Roche Freedman LLP recently published a document about Bitfinex and the Tether (USDT) stablecoin concerning alleged manipulation of the market and price of bitcoin.
The document, in fact, tries to highlight some inconsistencies between what is declared by Tether’s website and the events occurring with the management of the stablecoin, which is pegged 1 to 1 with a pool of fiat currencies.
In addition, the document also shows how it is possible to operate in the crypto market by switching between several banks with different accounts, through a mechanism known as shadow banking.
US attorneys and the Tether case
There is still no official estimate of the “damages” created by Bitfinex, but lawyers would have estimated as much as $1.4 trillion.
The answer is simple. As explained in the Bitfinex post, these are nothing more than mercenaries.
Bitfinex Anticipates Meritless and Mercenary Lawsuit Based on Bogus Studyhttps://t.co/k1jr2Vze59
— Bitfinex (@bitfinex) October 5, 2019
In essence, the document accuses Bitfinex of not having in the bank the correspondent in fiat currency of the total Tether (USDT) in circulation.
The document does not explain in any way how Bitfinex would have managed to manipulate the market or when. And it’s all based on a 2018 document that makes accusations without any tangible evidence.
The same Tether had anticipated what the document says, preparing users to the fact that most of the accusations would be precisely in terms of market manipulation, which is obviously not true.
“Tether and its affiliates have never used Tether tokens or issuances to manipulate the cryptocurrency market or token pricing. All Tether tokens are fully backed by reserves and are issued pursuant to market demand, and not for the purpose of controlling the pricing of crypto assets. It is irresponsible to suggest that Tether enables illicit activity due to its efficiency, liquidity and wide-scale applicability within the cryptocurrency ecosystem.”
The same thing has been reiterated by the Bitfinex CTO, Paolo Ardoino in a tweet a few hours ago.
Interviewed by The Cryptonomist, Tether’s General Counsel, Stuart Hoegner, stated:
“Tether is by far the most popular and useful stablecoin because Tether deals honestly and fairly with our customers in the marketplace and because it facilitates a great deal of digital token commerce. We operate in full conformity with applicable laws and our response to this opportunistic lawsuit will show that.”