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Does The Bitfinex Saga Even Matter?


​Bitfinex Saga Continues-but does it matter?
Depends who you talk to...



By now most of you know the New York Attorney General has accused Bitfinex of covering up $850M in losses with Tether's reserve funds. Let's recap the key issues in this story:

  1. 1. The NYAG believes Tether and Bitfinex were involved in concerning activities including: bypassing (NY) regulation, missing funds, and conflicts of interest
  • 2. Bitfinex has a hole on its balance sheet of $850M since late 2018
  • 3. Bitfinex claims the missing $850M is 'stuck' with Crypto Capital, a payment processing firm located in Panama
  • 4. Crypto Capital argues the $850M have been seized by US and Portugal gov't authorities
  • 5. Issues with obtaining these funds allegedly led Bitfinex and Tether to orchestrate a web of transfers and credit lines


While some in the crypto community have stated that there's simply nothing to see here, except the gov't doing its job and rightfully calling out negligent behavior- some have spoken of a double standard. Folks like Caitlin long, a 22 year Wall Street veteran and Founder of Wyoming Blockchain Coalition, have seen the NY AG take a different approach towards negligence from big banks.

caitlin long

While it's not about pointing fingers here, it is important to recognize high standards don't exist across the board- and they should. That being said, exchanges should also be more transparent, especially if they don't want to deal with lawsuits.

So why does any of this matter?

Maybe, in the short-run, it doesn't. But there are some important takeaways: 
  • 1. The US is clearly interested in reigning in crypto exchanges into its regulatory oversight
  • 2. Regulatory actions can end up hurting consumers rather than helping them. Regardless of what Bitfinex and Tether did or didn't do in this situation, authorities somewhere are holding $850M. As many have pointed out this is how the whole problem of Bitfinex 'masking lost funds' began. While government agencies are highly necessary, certain actions push companies, like Bitfinex, to take desperate measures to avoid bigger losses
  • 3. Crypto exchanges need to get their act together. Many exchanges and affiliate companies lack sufficient financial auditing or none (Tether) at all. The more transparency, the better

 

-Camille