Following the case against Tether and Bitfinex by the New York Attorney General, The Bitwise Crypto Index Committee after a meeting held on 25 April, 2019 has decided to ban Bitfinex from contributing price indices as a price source. This is to take effect immediately.
Rule “III.A.ii.b” meeting
On 25 April 2019, the Bitwise Crypto Index Committee held a meeting in accordance with Index Rule “III.A.ii.b” with respect to the New York Attorney General’s claims toward Tether and Bitfinex. the meeting which was chaired by Matt Hougan. According to a notice of the meeting published on Bitwise website, the New York Attorney General has retained a court order against iFinex Inc., the owner of the Bitfinex exchange and Tether, the company that issues USDT based on the allegations of fraudulent activities involving $850 million.
The meeting ended with a 100% vote against Bitfinex and the company was banned from contributing price indices based on the following conditions which Bitfinex did not meet. The condition is that a company that can contribute such information:
“Is in compliance with local regulations and not subject to extraordinary regulatory or legal action.”
The committee says “This requirement exists to limit exchanges to those that are positive actors in the community, and to limit the potential for interruptions in service or unusual pricing due to the government or regulatory enforcement actions.”
Implications on price discovery
To clear the air, the committee said the ban will not affect price discovery significantly, neither will it affect access to liquidity and the ban is more of a step towards caution. What effect is this likely to have on Bitfinex exchange and its IEO platform Tokinex token LEO?