Bitfinex CTO: Despite Earlier Reports, Tether Did Not Buy Bitcoin with USDT Nor is it Backed With BTC
If you follow any crypto-related news, you have heard about the whole controversy regarding the Tether/Bitfinex case, in which the stablecoin company lent money to its parent company and later it was denounced by the New York Attorney General.
As the case went on, The Block Crypto reported that Tether actually invested some of its money in Bitcoin, which would make no sense at all because the company is clearly focused on stability, so it would be very strange indeed for Tether to invest in something as volatile as BTC.
Are the rumors true, though? The court transcript, which was published yesterday by The Block Crypto, was supposed to prove that some of the Tether reserves were backed by BTC.
Now, Paolo Ardoino, the CTO of Bitfinex, used social media in order to clarify what happened. He affirmed that Tether only owns 0.076 BTC (less than $600 USD worth of BTC). This happened because the company had to pay mining fees in BTC, this is why they invested in this particular asset.
Initially, the Judge of New York Supreme Court, Joel Cohen, was very concerned about how Tether, which was pegged to the value of the USD, was backed by something like Bitcoin. According to him, that would not make much sense as Tether was supposed to be like a calm in the middle of a storm.
The Tether attorney David Miller affirmed that the company had bought BTC. However, he never said how much it was, so the media jumped the gun a bit when affirmed that Tether was backed with BTC. It actually wasn’t. Miller did not even affirm that the BTC was bought using the USD reserves, only that the company decided to buy it.
Ardoino’s tweet makes it clear that Tether is not backed by Bitcoin. He affirmed that the leading stablecoin issuer has private equity of over $35 million, too, which would make the company able to even buy a horse without needing to communicate with the investors at all.
In any case, the trouble over Tether and Bitfinex continues, mostly because of the loan which was made and started the whole controversy. Tether might be able to escape, though, as its lawyers have been affirming that the NYAG is out of its jurisdictions using local laws to prosecute the company since it does not have any New York-based client.