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Bitcoin Exchange siphons $ 900 million

2019-04-26 | 日記

Every money system in the world is based on the trust that real values stand behind the currency. If the users lose the belief that a form of payment is covered by countervalues, the financial system threatens to collapse. Perhaps this is precisely what is happening with Bitcoin: According to US investigators, the security reserves of the digital reserve currency are systematically plundered.

At the center of the investigation is the crypto currency Tether: it is a kind of digital gold standard, on which Bitcoin and the entire crypto market is based. The makers of Tether promised for a long time that you can exchange any of the digital coins for one dollar at any time, so the cyber money is linked to real money. Hence the name: Tether. It is this promise that stabilizes Bitcoin, because its buyers have the security of being able to trade the crypto currency in tether - and potentially in dollars as well. Much of the global Bitcoin trade is therefore handled in tether.

But now the New York Attorney General claims that the creators of Tether secretly tap off the reserves of the "Stablecoin": The operators of the crypto-exchange Bitfinex, which are also behind Tether, had withdrawn money from the dollar holdings of Tether to a loss Covering $ 850 million, Letitia James said at a press conference. The loss was never disclosed to the investors of the stock exchange.

At least $ 700 million have already drained from the cash reserves of Tether. Investigators have since obtained a preliminary injunction banning Hong Kong operators from moving more money from tether reserves into Bitfinex accounts and forcing them to disclose documents and information that they have denied since November.

The loss of investor confidence can be read directly from the Bitcoin price: After the allegations became known, he slumped by more than six percent. On Friday he continues his descent and is up to ten percent in the minus. The allegations threaten nothing less than the reputation of cyber money itself: Should something of tether be lazy, that could destabilize the entire crypto trade.

"Black box" for massive cover-up
With a series of questionable transactions, the heads of the Bitfinex exchange, which also operate tethers, have themselves granted access to the tether reserves of up to $ 900 million, the investigators claim. "These transactions treat Tether's cash reserves as a black box of Bitfinex and are used to disguise Bitfinex's massive unpublished losses and inability to meet customer withdrawals," states the New York Attorney General's Bulletin.

Bitfinex rejects the allegations: they were "charged with malice" and "interspersed with false claims," said the stock exchange in a statement on its website. "Both Bitfinex and Tether are financially stable - period." It would defend itself against the "blatant transgression" of the Prosecutor General's Office with all means and the charges "energetically oppose".

According to the Attorney General's Office, problems started in mid-2018 when Bitfinex wrote "$ 850 million without written contract or reinsurance" to an obscure payment processor named Crypto Capital Corp. transferred to Panama to handle withdrawals from customers. The company simply withheld the money. To compensate for the loss, Bitfinex then tapped the dollar reserves of Tether. Bitfinex, on the other hand, says the money is not lost but "guaranteed". Work on getting it back.

The revelations reinforce the long-held suspicions of many crypto-critics that Tether's reserve base does not really exist. The creators of the digital currency have never published an audited account of their dollar holdings. Only in March they weakened their central promise of stability: Instead of earlier allegations that Coins its 100% covered with money, it is now on the Tether website, the cyber currency is secured with reserves of money, cash equivalents and other equivalent.

Experts such as US star economist Nouriel Roubini have long suspected that cyber money is nothing more than a gigantic billions of fraud, with the Bitcoin price was artificially pushed. Because the tether makers should whenever the Bitcoin course slipped, issued on their Bitfinex exchange new tethers and have bought Bitcoins to stabilize the price. Two University of Texas researchers uncovered the eye-catching trade pattern in mid-2018 - coincidentally about the time Bitfinex first tapped Tether's cash reserves.

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