Bitfinex Tether Allegations 2019

Report: Bitfinex Shareholders Unconcerned with Ongoing Allegations

Despite Bitfinex, Tether and the New York Attorney General’s office dominating headlines in cryptocurrency, several shareholders have come forth to state they are “unconcerned” with the recent allegations.

Speaking with crypto news outlet CoinDesk, two Bitfinex shareholders reported that they were not concerned with the cryptocurrency exchange or the allegations the platform was facing insolvency. Despite the crypto markets making a slow march towards recovery, the overall landscape is down several billion from the start of the week, after news surfaced that cryptocurrency exchange Bitfinex may be facing a solvency crisis.

According to a court filing by the New York Attorney General’s office, Bitfinex used funds earmarked by Tether as reserved for the backing of their USDT stablecoin to cover over $850 million in losses. While each USDT is supposed to be backed 1:1 with U.S. dollars–or some value equivalent–the court filing draws into question both the state of solvency for Bitfinex in addition to whether 30 percent of the circulating USDT is now backed by nothing. The New York AG filing purports that both Tether and Bitfinex have acted to defraud investors and manipulate the price of the cryptocurrency market, by circulating stablecoins that are not actually backed by their stated value.

Yesterday, April 26, Tether and Bitfinex released a joint statement challenging the court filing. Both companies denied the allegations, saying

“The New York Attorney General’s court filings were written in bad faith and are riddled with false assertions, including as to a purported $850 million ‘loss’ at Crypto Capital. On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded. We are and have been actively working to exercise our rights and remedies and get those funds released.”

In addition, the companies came forth to state that the New York AG’s office was distracting them from their focus on helping clients obtain their funds, and that they are committed to “fighting this gross overreach by the New York Attorney General’s office against companies that are good corporate citizens and strong supporters of law enforcement.”

Now a pair of Bitfinex shareholders have come forth to dampen investor concerns and claim that the exchange is still operating comfortably. Zhao Dong, one of the shareholders, previously claimed in January 2018 that Tether and Bitfinex held over $3 billion in funds to back USDT, a balance that was made explicit to him at the time by Tether CFO Giancarlo Devasini. Speaking with Coindesk on April 26, Dong claimed that Devasini had told him Bitfinex would unfreeze user funds in a “few weeks.” According to the report, Dong also stated that user funds were spread across several banks in Poland, the U.S. and Portugal. Coindesk also cited shareholder Tian Jia claiming that his faith in the exchange remained unwavering, even in the face of current allegations.

These shareholders could be attempting to quiet the uproar surrounding Tether and Bitfinex, as both companies are facing severe community reaction in response to the ongoing controversy.