- The CFTC has issued subpoenas to Bitfinex and Tether as tether token comes under scrutiny
- Tether tokens are popularly used as substitute for the US fiat currency with supposedly $2.3Bln in reserves
- New to the cryptocurrency market? Check out the new Introduction to Trading Bitcoin guide
U.S. regulators are looking into the operations of one of the world’s largest cryptocurrency exchanges as the validity of certain digital tokens comes into question. According to Bloomberg, the US Commodity Futures Trading Commission (CFTC) sent subpoenas last week to virtual-currency venue Bitfinex and Tether. The former is one of the largest cryptocurrency exchanges and latter a company responsible for issuing a highly traded coin that it claims is pegged to the US Dollar.
Scrutiny intensified when it was reported that the company’s ties to accounting firm Friedman LLP had been cut before the full accuracy of the audit performed into the reliability of Tether’s records could be investigated and reported.
The relationship between Tether and Bitfinex has also come under question. In their murky relationship, Bitfinex and Tether share operators, Phil Potter and Ginacarlo Devansini, according to the New York Times. But according to Bloomberg, Potter is the Chief Strategy Officer at Bitfinex and a director at Tether. All while Devasini is a director at both companies. Neither company has confirmed their relationship with each other.
As of the time that this was written, Bifinex is the fourth largest cryptocurrency exchange by volume in the last 24 hours (around $1.391 billion) as reported on CoinMarketCap. And the tether token is the 3rd most traded product on Bitfinex at around $122 million in the last 24 hours and further a supposed $2.3 billion of the tokens outstanding across the world with reported reserved to back the product.
The news has put renewed pressure on the wider cryptocurrency market. At the time of this article Bitcoin dipped below $10,000, Ethereum fell below $1,100, and Ripple’s XRP token fell to $1.134.
Chart 1: Bitcoin 15-minute Chart (January 29- 30, 2018)
Following the news of the subpoenas from the CFTC, Bitcoin fell below 9,860. Just today, Bitcoin is down 11.5% from its intraday high. At the time that this was written, BTCUSD traded back around 10k.
--- Written by Dylan Jusino, DailyFX Research
