Crypto Bitfinex-Tether Scandal
Despite a recent 400% surge in price over a matter of weeks, Bitcoin has begun to pull back in lieu of three things: 1) A parabolic, blowoff top. 2) Significant unresolved technical flaws, including limitations regarding scalability, slow transaction times, and high transaction fees. And last but certainly not least, 3) A potentially devastating market fundamental scandal waiting to erupt. The New York Attorney General exposed crypto exchange Bitfinex for not disclosing an $850 million loss to investors and subsequently using funds from Bitfinex’s affiliate stablecoin operator US Dollar Tether (aka ‘Tether’) to cover Bitfinex’s loss. It’s difficult to envision a scenario where the NYAG doesn’t slam the gavel on Bitfinex, crushing both the exchange and Tether as a result. We’ll be monitoring this situation from the sidelines to see how it plays out.