Content adapted from this Zerohedge.com article : Source
Update 1440ET: according to the NYT's Nathaniel Popper, while the CFTC did subpoena Bitfinex and Tether -- the subpoena was delivered on December 6, not last week. Still, it is unclear where in the process the CFTC may be, and what it means for Bitfinex and Tether.
I've confirmed that the CFTC did subpoena Bitfinex and Tether -- though the subpoena was delivered on December 6, not last week, a source familiar with the matter told me. https://t.co/7dWhKLTwg2
— Nathaniel Popper (@nathanielpopper) January 30, 2018
Update 1255ET: Bloomberg reports that U.S. regulators are scrutinizing one of the world's largest cryptocurrency exchanges as questions mount over a digital token linked to its backers. This follows reports of the company severing its relationship with its auditor.
As Bloomberg details, the U.S. Commodity Futures Trading Commission sent subpoenas last week to virtual-currency venue Bitfinex and Tether, a company that issues a widely traded coin and claims it's pegged to the dollar, according to a person familiar with the matter, who asked not to be identified discussing private information.
The firms share the same chief executive officer.
"We routinely receive legal process from law enforcement agents and regulators conducting investigations," Bitfinex and Tether said Tuesday in an emailed statement. "It is our policy not to comment on any such requests."
The reaction in cryptos was modest but lower as Bitcoin tumbled below $10k once again...
Could Bitfinex, the world's largest, Hong-Kong based cryptocurrency exchange, be headed for a Mt. Gox-style collapse? It's starting to look that way.
As we detailed here, when Mt. Gox first halted customer withdrawals in February 2014, it waited more than two weeks to admit the truth to its customers: that hackers had stolen more than $450 million of their assets, leaving the exchange bankrupt and them holding the bag. That hack effectively crippled the entire digital currency ecosystem, ushering in a two-year bear market that at one point carried the bitcoin price below $200, from what was then a record high north of $1,200 reached in November 2013.
So when another exchange engages in similarly shady behavior - withholding critical information about customer funds, or failing to produce audited financials despite promising to do so - it should prompt crypto traders to ask themselves why, with dozens, if not hundreds, of cryptocurrency exchanges operating around the world, they're choosing to do business with this one.
That's the question that customers of Bitfinex should be asking nearly two weeks after the exchange, once one of the world's largest, first revealed that it had been cut off from sending outbound dollar-denominated wires to its customers.
Of course, halting customer withdrawals isn't uncommon in the cryptocurrency world: All three of China's largest exchanges suspended customer withdrawals in February. And last year, Kraken, one of the biggest U.S.-based exchanges, suspended withdrawals temporarily because of a glitch in its trading software. But this freeze is particularly troubling because, like Mt. Gox, Bitfinex inexplicably decided to wait before informing customers of a critical problem. It also has implications that stretch beyond the bitcoin market, to another cryptotoken called tether that was launched by Bitfinex back in January 2015, and has since been dogged by allegations that it's a scam.
The halt is already costing Bitfinex's customers money. On Tuesday, bitcoins were going for $1,547 on Bitfinex's platform, a premium of more than $100 over most of the other popular exchanges. Investors, apparently, feel that eating a 7%-8% loss is preferable to leaving their assets in Bitfinex's care any longer.
Reddit users reported that wire transfers requested as early as March 9 were cancelled, and that the exchange offered only vague excuses as to why. It took the exchange until April 13, after it had filed a lawsuit against Wells Fargo & Co., whose correspondent banking division had effectively shut Bitfinex out of the global financial system, that the exchange disclosed the problem to its customers.
And while Bitfinex has repeatedly said it would make things right - it has promised to either establish a new banking relationship and to allow customers access to other fiat currencies - only a handful of customers have been able to get their assets out of the exchange.
As part of the freeze, Bitfinex has established a moratorium on cashing in tether tokens held by its customers. These tokens were created by Bitfinex in 2015 to allow customers to exchange an asset that's pegged to the dollar at a one-to-one ratio, allowing them to avoid costly wire transfers that must be processed through the banking system.
But the withdrawal freeze has put pressure on the tether market; for only the second time since they were introduced, investors are selling these tokens at a discount. The price of a single token has been languishing below the $1 level for more than a week.
More troubling still is that Bitfinex has so far refused to provide an audit of the fiat funds that allegedly backstop the tether float, despite promising that it would be "fully transparent and audited to demonstrate 100% reserves at all times" when it first launched the token.
This has lead some to speculate that the exchange could be commingling tether funds with other customer assets.
While evidence of this could cause irreparable damage to Bitfinex's reputation, leading to a wave of withdrawals that could add further strain to its already thinning bitcoin reserves, as Twitter user @Bitfinexed points out, it's not technically a violation of the tether terms of service.
