Bitfinex’ed: The Mysterious Blogger’s Crusade Against Corruption In Crypto World
Bitfinex’ed has been one of the most prominent vocal critics of the borderline corruption and fraud in the crypto industry, especially the popular crypto exchange Bitfinex.
Criticism Of Tether’s Audit
Over the past several months, there’s been growing doubt as to whether or not Tether is actually backed by USD on a one-to-one basis. On its landing page, Tether writes that its
“reserve holdings are published daily and subject to frequent professional audits. All tethers in circulation always match our reserves.”
Those frequent audits have been anything but–an unofficial audit by mid-sized accounting firm Friedman LLP that started in May 2017 was not published until September 2017; the banks in which the accounts are supposedly held were blacked out of the report.
Eyebrows were raised further on January 27 of this year when Tether broke off its relationship with the auditors at Friedman LLP. In an official company announcement, Tether cited Friedman’s detailed methods as the reason for the split:
“Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame.”
Ties Between Tether And Bitfinex
Another questionable issue is the alleged close ties that the exchange has with Tether (USDT), a cryptocurrency that claims to be back on a one-to-one basis with USD. Bitfinex and Tether share two board members, Phil Potter and Giancarlo Devasini. Bitfinex has been allegedly ‘minting’ fake USDT to pump up the volume of BTC and other cryptocurrencies on their exchange. It is important to note that Tether tried several times to rebuke those claims by issuing audits proving that the coin is backed by real US dollars.
In April 2017, Bitfinex and Tether lost their banking relationship with Wells Fargo. That’s when new tether tokens began being issued at a breakneck pace. Bitfinex’ed also noted that the cryptocurrency industry’s efforts to be self-regulating might have hit a weak spot when it comes to Tether and Bitfinex.
“If the community was self-policing, exchanges would have immediately disabled Tether pairs once Tether failed to produce an audit/fired their auditor…Bittrex could demand the US dollars on behalf of their customers, the same with Poloniex and other exchanges.”
Despite what Bitfinex’ed sees as flagrant manipulation and disregard for the law, Bitfinex’ed believes that the highest price to be paid will be paid by the victims of the pegged currency schemes.
“There were innocent people who were not engaging in criminal activity that used Liberty Reserve. They lost their money. The same will be true for people ‘hodling’ Tethers, and because Bitcoin has been inflated by counterfeit money, once that buy side is removed, the whole thing falls apart.”
The individual who has paid the highest price for calling out Tether and Bitfinex’s suspicious behavior is Bitfinex’ed himself, who has been threatened with legal action.