Bitfinex And Tether Subpoenas – What Does the Community Think?

Sead Fadilpašić
Last updated: | 1 min read

The U.S. Commodity Futures Trading Commission sent subpoenas on Dec. 6 to crypto exchange Bitfinex and token issuer Tether, according to a “source familiar with the matter.”

The two firms share the same CEO.

The subpoenas seem to be resolving the situation around Tether and Bitfinex, one way or another, and the community is thankful that the farce is over – and during the current dip.

It seems that nobody is too surprised with how the situation turned out; a megathread (a post containing all news and discussion pertaining to a certain topic) on Reddit’s r/cryptocurrency community mostly sports comments such as, “I actually think this is really good news. This needed to happen before the market continued to gain momentum,” implying that while the prices are still low, the blow from these news won’t be felt as much as during a peak.

Some argue that, since the subpoena turned out to have been issued on December 6, “This means that they have been printing more and more tether even since. This indicates that either they have [courage] ever or they don’t have anything to be afraid of.”

Tether’s coins (aspirationally) have a value of exactly USD 1 (and market pricing suggests traders believe that), and their growing popularity ensured they would become a substitute for dollars, with about USD 2.3 billion of the tokens outstanding as of Tuesday. Tether claims all of its coins are backed by U.S. dollars held in reserve, but they haven’t conclusive evidence of its holdings to the public yet, or even had its accounts audited. Suspicions regarding the workings of Tether build up as the news of their relationship with audit firm Friedman LLP ending spreads.

Speculations that Tether may be operating a fractional reserve, issuing more tokens than they have backing for, and sending them to Bitfinex, abound. The exchange then uses those tokens as collateral to create leveraged long or short positions in the Bitcoin market.

Market manipulation accusations were not a rarity either – even Charlie Lee, creator of Litecoin, urged both Bitfinex and Tether to come clean.