Here's an excerpt: "There is no contractual right or other right or legal claim against us to redeem or exchange your tethers for money. We do not guarantee any right of redemption or exchange of tethers by us for money. There is no guarantee against losses when you buy, trade, or redeem tethers."
Given the preponderance of scams in the cryptocurrency market, investors who haven't already, should probably take what's left of their money and run, if they can of course.
Having bounced back from the Coincheck-hack crash, cryptocurrencies are extending yesterday's ugliness today and accelerating to the downside...
Bitcoin is back below the Coincheck crash lows...
There are no clear catalysts for this drop.
Deutsche Bank executives have suggested that** "governance" that will legitimize crypto investments could exist in "five to ten years."**
Originally speaking in an interview with Bloomberg on Monday, Jan. 29, Mueller cautioned against current investment in cryptocurrency as only for those "who invest speculatively" while appealing for businesses in the sphere to work together with regulators.
"Once security and the corresponding trust have been created, cryptocurrencies can be assessed and evaluated like established asset classes," he forecast.
"It's possible that the required governance will be in existence in five to ten years."
Deutsche Bank has traditionally taken a bearish view on cryptocurrencies as prices rise, cautioning in December that a major fall in Bitcoin was being "discounted as a small issue" by financial markets.
The lack of volatility in traditional stocks was driving investor interest in more risky assets such as Bitcoin, fellow Deutsche Bank analyst Masao Muraki determined in a note mid-January.
"Now, a growing number of institutional investors are watching cryptocurrencies as the frontier of risk-taking to evaluate the sustainability of asset prices," he wrote.
Germany continues to fall behind in its treatment of cryptocurrencies at consumer level, providing a stark contrast to initiatives in other countries, such as neighboring Switzerland.
Earlier this month, the country's central bank director nonetheless precluded comments from UK and US lawmakers at the World Economic Forum 2018 that regulation of cryptocurrency should be a joint international effort.
As a reminder this early-year weakness in crypto is not unusual...
_As CoinTelegraph notes, _the lead up to Chinese New Year is one of high spending as people book all sorts of travel and holidays, not to mention buy presents. Thus, just like Christmas and December is a time for spending in the West, January has a similar pattern in the east.
With Bitcoin's value almost halving from $20,000 in the middle of December to $10,000 at its worst in January, Wallin is both unperturbed or surprised.
_"The January drop is a recurring theme in cryptocurrencies as people celebrating the Chinese New Year, aka Lunar New Year, exchange their crypto for fiat currency," _explains Alexander Wallin, CEO of trading social network SprinkleBit, as quoted by Bloomberg.
"The timing is about four to six weeks before the lunar year when most people make their travel arrangements and start buying presents," he added.
The holiday takes place on Feb. 16; however, the build-up is where people start to spend their money. And with the Chinese population heavily vested in Bitcoin, it has a huge role to play on the movement of the market.
The thoughts are that people have been taking their profits into the build-up of the New Year, turning their Bitcoin into fiat currency to use for gift buying.
These centralized exchanges are turning out to be just as slimy as the banskters. Bitfinex and JPMorgan seem to have many similarities. I guess the currency can change but the game is still the same.
In the end, we will need to move this all to decentralization. There simply is too much theft and dishonesty when all this is centralized. Either the players are greedy/corrupt or the system itself is that way.
In the end, everything has to be moved to blockchain to avoid these situations. Imagine all the crypto trading done on decentralized exchanges. Then, nobody would have any questions....the accounts could be seen yet the keys were held by the individuals.
Let us hope this turns out for the best. We know the media is salivating at the prospects of really sticking it to the crypto world.
I hope bitfi is fine! Too much money there, this will be a mt. gox 1/2 crash - we dont need this.
lol, come on... these exchanges are ... wtf. I guess the transition to decentralzied exchanges will happen even faster than I thougt. Unfortunately if something happens to Bitfinex, it will be far more signifacnt than coincheck. Let's hope it will be fine, lol.
This news didnt help the price of bitshares any.
I guess we will have to see how many of these stories come out until people start to realize the value of decentralization in all things, especially exchanges.
To me, it appears they exchanges are acting like the banks do....no regard for anyone's money...as long as they get their cut, that is all that matters.
I, like you, and still wondering how coincheck plans on paying back $500M....who has that kind of cash laying around?
I certainly dont expexct coincheck to have it! I think people dont realize what exactly decentralized exchanges are. Maybe we should write an article or two on the matter for awareness.
Although Bitcoin experienced momentary fluctuations following the approach of 20 thousand dolars, there was a steady decline in overall picture. On the other hand, no one expected Bitcoin to rise so fast. Nevertheless, according to expert comments, after a rapid rise, Bitcoin's rapid decline was not foreseen. After declining today, the balloon expressions came to mind about Bitcoin, which dropped below 10 thousand dollars.
