Joseph Lubin on Tether-Bitfinex Debacle: “It seems like a really big mess that probably won’t get better”
Joseph Lubin, founder of ConsenSys and co-founder of Ethereum, has shared his views on the recent debacle involving controversial stablecoin, Tether, and its parent company Bitfinex exchange.
Speaking at the Fluidity Summit conference, Lubin said that: “It seems like a really big mess that probably won’t get better.” The mess Lubin refers to is that in late April the New York State Attorney General alleged that Bitfinex lost $850 million and subsequently used funds from affiliated firm Tether to covertly cover the shortfall.
The issue is that Tether has had a shadow of controversy following it for some time, and this allegation hit not only the stablecoin, but also Bitfinex, and the rest of the cryptocurrency space which has now been piled with more bad press.
Good and bad
While the allegations being laid at Bitfinex have had little sway on the market, with Bitcoin now climbing above $6,000, it is still an unpleasant charge to be lingering. Lubin makes mention how Tether is somewhat important to the ecosystem because it’s used by different institutions to effect more fluid trading.
Moreover, the ConsenSys founder also made mention how this blow to Tether could be a benefit for other stablecoins which have emerged more recently.
“There are other price-stable tokens out there — many others — and I think they’re going to gain traction because of this. I think that will be a really good thing.”
Part of Tether’s controversy was that the company maintained until only recently that it was 100 percent backed by a reserve of US dollars. However, that has been found to be untrue. Lawyers confirmed that Tether only had enough cash to back three-quarters of its increasing supply.
As Lubin states, this mess from Bitfinex and Tether is not going to get any better as the walls look to be crumbling down between the two companies. Tether could well be on its way to becoming defunct, but that could open the doors to other more reliable stable coins.
At the same time, Bitfinex is also suffering from the bad press as many customers look to pull out of the under siege exchange. Exchanges are a hot topic in the cryptocurrency space, so often marred by bad news of hacks, and illicit dealings.
The optimistic point of this debacle is that the market has manage to continue its growth regardless of the negativity stemming from these two rather large and influential cryptocurrency companies.
With that in mind, the future may well be heading into a space devoid of Tether and Bitfinex, but if the allegations are correct, and there has been nefarious actions from the two companies, this may well be for the better in the end.