations into the operations of cryptocurrency exchanges and other related business in 2018. For the OAG to make such an accusation, serious facts and evidence have to be involved. It is also worth noting that the government serves its people while investors protect their assets.
Having denied the “misappropriation of $850 million” Bitfinex and Tether all but confirmed the misappropriation of the stated money by launching a one-billion-dollar Initial Exchange Offering (IEO). The IEO would see Bitfinex and Tether clear up the mess they have created.
Bitfinex was bailed out in 2016 where users lost 36% of their holdings with the company replacing them with native tokens. The same ploy where losses are distributed to users is being carried out in 2019 through the launch of the IEO. What is shocking is that private investors are set to raise $600 million! Who in their right mind would invest in such a shady company?
Further, Tether and Bitfinex recently confirmed that the two companies are intertwined, allegations which they had denied before. The inadequacy of information is just telling of the lengths insiders are willing to go to protect their assets.
Bitfinex/Tether collapse=no Bitcoin damage?
The NYAG has submitted legal documents and action is likely to be taken against iFinex. Once the ball starts rolling, shadier deals are going to be exposed which may result in a collapse of both Bitfinex and Tether. Bitfinex’s failure will not affect the price of Bitcoin; however, depending on the nature of Tether’s collapse, the price of Bitcoin will decrease.
The news surrounding shady dealing within iFinex has caused many USDT traders to stay on high alert. Some have even started moving their assets to other stablecoins. The migration from Tether will help reduce the impact of a Tether collapse were it to come to fruition. Moreover, as the plot thickens, mass migration is inevitable.
The shenanigans around iFinex should not discourage traders from dealing in BTC. The scenarios through which the price of BTC may significantly drop are becoming highly unlikely by the day. With every delaying tactic iFinex employs, the potential damage decreases significantly. The price of BTC will remain stable and even increase after all this.
The aftermath of the NYAG release has seen Bitfinex and Tether defenders arise. Do not be fooled. Investments are being protected. Protect your investments.