In general, as the investment made in Bitcoin grows, the value increases and vice versa, but the value starts decreasing. Tether and Bitfinex, the world's biggest cryptographic cryptography companies, are accused of causing all Bitcoin investors to turn around and lose value.
I think that Bitcoin will continue to lose value when considering living conditions. Nouriel Roubini, who has become the world's top economist with many guesses about the crisis, said that Bitcoin values are inflated and will experience 80% depreciation without this support.
I also think that the lawsuits and rumors going on will continue to depreciate as coward investors will move away from the favorite crypto currency. Well, do you think people who are waiting for your long-term investment will be profitable?
Qin Block Technology
Decentralization is inevitable
Are you still masquerading this news,
bitcoin Xapo and a board member at PayPal, provide compelling predictions regarding the value of the bitcoin currency over the next decade. Where he spoke at the 2017 Conciliation Conference in New York. He delivered a speech at a dinner organized by the bitcoin and blocin group pro-currency center, his speech was a lightning strike.
Since the dinner was not attended, and no video was found to speak, some snippets were taken from his online commentary. He highlighted the currency of bitcoin, where Casares saw that "the Internet has no currency and is in desperate need of one", drawing attention to the most popular encrypted currency in the world.
He also told the audience: "[The biggest mistake will be buying more bitcoin currency than you can afford to lose. But the biggest mistake [too] is not owning any bitcoin currency. "
"Put 1% of your net income into the bitcoin coin and forget it for 10 years," Casares said.
His speech also included the prediction of the encoded currency, that one of the bitcoin currencies would be worth $ 1 million by the next ten years.
As long as Casares was a pioneer in the technology business. He was the first founder of the ISP in Argentina, as well as one of the first promoters of the bitcoin currency. He also launched the retail bank in Brazil before the recent launch of the bitcoin Xapo portfolio. In early 2016, Casares joined the board of PayPal, where he was described as "the next generation leader of payment methods and currency coding ideas."
However, the Casares forecast has sparked controversy among the most bullish forecasts for bitcoin currency prices so far. He was also predicted by both financier Chat Jeremy Liu and Plucheen CEO Peter Smith that bitcoin currency prices would reach $ 500,000 by 2030.
My future traders. @zer0hedge
Any report that can show cryptocurrancies as being unstable and prone to hacks or scams is going to make big news - it's going to make people worried about the safety of their money and whether it's a good thing or just someone trying to take what they have worked hard for.
Moving everything to decentralised exchanges and having transparency can only be a good thing, it would help alleviate some of the fear that cryptos hold for so many
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Is this a Bitcoin buying opportunity?
Germany continues to fall behind in its treatment of cryptocurrencies at consumer level, providing a stark contrast to initiatives in other countries, such as neighboring Switzerland.
very sad to see
The digital currency market needs a strong push
The world's most popular electronic currency, Petcown, continued its downward spiral last Friday, losing about 5 percent of its value on Wednesday morning, losing more than 16 percent of its total value over the past few days amid fears that China A decision to ban the circulation or dealing with them, which constitutes a severe blow to them.
The currency of the "Petcoin" to less than four thousand dollars during the trading Wednesday for the first time in weeks, after the price of last Thursday had exceeded the $ 4700 dollars in the markets, thus losing more than 16% of its value within four days of Trading only.
A good kick in the nuts will be good long term for cryptos. The hype from say, November till now was like taking the entire dot com hype, boiling down to condense it, then shooting that right in your arm. BTC was jumping $1k per day, $2k per day. People were giddy. Everything got a bid. Supermodels and Evander Holyfield started pimping tokens. ICOs were the daily thing. It was like wonderland.
That is not sustainable nor healthy for something that many hope would come to compete with the current fiat system.
So a drop down to $5k for BTC, a shakeout of weak hands, and the implosion of many of the shady shops will help cryptos in the long run. Much healthier to have that then keep up with the current moonshot trajectory, which would guarantee a spectacular explosion, thus ending the cryptocurrency experiment.
pods @zer0hedge
@zer0hedge...bro 12:18 PM Permalink
The FUD around Tethers is a major contributor to this crypto market weakness IMO. A few shrill voices have made a lot of allegations and accusations without actually producing any tangible proof of malfeasance. Tether didn't help its own cause much by firing its auditor the other day. Tether claimed the auditor was dragging their feet and not delivering answers quickly enough which might be a lgood kick in the nuts will be good long term for cryptos. The hype from say, November till now was like taking the entire dot com hype, boiling down to condense it, then shooting that right in your arm. BTC was jumping $1k per day, $2k per day. People were giddy. Everything got a bid. Supermodels and Evander Holyfield started pimping tokens. ICOs were the daily thing. It was like wonderland.egitimate beef but it sure didn't look good...thank you for sharing with us...
