The crisis with Tether and Bitfinex seems to be escalating as evident from the recent events in the crypto-market. As the firm itself confirmed the discrepancy in the total backed amount by Tether, the general market sentiment is one of ‘abandoning ship’ from Tether. The Bitfinex premium can also be attributed to the Tether issue.
Justin Sun, the Founder of Tron and CEO of the Tron Foundation also announced the suspension of the USDT-Tron rewards program until things are resolved at Tether. He tweeted:
“I’ve decided to postpone our # rewards program for future updates until there’s more clarity regarding @ and @ . Regardless, I firmly believe stablecoins will continue to play a big role in the blockchain space.”
However, legally Bitfinex seems to have to upper-hand with Supreme Court of NY issuing show cause notice to the petitioner.
Supreme Court Issues Show Cause Orders
The Supreme Court of New York has also intervened in the matter. In the New York Attorney General Vs itFinex Inc. Case, four branches of Tether have been confirmed as ‘defendants’ as well. Nevertheless, they have established a strong legal stand as reflected in the Supreme Court order.
The Supreme Court has issued a show-cause notice to the Attorney General of New York. According to the Apex Court’s order, the existing order against the defendants will be vacated pursuant to the ‘affirmations of Jason Weinstein and Stuart Hoegner.’ Jason Weinstein is a partner that famous law firm, Steptoe LLP, and Stuart Hoegner is the in-house legal counsel for Bitfinex. These two are defending the case for the Exchange and Stablecoin provider.
The court has ordered the petitioner to submit all ‘paper in opposition’ on 3rd May 2019.
Bizzare Bitcoin Market At Bitfinex
Bitfinex Premium, the surcharge on Bitcoin prince at Bitfinex, has continued to haunt the crypto community. While Bitcoin is still trading near $5300 at other Exchanges, the price of Bitcoin at Bitfinex is at 12: 30 hours UTC on 1st May is trading at $5612. A Bitfinex Premium of over $300 or 5.6% on the Bitcoin’s average price.
The reported 7-Day volume on the Exchange is 1.165 billion dollars. Moreover, it is one of the leading benchmarks for short and long orders on Bitcoin. Hence, the Bitfinex Premium is causing a lot of short orders to be built on Bitfinex. The building pressure of shorts could reduce the difference between their price from the other exchanges.
However, it currently signifies that the demand for Bitcoin on Bitfinex is higher. Moreover, the Price of USDT/USD is around 1.05, 5% higher than the USD pegged rate.
Therefore, while the shorts are increasing the bearish pressure above $5600, the actual demand for BTC is increasing considerably as people are apparently abandoning ship from USDT.
Do you think that the chaotic solution will lead to a short squeeze or further bullish action on Bitcoin? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com