Bitfinex, Tether and the public are openly confronted, is 5.7 billion "frozen" or "evaporated"?

Yesterday, the players in the currency circle just cheered for the bitcoin price to break through $5,400. Today, the bitcoin price instantly dive below $5,200.

The "culprit" of price diving, the document issued by the New York State Attorney General's Office, said that the exchange Bitfinex moved Tether's $850 million in reserve funds; a few hours later, Bitfinex issued a statement saying that $850 million was not lost but was seized and Protection, the Office of the Attorney General of the State of New York is seriously overstepped and malicious.

Does Bitfinex's "frozen" $850 million lead to a $850 million gap in Tether, which proves that Tether's stable USDT does not have sufficient reserves? The players in the currency circle have had a heated debate.

The 31QU combed the documents issued by the New York State Attorney General's Office and found that more textual details were relevant to Tether's actions over the past six months. For example, why did the USDT show a waterfall in October 2018, why did USDT suddenly change the terms of service in March this year?

Behind these anomalous moves, there is a hidden connection with this disappearing $850 million.

1

Confrontation

At around 6 o'clock this morning (Beijing time), Bitcoin quickly fell below the three barriers of 5,400, 5,300 and 5,200 US dollars, a decline of more than 6%, and led the collective currency to fall.

The reason behind this cryptocurrency market crash is actually related to a news.

Almost at the same time, the New York State Attorney General's Office issued a document saying that starting from 2018, Bitfinex, the digital currency exchange, began to divert USDT reserve funds to fill the $850 million deficit.

According to an article published exclusively by the Wall Street Journal, the New York State Attorney General’s Office obtained a court order requiring iFinex to stop transferring funds from Tether’s reserves to Bitfinex’s bank account, stop distributing any dividends or other dividends to executives, and surrender Documents and information.

Affected by this heavy news, bitcoin prices have instantly dived.

A few hours later, Bitfinex issued a statement saying that $850 million was not lost, but was "blocked and protected." Bitfinex's explanation is that $850 million is a "loss" when working with third-party payment company Crypto Capital. The huge amount of encrypted capital was not lost, but was seized and protected.

The announcement emphasizes that Bitfinex and Tether are in good financial condition.

Moreover, Bitfinex’s attitude is tough, and the New York Attorney General’s Office’s actions are grossly powerless and malicious, and the documents are full of false assertions. Bitfinex will fight at the Office of the Attorney General in New York.

The two sides hold the same word and the market is in turmoil. The issue of the security and credibility of the stable currency USDT was once again placed in front of everyone in the currency circle.

31QU combed the documents issued by the New York State Attorney General's Office and found that more textual details were relevant to Tether's actions during the past six months.

For example, why did the USDT have a waterfall in October last year, and why the USDT suddenly revised the rules in March this year.

2

USDT's operation

When we interpret today's documents, first remember the two big events and time points of USDT:

In October 2018, the USDT price suddenly plummeted by 13%;

In March 2019, USDT revised the terms of service, linking 1:1 to the US dollar, becoming a 75% dollar anchor and 25% iFinex stock secured loan.

According to documents released by the Office of the Attorney General of the State of New York, both incidents were caused by Bitfinex’s “$850 million” deficit.

According to the document, Bitfinex once worked with Panama-based payment processing company Crypto Capital to handle customer withdrawal requests.

The reason is that it is difficult for cryptocurrency trading platform Bitfinex to find a bank with a good reputation and cooperation with it, so it relies mainly on third-party payment processing company Crypto Capital to handle the customer's withdrawal demand.

However, although the two sides involved huge amounts of money, Bitfinex did not sign a contract or a formal agreement with Crypto Capital. We can only see screenshots of Bitfinex's cooperation with Crypto Capital in the file:

In the document, Bitfinex and Tether's lawyers said that since 2014, Bitfinex has partnered with Panamanian payment processing company Crypto Capital Corp.