Bitfinex Is Accused Of Publishing Data For A Tether Market That Does Not Exist
A recent development involving the popular but controversial stablecoin Tether has caught our attention today. A post from Coindesk accuses Bitfinex, which has the same CEO of Tether and is the main link of the company in the crypto market, of publishing information that does not exist.
The case is, indeed, very curious, as well as troublesome, as Tether is not enjoying a big popularity recently after some other popular stablecoins like Circle’s USD Coin (USDC) and Gemini Dollar (GUSD) have been launched and Tether have lost its parity with the USD, one of the most important aspects for a stablecoin.
What Are The Accusations Against Bitfinex?
Basically, the whole case is based on the fact that Bifinex’s page on CoinMarketCap lists the USDT/USD trading pair. This is the trading pair with the second highest volume in the exchange over the past 24 hours (nearly $48 million USD).
However, the main problem draws from the fact that Bitfinex does not actually exchange the USDT/USD trading pair meaning that the pair, which is the second in the exchange’s information, simply does not exist.
The question originally asked by the Coindesk author is “If there is no live trading of USD/USDT, why is it listed”? That is a fair question, surely. You simply cannot deny that there is something very fishy about the fact that the second largest market of an exchange… does not exist.
As Bitfinex shares common owners with Tether Ltd., the issue gets even more troublesome than it would normally be because of the company’s links. The data comes directly from the API of Bitfinex, meaning that it appears there but the option is not listed on the site of the company for its customers.
A spokesperson from Coinmarketcap, Carylyne Chan, has talked to Coindesk and affirmed that the company is actually confused about the information. According to her, Bitfinex did not answer until the time of the report, even with CMC trying to get some information about why the API has sent information that does not appear to be the truth.
The most unclear point, it is affirmed, is that it is not understandable where does this volume come from. A representative of Bitfinex’s marketing department, Kasper Rasmussen, affirms that the information has to be linked to deposits and withdrawals as the company does not have the trading pair.
He also affirmed that Tether is “only used” as a transport layer on the company and that it can be withdrawn more quickly than fiat currency. Further information has not been provided, though.
Is This Affecting The Tether Price?
Only a few exchanges directly change Tether and USD. Kraken, for instance, does it, and it was flooded last week when the prices went down abruptly. Bittrex also does it but did not see the same influx.
The author of the post at Coindesk affirms that it is “fair to ask if the data from Bitfinex would have a distorting effect on the composite price” of Tether which is displayed at CMC. Even since the peg broke, the price has been consistently $1,00 USD while it went to as low as $0.85 USD on Kraken during the downfall last week.
At the moment, neither company has responded to the question and there are many doubts on what will actually happen, however, Luke Wagman, from CoinMarketCap, has affirmed that the “trading volume” at Bitfinex is irrelevant because it is only about 2% of the official volume.
We will probably discover soon why has this happened, but it looks like we will have to sit and wait for the company to answer right now.