No, actually BTC and the rest of the cryptos are led by massive fake liquidity injections as Bitfinex pumps the market with tethers at any sign of a drop... I wonder if theyre firing up the tether printer right now...Should be back above 12k by tomorrow...Tether claimed the auditor was dragging their feet and not delivering answers quickly enough which might be a lgood kick in the nuts will be good long term for cryptos. The hype from say, November till now was like taking the entire dot com hype, boiling down to condense it, then shooting that right in your arm. BTC was jumping $1k per day, $2k per day. People were giddy. Everything got a bid. Supermodels and Evander .It's unfortunate that, no matter how hard you try, some people simply refuse to see the evidence or logic in something when a few dollars profit is at stake. It's usually those people that don't 'lose' per se, but get completely wiped out. Judgement is gone for some when money comes into play.IMO it's just as likely that shorts are pushing the Tether FUD to drive out the weak hands so they can make their short futures positions good thank you for sharing with us...
Bitcoin Cash is more like Bitcoin (that doesn't exist anymore). Bitcoin Core is the fork with Segwit that is very different from Bitcoin, and it has too expensive and slow transactions.Both don't have any real use case any more. Bitcoin was a great invention, but it can't scale to be the solution for the future except maybe for some "central banks".It's unfortunate that, no matter how hard you try, some people simply refuse to see the evidence or logic in something when a few dollars profit is at stake. It's usually those people that don't 'lose' per se, but get completely wiped out. Judgement is gone for some when money comes into play.IMO it's just as likely that shorts are pushing the Tether FUD to drive out the weak hands so they can make their short futures positions good, and then build a long position in BTC, as it is likely that Tether is engaging in misfeasance or malfeasance . thank you for sharing with us...
I heard it that Bitfinex has established a moratorium on cashing in tether tokens held by its customers. These tokens were created by Bitfinex in 2015 to allow customers to exchange an asset that's pegged to the dollar at a one-to-one ratio, allowing them to avoid costly wire transfers that must be processed through the banking system.
But the withdrawal freeze has put pressure on the tether market; for only the second time since they were introduced, investors are selling these tokens at a discount.
BTC PRICE GOING DOWN
Let's hope yearly history will repeat itself..
Thanks a lot for this update. Very useful. I expect Tether and Bitfinex to go down within days.
I remember we hit 20000 not far away, recently 2017.
What could be your clear thoughts after that massive drop?
mid-term, we are going down
Another one
well posted again sir @zer0hedge
BTC price going down there would be a possible increase withe the year @rihaan
Heh, crypto exchanges being all shady. Just like any other business. How long did Sony take to report their hacked system, Target, and all the others? The moment they report that is the moment we use confidence in them and the chance of them going out of business spikes. Spin is all they care about, and in the crypto world with no real governance, why should they care?
Just another day of HODL and FUD :) My coins are in the tank, but only for now. Thanks again for the good info! Helping educate a crypto newbie on the daily events of the bitcoin world.
LOL I posted that they are starting to act like banksters.
I'd have to say they're more like wanksters, lol. The whole game changes when you have that kind of money. I mean, it's all about protecting the money/power you got, making sure someone doesn't take that away from you, even if it should be. So few downsides to life when you got that kind of cash, and there's always a way out.
@zer0hedge like it keep it up again i will come to see your next post
Anything backed by fiat currency has to be full of shit. It was obvious.
Hi my brother.. One day pleas See my post..
The world's most prevalent electronic money, Petcown, proceeded with its descending winding last Friday, losing around 5 percent of its incentive on Wednesday morning, losing more than 21 percent of its aggregate an incentive in the course of recent days in the midst of fears that China A choice to boycott the flow or managing them, which constitutes a serious hit to them.
The cash of the "Petcoin" to under four thousand dollars amid the exchanging Wednesday without precedent for weeks, after the cost of last Thursday had surpassed the $ 4700 dollars in the business sectors, along these lines losing over 21%of its incentive inside four days of Trading as it were.
Very interesting article. Thank you for reporting this news. Good luck to you and Good.
nice post but i think btc is going down and it will go more down what do you think
This just shows everybody how susceptible BTC and the cryptocurrencies are to the bad news, especially the bad news... which considering the high volatility of the markets in a normal day, then I would call normal to a 20% low in most of the coins.
If Tether is in trouble, everyone should be selling their Tether in panic for Bitcoin or ETH and that in tern should increase the price of BTC and ETH. But opposite is happening. Its hard to understand this crypto market. It's not like stock market or other securities. Common sense and logic often fails. All cryptos may hit their lowest price in this February if Bitfinex and Tether are in real trouble under fraud and misrepresenting information publicly.